Costco defends its diversity policies as other U.S. companies evolve theirs

Costco is pushing back against a shareholder proposal that urges the big club operator to conduct an assessment of any business risks posed by its diversity, actions and inclusion practices.

Investors were expected to vote on the recommendation at the company’s annual meeting on Thursday.

The National Center for Public Policy Research, a conservative think tank based in Washington, submitted the proposal, arguing that Costco’s DEI initiatives pose “reputational and reputational risks to the company, and therefore financial risks for shareholders.

The think tank made a similar proposal to Apple, and like some U.S. companies that have already reduced or withdrawn their diversity policies, cited a U.S. Supreme Court ruling in July 2023 that banned affirmative action in university admissions.

Costco officials could not be reached for comment on the DEI proposal.

But Costco’s board voted unanimously to ask shareholders to reject the motion.

The board said it believes “our commitment to a business rooted in respect and inclusion is appropriate and necessary. The report requested by this proposal would not provide significant additional information. »

The directors’ message to shareholders details how having diverse employees and suppliers has, in their view, fostered “creativity and innovation in the goods and services we offer” and led to greater customer satisfaction among Costco members.

Neil Saunders, managing director of the retail division of consulting firm GlobalData, said Costco can be confident the proposal will be rejected.

“I think people generally have confidence in Costco’s management, and there’s an attitude of ‘why rock the boat?’ It sails very well,’ Saunders said.

Costco’s public stance in support of diversity, equity and inclusion programs contrasts with positions taken in recent months by other major consumer brands, including Walmart, McDonald’s and John Deere.

Last week, more than 30 Walmart shareholders, including Amalgamated Bank and Oxfam America, asked the CEO of the nation’s largest retailer to explain the business impact of scaling back the company’s DEI policies, a move that they called it “discouraging.”

Prominent technology companies including Amazon and Meta – the parent company of Facebook and Instagram – have also returned Dei’s initiatives, which are expected to face opposition from President Donald Trump’s administration.

Emboldened by the Supreme Court’s ruling on affirmative action at colleges and universities, conservative groups have filed lawsuits for making similar arguments about corporations, targeting initiatives such as employee resource groups and advertising practices. hiring that prioritizes historically marginalized groups.

On Monday, Trump signed an executive order to end DEI programs within federal agencies. Conservatives have long condemned them, arguing that they violate the U.S. Constitution by considering factors such as race, gender and sexual orientation.

The plan includes partying the Justice Department and other agencies to investigate private companies pursuing training and hiring practices that conservative critics view as discriminatory against people who are not members of minority groups, such as white men.

As for Costco, the National Center for Public Policy Research has alleged that at least 200,000 of the company’s 300,000 employees worldwide “are potentially victims of this type of unlawful discrimination because they are white, Asian, male or rights”.

If just a fraction of those employees were to sue Costco, the legal costs could be significant, the center said.

Costco has a chief diversity officer, but the company’s leadership ranks don’t reflect the diversity of its customers.

According to data published on its website, nearly 81% of Costco’s executives were in place, and 72% of them were men published on its website.

Saunders said members of Costco’s management team typically stay for a long time given the company’s strong and stable financial performance.

In other ways, Costco has been a bit of a maverick in the corporate world.

It doesn’t have a formal corporate PR team, and it hasn’t focused on building an online business as much as competitors Walmart and Target.

The National Center for Public Policy Research plans to present a proposal at Apple’s Feb. 25 shareholder meeting that goes beyond what the think tank wants from Costco.

The center’s resolution calls on the tech company to abolish its inclusion and capital department, policies and goals, describing them as “consistent with, if not more radical than, most corporate DEI programs.”

Apple’s board wants shareholders to vote on the proposal, saying the company strives to “create a culture of belonging where everyone can do their best work.”

JPMorgan CEO Jamie Dimon joined company leaders in supporting expanded diversity goals that some companies added after the 2020 police killing of George Floyd.

Dimon defended his bank’s DEI policies during an interview with CNBC.

“We’re going to continue to reach out to the black community, the Hispanic community, the LGBT community, the veteran community,” he said Wednesday from the World Economic Forum meeting in Davos, Switzerland .

“And everywhere I go, red states, blue states, green states, mayors, governors and they have said they love what we do.”

According to David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion and Opinion, the potential legal risks for companies that resist the conservative backlash against Dei membership at NYU School of Law.

But most large companies will have consulted their lawyers or conducted an internal self-audit after the Supreme Court’s affirmative action ruling, Glasgow said.

“So if you’re an Apple or another company that has done this, and you’re confident in the legality of your existing DEI program, … I think what you need to do right now is stand firm.” , he said.