Costco defends its diversity policies as other US companies scale back theirs

NEW YORK (AP) — Costco is pushing back against a shareholder proposal that urges the wholesale club operator to conduct an assessment of any business risks posed by its diversity, equity 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 proposalarguing that Costco’s DEI initiatives carry “litigation, reputational and financial risks to the company, and therefore financial risks to shareholders.”

The think tank made a similar proposal to Apple, and as some American companies who have already reduced or withdrawn their diversity policies, cited a decision of the Supreme Court of the United States in July 2023, which banned affirmative action in college admissions.

Costco officials could not be reached for comment on DEI’s 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 employee and supplier diversity has, they say, fostered “creativity and innovation in the goods and services we offer” and led to greater customer satisfaction among shareholders . Costco Members.

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

“I think people generally have confidence in the management of Costco, and there’s an attitude of, ‘Why shake things up?’ It sails really 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 brandsincluding 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 restricting the company’s DEI policies, a move that they described as “discouraging”.

Leading technology companies including Amazon and Meta – the parent company of Facebook and Instagram – have also canceled DEI initiatives, which are expected to face opposition from the administration of President Donald Trump.

Emboldened by the Supreme Court’s decision on affirmative action in colleges and universities, conservative groups filed lawsuits making similar points about businesses, targeting initiatives like employee resource groups and hiring practices that prioritize historically marginalized groups.

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

The plan calls for mobilizing the Justice Department and other agencies to investigate private companies that engage in training and hiring practices that conservative critics view as discriminatory against non-state workers. minority groups, such as white men.

As for Costco, the National Center for Public Policy Research said 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 heterosexual. If just a fraction of those employees 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. Nearly 81% of Costco executives in place last year were white, and 72% of them were men, according to data published on its website. Saunders said members of Costco’s management team 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 public relations team and hasn’t focused as much on building online business as rivals Walmart and Target.

The National Center for Research on Public Policy intends to present a proposal at Apple’s Feb. 25 shareholder meeting, it goes beyond what the think tank expects from Costco. The center’s resolution calls on the tech company to abolish its inclusion and equity 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 against 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 this week to take a stand in support of expanded diversity goals that some companies added after 2020. police killing of George Floyd. Dimon defended his bank’s DEI policies during an interview with CNBC.

“We are going to continue to reach out to the black community, the Hispanic community, the LGBT community and the veteran community,” he said Wednesday at the World Economic Forum meeting in Davos, in Swiss. “And everywhere I go, red states, blue states, green states, mayors, governors and they have said they love what we do.”

Trump’s actions this week increase potential legal risks for companies resisting the conservative backlash against DEI, according to David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion and Belonging 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 Apple or another company that has done this and you’re confident in the legality of your existing DEI program, … I think what you should do now is stand firm,” he said. -he declared.