Costco shareholders overwhelmingly support company’s DEI policies as other major retailers pull back

Top line

In a nearly unanimous decision, Costco shareholders voted in favor of Costco’s current diversity, equity and inclusion initiatives after the National Center for Public Policy Research submitted a proxy proposal to audit the company’s “litigation, reputational and financial risks”. As the Trump administration opposes DEI, Costco is swimming against the tide, causing many major retail companies to roll back DEI initiatives, including Amazon, Walmart, McDonald’s, Lowe’s, Tractor Supply and more recently Target.

Key facts

Background

NCPPR’s proxy proposal to conduct and make public an audit of Costco’s DEI program seemed innocuous on the surface since it only called on the company to conduct a study to avoid eliminating or canceling its program. However, the company saw things differently. The board said inclusion is key to making its employees feel valued and respected and that it welcomes diverse members from “all backgrounds and backgrounds” as this promotes greater employee satisfaction and improves the “originality and creativity” of the company. Yet NCPPR claimed the company’s DEI program concealed illegal “discriminatory practices” that considered race and gender in hiring and promotions. The company defended its program as critical to its success and that all policies followed the law and Costco’s code of ethics. The shareholders agreed.

Crucial quote

“We have always been intentionally apolitical, and a welcoming workforce has been an integral part of the company’s culture and values ​​since its founding,” Costco board member Tony James said during the meeting of shareholders.

Trump administration targets Dei

In a pre-recorded message before the shareholder vote, NCPPR Deputy Director Ethan Peck said that “DEI is illegal, immoral and detrimental to shareholder value” and that it “conceals a radical Marxist agenda.” The Trump administration appears to agree and also aims to eliminate “unlawful DEI discrimination” in the private sector. In another subsequent executive order aimed at eliminating federal DEI programs, the president ordered the Office of Management and Budget to submit a report with a plan for “specific steps or measures” to deter illegal DEI programs and to identify up to nine potential organizations, including publicly traded companies,” which may be targets of litigation.

State attorneys general put companies on notice

Attorneys general from 20 states sent a letter to Fortune 100 CEOs warning that companies’ DEI programs could violate federal and state laws and that they were prepared to take legal action to “vigorously” enforce those laws. This could endanger large retailers operating in these states. States include Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, and New Mexico. New York, Oregon, Rhode Island, Vermont and Washington.

Tangent

Costco Teamsters, who represent only about 8 percent of U.S. employees, voted to strike when their current contract expires on January 31. The Teamsters say the company prioritizes corporate shareholders over the needs of “the workers who made them successful.” In association with the shareholders’ meeting, the Teamsters held a rally in front of the company’s headquarters yesterday.

Future

Apple faces an even tougher anti-DEI proposal from the NCPPR at its next shareholder meeting on February 28. The NCPPR suggests that the company “consider abolishing its inclusion and diversity program, policies, department, and goals.” The board recommends shareholders vote against the proposal, saying it is unnecessary because the company has a well-established compliance program and maintains active oversight of legal and regulatory risks. “The proposal attempts to restrict Apple’s ability to manage its own ordinary business operations, people, teams and business strategies,” the board said in its proxy filing.

Further reading

Costco successfully defends its diversity policies as other US companies scale back theirs (AP, 01/23/2025)

Conservative groups push banks to abandon DEI: Here are the organizations ending diversity programs – full list (Forbes, 01/22/2025)

Trump’s diversity orders shake CEOs: What companies should know about new DEI rules (Forbes.com, 01/23/2025)

Costco Teamsters vote in favor of strike, challenging Costco’s pro-worker stance (Forbes, 01/22/2025)

McDonald’s joins the stampede of companies opting out of DEI (Forbes.com, 1/8/2025)

Costco caught in crosshairs of DEI controversy (Forbes, 1/1/2025)

Inside Costco’s Defense of DEI Efforts: Lessons for Business Leaders (Forbes, 1/2/20205)