Costco defends DEI program as other major retailers drop controversial diversity push
Costco's board of directors is urging shareholders to vote against a proposal that would eliminate the wholesale retailer's diversity, equity and inclusion (DEI) program.
"Our success at Costco Wholesale has been built on service to our critical stakeholders: employees, members, and suppliers. Our efforts around diversity, equity and inclusion follow our code of ethics: For our employees, these efforts are built around inclusion – having all of our employees feel valued and respected," the board of directors wrote in a message to investors previously reported by The Hill. "Our efforts at diversity, equity and inclusion remind and reinforce with everyone at our Company the importance of creating opportunities for all. We believe that these efforts enhance our capacity to attract and retain employees who will help our business succeed. This capacity is critical because we owe our success to our now over 300,000 employees around the globe."
The message was sent ahead of Costco's annual meeting of shareholders scheduled for Jan. 23, 2025.
Shareholders will vote on a proposal brought by the National Center for Public Policy Research challenging the legality of Costco's DEI program after the Supreme Court's ruling in SFFA v. Harvard that discriminating on the basis of race in college admissions violates the equal protection clause of the 14th Amendment.
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The proposal cites how attorneys general of 13 states have warned Fortune 100 companies that the ruling implicated corporate DEI programs, and a number of lawsuits have been filed.
Companies that have since rolled back DEI commitments and/or laid off employees from DEI departments include Alphabet, Meta, Microsoft, Zoom and John Deere, the proposal says, although Costco's board says Microsoft later clarified that it had eliminated two redundant DEI roles, yet its focus on diversity and inclusion "remains unwavering."
"And yet Costco still has such a program, though it was apprehensive enough to recognize this as it recently and quietly rebranded its DEI program to ‘People and Communities,’" the National Center for Public Policy Research wrote in its shareholder proposal. "But sticking a new label on discriminatory practices does not protect Costco and its shareholders from these risks."
The foundation decried that Costco's renamed program still openly expresses a "commitment to equity," which it argues means equality of outcome, not opportunity – and that the company still employs a "Chief Diversity Officer," still has a supplier diversity program that picks suppliers based on their race and sex, still appears to factor in race and sex in hiring and promotion "and still contributes shareholder money to organizations that advance the discriminatory agenda of DEI."
"With 310,000 employees, Costco likely has at least 200,000 employees who are potentially victims of this type of illegal discrimination because they are white, Asian, male or straight," the proposal argues. "Accordingly, even if only a fraction of those employees were to file suit, and only some of those prove successful, the cost to Costco could be tens of billions of dollars."
Despite the Supreme Court ruling, Costco's board of directors asserted that its DEI practices "are legally appropriate, and nothing in the proposal demonstrates otherwise." The board also claimed that the National Center for Public Policy Research's request for a study of Costco's DEI practices "reflects a policy bias" and threatens to burden company resources.
Citing a 2023 federal district court decision, the board argued that the National Center for Public Policy Research's "broader agenda is not reducing risk for the Company but abolition of diversity initiatives." The board claims that the foundation is continuing its "shareholder activism," noting how the National Center for Public Policy Research has previously expressed a commitment to "fighting back" against "the evils of woke politicized capital and companies."
"We welcome members from all walks of life and backgrounds. As our membership diversifies, we believe that serving it with a diverse group of employees enhances satisfaction," Costco's board wrote, defending its DEI practices. "Having diversity in our supplier base, including appropriate attention to small businesses, is beneficial for many of the same reasons diversity benefits our Company. We believe that it fosters creativity and innovation in the merchandise and services that we offer our members."
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Fox News Digital reached out to Costco and the National Center for Public Policy Research for additional comment.