Costco Board Pushes Back At Anti DEI Activists
Costco’s board of directors unanimously pushed back against a request by an activist shareholder proposal from the National Center for Public Policy Research, a conservative think tank, which urged the company to evaluate the financial risks associated with its Diversity, Equity, and Inclusion (DEI) initiatives, recently rebranded as "People & Communities."
Citing the 2023 Supreme Court decision in SFFA v. Harvard, which deemed race-based admissions policies unconstitutional, the activist shareholder suggested that Costco's policies could lead to "illegal discrimination" against straight, white, male, and/or Asian employee groups, potentially resulting in significant legal costs.
The National Center for Public Policy Research pointed to instances where major corporations faced litigation or reduced DEI commitments following legal challenges. They cited high-profile lawsuits, including a $25 million judgment against an employer accused of reverse discrimination, and note that several Fortune 100 companies, such as Microsoft, Meta, and Zoom, have scaled back DEI initiatives.
"Costco risks facing similar financial and reputational consequences if it continues to prioritize DEI practices that may be deemed discriminatory," the group stated. The proposal emphasizes concerns about potential lawsuits from employees who feel marginalized, estimating that such legal actions could result in billions in damages.
The group also criticized Costco's rebranding of its DEI program as insufficient, claiming that underlying practices—such as hiring preferences and supplier diversity programs—remain unchanged.
Costco's Board of Directors, however, has unanimously recommended a vote against the proposal, asserting that the company's DEI efforts align with its core values and contribute to long-term success. The Board argues that diversity enhances employee satisfaction, innovation, and customer engagement, all of which are vital to Costco's business model.
"Our commitment to an enterprise rooted in respect and inclusion is both appropriate and necessary," the Board stated. "Diversity and inclusion help us attract and retain talented employees, serve a diverse membership, and foster creativity within our supplier base."
The Board also asserted that Costco’s practices comply with all applicable laws, including the evolving legal landscape shaped by recent Supreme Court decisions. They dismissed the proponent's legal concerns as speculative and argued that the request for a report reflects a broader policy bias against diversity initiatives
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