Costco says it’s keeping its diversity, equity and inclusion practice despite pressure from an outside group amid a wave that sees other companies rolling back the policy in recent months.
The retailer’s board of directors urged shareholders to vote against recommendations from the conservative National Center for Public Policy Research that requested the wholesale giant conduct and publish a report on the risks of maintaining the DEI program.
The think tank argued in its proposal that the Supreme Court’s 2023 decision that race-based affirmative action programs in college admissions processes violated the Fourteenth Amendment has called into question the legality of DEI programs.
The center said that since the court’s decision, other companies have cut back or eliminated DEI out of fear of legal, reputational or financial risks.
Indeed, Toyota, Meta, Walmart, Ford and others have scaled back or ditched DEI altogether, and the center contended that while Costco rebranded its equity program, “sticking a new label on discriminatory practices does not protect Costco and its shareholders from these risks.”
“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 think tank argued in its proposal. “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.”
Costco’s board of directors fired back against the request and unanimously recommended that shareholders vote against it. Voting on the center’s proposal is slated for next month.
The company contended that its DEI program boosts stores’ “treasure hunt” shopping atmosphere and allows for more diverse employees serving a customer base of many backgrounds.
Costco’s board of directors accused the think tank of being “responsible for inflicting burdens on companies with their challenges to longstanding diversity programs.”
“The proponent’s broader agenda is not reducing risk for the company but abolition of diversity initiatives,” the board said.
