A proposal for the wholesale club operator to assess potential risks associated with its diversity, equity, and inclusion policies was turned down by Costco shareholders.
More than 98% of shares voted against the idea, according to preliminary findings presented by Costco officials at its annual meeting on Thursday.
The petition was presented by the conservative Washington-based think tank National Center for Public Policy Research, which claimed that Costco’s DEI projects posed financial, reputational, and legal dangers to the business, and consequently, to shareholders.
In a similar recommendation to Apple, the think group referenced a July 2023 ruling by the U.S. Supreme Court that prohibited affirmative action in college admissions, just like several other American firms that have already reduced or backed off from their diversity initiatives.
However, the board of directors at Costco unanimously decided to request that shareholders reject the move. According to the board, it is appropriate and vital for us to be committed to an enterprise that is based on respect and inclusiveness. This proposal’s required report would not offer any significant new information.
The directors’ speech to shareholders explains how, in their opinion, having a diverse workforce and suppliers has increased customer happiness among Costco members and encouraged creativity and innovation in the goods and services we provide.
Neil Saunders, managing director of the retail sector of consulting firm GlobalData, stated ahead of the meeting that Costco can be sure the plan will be turned down.
I believe that most people trust Costco’s management, and there’s a mindset of “why upset the status quo?” According to Saunders, it’s sailing really well.
Costco’s public support for diversity, equity, and inclusion initiatives stands in stark contrast to other major consumer companies including Walmart, McDonald’s, and John Deere’s recent stances.
Amalgamated Bank and Oxfam America were among the more than thirty Walmart shareholders who criticized the company’s decision last week and urged the CEO to explain the commercial impact of reducing the company’s DEI standards.
The administration of President Donald Trump is likely to oppose DEI projects, which have been rolled back by prominent digital giants like Amazon and Meta, the parent company of Facebook and Instagram.
Encouraged by the Supreme Court’s ruling on college and university affirmative action, conservative organizations have sued corporations on similar grounds, focusing on programs like employee resource groups and hiring procedures that give preference to historically underrepresented groups.
Trump issued an executive order on Monday to end DEI initiatives in federal agencies. Conservatives have long denounced them, claiming that by taking into account characteristics like sexual orientation, gender, and ethnicity, they violate the U.S. Constitution.
The plan calls for using the Justice Department and other agencies to investigate private corporations that engage in recruiting and training practices that conservative critics believe discriminate against white men and other non-minority individuals.
According to the National Center for Public Policy Research, at least 200,000 of Costco’s 300,000 workers globally may be subjected to this kind of unlawful discrimination according to their gender identity—white, Asian, male, or straight. According to the center, legal fees may be high even if only a small percentage of those workers choose to sue Costco.
Despite having a chief diversity officer, Costco’s leadership levels do not adequately represent the variety of its clientele. According to data posted on its website, 72% of the executives employed by Costco last year were men, and nearly 81% of them were white. According to Saunders, Costco’s management team members usually remain for a long period because of the company’s steady and reliable financial results.
In other respects, Costco has been somewhat of a trailblazer in the business sector. It lacks a formal corporate public relations department and hasn’t made as much of an effort to expand its internet presence as competitors Walmart and Target.
At Apple’s shareholder meeting on February 25, the National Center for Public Policy Research plans to make a recommendation that goes beyond what the think tank is requesting from Costco. As being on par with, if not more radical than, the majority of corporate DEI programs, the center’s resolution requests that the tech business eliminate its inclusion and equality department, policies, and goals.
As the firm works to foster a culture of belonging where everyone can perform at their highest level, Apple’s board is urging shareholders to reject the plan.
Jamie Dimon, the CEO of JPMorgan, joined other business executives this week in expressing support for the broader diversity objectives that several corporations implemented following George Floyd’s death at the hands of police in 2020. In an interview with CNBC, Dimon defended the DEI policies of his bank.
Speaking Wednesday from the World Economic Forum gathering in Davos, Switzerland, he stated, “We will keep reaching out to the Black community, Hispanic community, LGBT community, and veterans community.” Everywhere I travel, mayors, governors, and people from red, blue, and green states tell me they enjoy what we do.
David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion and Belonging at NYU School of Law, said Trump’s actions this week raise the possible legal consequences for businesses who oppose the conservative backlash against DEI. However, Glasgow noted that following the Supreme Court’s affirmative action decision, the majority of large corporations will have either consulted their attorneys or conducted an internal self-audit.
Therefore, he continued, “I think what you should do right now is stand firm if you are an Apple or another company that has done that and you are confident in the legality of your existing DEI program.”
