When an anti-DEI activist took a swing at Costco, the board hit back

A Costco shareholder proposal brought by a conservative activist asked the company to probe its diversity, equity and inclusion policies, with an eye toward eliminating them.

The Issaquah, Washington-based company’s board wasn’t amused with the pitch.

The National Center for Public Policy Research, a Washington, D.C.-based conservative think tank, wants the company to evaluate its DEI policies. The thrust of the proposal is that certain DEI initiatives could open Costco up to financial risks over discrimination lawsuits from employees who are “white, Asian, male or straight,” according to a regulatory filing that outlines what shareholders will vote on during an upcoming shareholders meeting.

The company’s board of directors unanimously urged shareholders to reject the proposal. In a statement, the board cast the proposal’s concerns as dubious as the company already regularly evaluates its practices, and made the case that Costco’s success depends on establishing a racially diverse, inclusive workplace.

“We believe that our diversity, equity and inclusion efforts are legally appropriate, and nothing in the (Center for Public Policy Research) proposal demonstrates otherwise,” the board’s statement said.

The statement went on to rebuke the Center for Public Policy Research, saying that they and others were the ones responsible for inflicting financial and legal burdens on companies.

“The proponent’s broader agenda is not reducing the risk for the Company but abolition of diversity programs,” the board said.

During an annual meeting for a public company like Costco, shareholders vote on items put forth by the company. Those usually include approving the pay for top executives and selecting board members. But they’ll also vote on shareholder proposals, which shareholders make as a request to change something about the company or to address a pressing issue the board hasn’t brought up.

Costco, which has more than 300,000 employees around the globe, said its diversity efforts have helped the company by fostering creativity and innovation in the merchandise it can offer to a diverse membership.

“Combined with our obedience to the law, service to our employees, members and suppliers has rewarded our shareholders,” the board said.

While Costco is standing firm with its DEI initiatives, other companies have recently retreated from theirs.

Those shifts have occurred since the U.S. Supreme Court’s ruling that ended affirmative action in college admissions in June 2023. The Center for Public Policy Research proposal argues that after the ruling, corporations are open to more discrimination lawsuits.

Last summer, John Deere and Tractor Supply both announced sweeping changes to their DEI efforts. John Deere said it will no longer sponsor “social or cultural awareness” events and Tractor Supply said it was eliminating all DEI roles and retiring its commitments.

Walmart, the country’s largest employer, dropped several of its diversity policies in November, including one that gave priority treatment to suppliers owned by women or people of color.

The Center for Public Policy Research proposal pointed to both John Deere and Tractor Supply as examples of companies unburdening themselves from the legal risks of DEI policies. But it also mentioned a false claim about Microsoft that swept through headlines in July.

The tech giant laid off two employees on the company’s events team that worked with the talent, diversity, inclusion and learning team. It was first reported by numerous outlets that Microsoft had axed an entire DEI team. Microsoft Chief Diversity Officer Lindsay-Rae McIntyre sent an internal memo in late July that clarified the team had not been cut.

The two employees did not report to Microsoft’s diversity and inclusion team and had been laid off because their roles were redundant, according to the company.

“As we move forward, our D&I commitments remain unchanged,” Microsoft spokesperson Jeff Jones said in July. “Our focus on diversity and inclusion is unwavering and we are holding firm on our expectations, prioritizing accountability, and continuing to focus on this work.”

The challenges to DEI policies and initiatives are likely to increase with President-elect Donald Trump entering the White House.

Stephen Miller, a fixture of the first Trump administration and incoming deputy chief of staff for policy, launched the America First Legal Foundation, a group that has targeted corporate DEI policies.

The Center for Public Policy Research announced earlier this year that shareholder activists involved with it were presenting proposals to American Express, Intel, General Electric, Progressive, Ford and Duke Energy. All of them denounced DEI, decarbonization and disarmament policies.