Costco Rejects Shareholder Demand to Back Out of DEI Hiring

the Costco The Board rejected the anti-diversity, equity and inclusion (DEI) shareholders, who suggested the wholesale corporation to re-examine the “illegal discrimination” program.

Newsweek Costco has been reached for comment.

Why It Matters

DEI programs have become the basis of institutional policies and a flashpoint in legal debates. Notable court cases, such as Students for Fair Admissions v. Harvard and Fisher v. University of Texaschallenged affirmative action practices, questioning whether racially motivated claims violated constitutional principles of equal protection. Similarly, DEI’s workplace initiatives face scrutiny under Title VII of the Civil Rights Act.

What to Know

The Costco board responded to a group of shareholders, unanimously recommending a vote against the proposal to “report risks to the sustainability of DEI’s efforts.” Shareholders suggested Costco employees could potentially be victims of “illegal discrimination because they are white, Asian, male or straight,” which would generate “tens of billions of dollars” in legal costs for the company.

“Our Board has considered this proposal and believes that our commitment to a business rooted in respect and inclusion is appropriate and necessary,” the response read. “Our success at Costco Wholesale has been built on service to our critical stakeholders: employees, members and suppliers.

The Board noted that it is working so that all of its more than 300,000 employees “feel valued and respected.” They maintain that by having a diverse group of employees, Costco is able to gain more insight and creativity in product offerings. Customers can also “see themselves displayed by people in our warehouses that they interact with.”

“Having diversity in our supplier base, including a focus on small businesses, is beneficial for many of the same reasons that diversity benefits our Company,” the Board wrote. “We believe this promotes creativity and innovation in the products and services we offer our members.”

How It Began

Some shareholders have put forward a proposal that originates from Supreme Court ruled the SFFA vs. Harvardthat the Court said that the college’s use of race as a factor in admissions is a violation of 14^th Amendment.

The proposal suggests that a Starbucks manager, who won a $25.6 million lawsuit after arguing he was fired for being white, thanks to the Supreme Court ruling. The proposal also continues the layoffs of DEI staff and related investments in companies such as Meta, Microsoft and Zooming.

“It is clear that the DEI holds the litigation, reputation and financial risks of the Company, and therefore financial risks of the shareholders,” the proposal reads. “And yet Costco still has such a program, even if it is afraid enough to recognize it as such that it has recently and quietly rebranded its DEI program to ‘People and Communities.'”

The Costco Board said they “regularly evaluate” the practices the company maintains to be “in compliance with the law including changing Supreme Court decisions.”

“We believe our diversity, equity and inclusion efforts are legally appropriate, and nothing in the proposal indicates otherwise,” the Board wrote. “Our focus on diversity, equity and inclusion is not, however, just to improve financial performance but to improve our culture and the well-being of the people whose lives we influence.”

What People Are Saying

The people of X, formerly known as Twitterpraised the Costco Board for its response, some even calling it “socially responsible capitalism.”

What Happened Next

The annual meeting of shareholders will be held via live webcast on Thursday, January 23 at 5 pm EST. Part of the time will allow for a vote on the shareholder proposal “if properly presented at the meeting.” Only shareholders before November 15 are allowed to vote at the meeting.