Costco’s board wants shareholders to vote no on challenging the DEI program

Costco Board of Directors is urging shareholders to vote against a proposal that would eliminate the wholesale retailer’s diversity, equity and inclusion (DEI) program.

“Our success at Costco Wholesale has been built on serving our critical stakeholders: employees, members and suppliers. Our efforts around diversity, equity and inclusion follow our code of ethics: To our employees, these efforts are built around inclusion – having all of our employees feel valued and respected,” wrote the board of directors in a message to investors previously reported by The hill “Our efforts at diversity, equity and inclusion remind and reinforce with everyone in our Company the importance of creating opportunities for everyone. We believe that these efforts strengthen our ability to attract and retain employees who help to our successful business. This ability is critical because we owe our success to our more than 300,000 employees around the globe.”

The message was sent ahead of Costco’s annual shareholder meeting scheduled for January 23, 2025.

Shareholders will vote on a proposal filed by the National Center for Public Policy Research that challenges the legality of Costco’s DEI program following the Supreme Court’s ruling in SFFA v. Harvard that discrimination on the basis of race in college admissions violates the equal protection clause of the 14th Amendment.

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The proposal mentions how the attorneys general of 13 states warned the Fortune 100 companies that the decision involved corporate DEI programs, and a number of lawsuits were filed.

Customers enter a Costco Wholesale Corp. store. in Hawthorne, California on June 12, 2024. (PATRICK T. FALLON/AFP via Getty Images/Getty Images)

Companies that have since canceled DEI commitments and/or fired employees from DEI departments include Alphabet, Meta, Microsoft, Zoom and John Deere, the proposal says, although Costco’s counsel says Microsoft later clarified that it had removed two redundant DEI roles, but also. his focus on diversity and inclusion “remains unwavering.”

“Yet Costco still has such a program, although it was apprehensive enough to admit it, as it recently and quietly changed its DEI program to ‘People and Communities,'” the National Center for Public Policy Research wrote in its shareholder proposal. “But slapping a new label on discriminatory practices does not protect Costco and its shareholders from these risks.”

The foundation complained that Costco’s rebranded program still openly expresses a “commitment to equity,” which he claims means equality of outcome, not opportunity – and that the company still employs a “Chief Diversity Officer”, still has a supplier diversity program that selects suppliers based on their race and gender, it also seems to have made in race and gender hiring and promotion “and also contribute shareholder money to organizations that advance DEI’s discriminatory agenda.”

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Customers wait in line to check out at a Costco store on December 11, 2024, in Novato, California. (Justin Sullivan/Getty Images/Getty Images)

“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 proposal states. “As a result, even if only a fraction of those employees were to file a lawsuit, and only some of those were successful, the cost to Costco could be tens of billions of dollars.”

Despite the Supreme Court’s decision, Costco’s Board of Directors stated that its DEI practices “are legally permissible, and nothing in the proposal demonstrates otherwise.” The board also said the National Center for Public Policy Research’s request for a study of Costco’s DEI practices “reflects a policy bias” and threatens to strain the company’s resources.

Citing a 2023 federal district court decision, the board argued that “the broader agenda of the National Center for Public Policy Research does not reduce risk to the Company, but the abolition of the ‘diversity initiatives’. The Board maintains that the foundation will continue its “shareholder activism,” noting how the National Center for Public Policy Research has already expressed a commitment to “fight back” against “the evils of awakened the political capital and companies.”

A Costco store on July 11, 2024, in Richmond, California. (Justin Sullivan/Getty Images/Getty Images)

“We welcome members from all walks of life and backgrounds. As our membership diversifies, we believe that serving with a diverse group of employees increases satisfaction,” Costco’s board wrote, defending its DEI practices. “Having diversity in our supplier base, including tailored attention to small businesses, is beneficial for many of the same reasons that diversity benefits our Company. We believe it promotes creativity and innovation in merchandise and the services we offer our members”.

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Fox News Digital has reached out to Costco and the National Center for Public Policy Research for additional comment.

“DEI is the redistribution of opportunity – for employees, potential employees and suppliers – on the basis of race and gender,” Ethan Peck, deputy director for the Free Enterprise Project of the National Center for Public Policy Research said in a statement. “This is not only unethical, it is illegal, and runs the risk of future litigation. It also comes with sacrificing merit – and therefore excellence and innovation (which the company has a fiduciary duty to shareholders to maximize at to the best of his ability) – at the alter of arbitrarily determined diversity.”