Costco defends its diversity policies as other US companies scale theirs back

Core Viewpoint - Costco is opposing a shareholder proposal that calls for an evaluation of business risks associated with its diversity, equity, and inclusion (DEI) practices, with a vote expected during the company's annual meeting [1][3]. Group 1: Proposal Details - The National Center for Public Policy Research submitted the proposal, claiming that Costco's DEI initiatives pose "litigation, reputational and financial risks to the company, and therefore financial risks to shareholders" [2][6]. - The proposal is part of a broader trend where conservative groups are challenging corporate DEI initiatives, especially following a U.S. Supreme Court decision that outlawed affirmative action in college admissions [2][8]. Group 2: Company Response - Costco's board of directors unanimously voted to recommend that shareholders reject the proposal, asserting that their commitment to respect and inclusion is essential and that the requested report would not yield meaningful information [3][10]. - The board emphasized that diverse employees and suppliers contribute to creativity, innovation, and customer satisfaction [3]. Group 3: Market Context - Analysts believe that Costco's management is generally trusted, and there is a prevailing sentiment among shareholders to maintain the current course without disruption [4]. - Other major companies, such as Walmart and McDonald's, have recently faced shareholder scrutiny regarding their DEI policies, indicating a shifting landscape in corporate diversity initiatives [7][9]. Group 4: Legal and Social Implications - The proposal highlights concerns that a significant portion of Costco's workforce, approximately 200,000 out of 300,000 employees, could be seen as victims of illegal discrimination due to the company's DEI practices [10][11]. - The current political climate, including actions taken by former President Trump to terminate DEI programs within federal agencies, adds complexity to the corporate landscape regarding diversity initiatives [9][15].