Costco Faces Shareholder Proposal on Diversity, Equity, and Inclusion

Costco Faces Shareholder Proposal on Diversity, Equity, and Inclusion

Costco is facing a shareholder proposal urging the company to evaluate potential business risks associated with its diversity, equity, and inclusion (DEI) practices. The proposal, submitted by the National Center for Public Policy Research (NCPPR), argues that Costco's DEI initiatives could lead to legal, reputational, and financial risks for the company and its shareholders.

NCPPR's proposal echoes similar efforts targeting other companies, including Apple. The think tank cites the recent Supreme Court decision outlawing affirmative action in college admissions as justification for its concerns.

Costco's board of directors unanimously recommends shareholders reject the proposal. They believe their commitment to diversity and inclusion is essential for fostering creativity, innovation, and customer satisfaction. They also argue that the requested report wouldn't provide meaningful additional information.

Analysts believe the proposal is unlikely to succeed, given Costco's strong financial performance and shareholder confidence in its management.

Costco's stance on DEI contrasts with recent moves by other major companies like Walmart, McDonald's, and John Deere, which have scaled back or retreated from their diversity initiatives.

The NCPPR claims that at least 200,000 of Costco's 300,000 employees could be victims of illegal discrimination based on race, gender, or sexual orientation. They argue that potential lawsuits could result in significant legal costs for the company.

Despite the proposal, Costco's executive ranks remain predominantly white and male. However, the company's long-standing and stable financial performance has typically resulted in low turnover among its management team.

The NCPPR plans to present a similar proposal at Apple's upcoming shareholder meeting, calling for the abolition of the company's entire DEI department and policies. Apple's board recommends shareholders reject the proposal, emphasizing their commitment to creating a culture of belonging for all employees.