"Inclusion is appropriate and necessary": Costco defends its DEI policies as other US companies scale them back

Wholesale corporation Costco has announced that it will not compromise its diversity, inclusion, and inclusion (DEI) policies. This decision dates back to when the US-based think tank organization The National Center for Public Policy Research (NCPPR) sent a proposal to the retail company suggesting that its DEI initiatives could pose risks, such as lawsuits.

NCPPR claimed that the DEI initiatives could also harm the company's reputation, and incur financial losses, ultimately affecting shareholders. However, the shareholders rejected the proposal at the January 23, 2025, annual meeting, where over 98% of votes fell against it. According to Costco’s board of directors,

“Our commitment to an enterprise rooted in respect and inclusion is appropriate and necessary. The report requested by this proposal would not provide meaningful additional information.”

According to WOSU, the board members emphasized that its diversity, equity, and inclusion efforts were aimed at fostering opportunities for everyone within the company, which they believe helped attract and retain talented employees.

The board also consistently reviewed its practices to ensure legal compliance, including updates based on Supreme Court decisions. It maintained that its DEI initiatives were lawful and that the proposal provided no evidence to suggest otherwise.

Costco's leadership emphasized that diversity among employees and suppliers has helped enhance creativity, innovation, and customer satisfaction.

Before the shareholder meeting, retail expert Neil Saunders expressed confidence that the proposal questioning the corporation’s diversity efforts would likely be rejected, noting that shareholders generally trust the company's leadership and see no reason for major changes.

The corporation's open support for diversity, equity, and inclusion programs contrasts with recent stances from other major brands, such as Walmart, McDonald’s, and John Deere.

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What did the NCPPR say about Costco’s DEI policy?

NCPPR referred to the 2023 Supreme Court case as part of its proposal for Costco, urging the company to assess potential financial risks tied to its DEI programs. Even a small number of successful lawsuits could result in costs amounting to billions, they claimed.

They argued that these initiatives might expose the corporation to employment discrimination lawsuits. It estimated that a significant portion of the company’s 310,000 employees, potentially 200,000, could claim discrimination based on being white, Asian, male, or straight.

While the corporation has a chief diversity officer, its executive team reportedly lacks diversity. Data from last year showed that 81% of Costco's executives were white, and 72% were men.

Saunders explained that the company's strong financial performance has contributed to long executive tenures, which may influence these statistics.

The NCPPR also highlighted warnings from some state attorneys general about potential legal vulnerabilities following the Supreme Court's decision in Fair Admissions v. Harvard.

For instance, Missouri Attorney General Andrew Bailey wrote to Fortune 100 CEOs in 2023, emphasizing that racial quotas and race-based preferences in hiring and contracts could now be deemed illegal.

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Quoted by WOSU, according to Costco's internal report from December, its U.S. non-management workforce was 44.2% white, 33.1% Hispanic, 9.3% Black, and 8.5% Asian. The 11-member Board of Directors included four women and one person of color, while 27.7% of U.S. officers identified as women, and 19.4% as non-white.