Costco, the American big-box shopping behemoth beloved for its bargains, has long had a reputation as a promoter of Diversity, Equity and Inclusion (DEI) initiatives. Now, despite conservative political blowback against such programs across multiple business sectors, Costco is maintaining its stance that its DEI practices enhance its business and its bottom line.
As rightwing MAGA adherents increasingly agitate for the elimination of DEI in every sector of America — especially in schools, business, and government where DEI has taken root in an effort to grow curricula and workforces that reflect American diversity — many companies are paring back their efforts in response to the pressure.
In addition, recent court decisions have largely stripped universities of their ability to consider race as a factor in their admissions process, curtailing what DEI supporters consider the correctives of its inclusion-oriented policies.
(NOTE: DEI is not just about race, but as the majority of college matriculators are women, DEI efforts to raise female headcounts in higher education aren’t part of the equation.)
MAGA anti-DEI crusaders make a case that preferential treatment of historically disenfranchised groups (women, Blacks, Latinos, et al) in hiring is effectively “reverse discrimination” against qualified white males — and that it devalues merit as the crucial factor. (Besides being “unfair,” they contend, this practice makes a company or university less productive and competitive by lowering its standards.)
“Ethan Peck of the conservative think tank @NationalCenter for Public Policy Research, which challenged Nasdaq’s diversity rules that led to the court’s ruling, said dropping DEI will benefit corporate stakeholders in the long run.
“Hiring ‘the best people for the job over time… pic.twitter.com/5dXzrxArlw
— National Center for Public Policy Research (@NationalCenter) December 21, 2024
DEI advocates defend the practice as both a corrective to a history of discrimination and as a pragmatic business methodology, contending that both customers and employees benefit from innovative companies that are less insular and homogeneous.
Corporate agitators trying to force companies to abandon DEI often use legal threats, pointing to potential lawsuits against them for discrimination.
In Costco’s case, its Board of Directors responded directly to such a warning from the National Center for Public Policy Research — a “free-market, independent conservative think tank” — which wants Costco shareholders to consider scuttling the company’s DEI initiatives or risk facing legal problems for discrimination against the “white, Asian, male or straight” people it claims may be undermined by its inclusive policies.
The NCPPR contends it’s “clear that DEI holds litigation, reputational and financial risks to the Company, and therefore financial risks to shareholders.”
Costco calls out this threat, saying essentially that the NCPPR is not a concerned party merely warning presciently of an outside threat — but rather that NCPPR and groups like them are the threat.
Costco writes: “The proponent professes concern about legal and financial risks to the company and its shareholders associated with the diversity initiatives,” yet it is they who are “inflicting burdens on companies with their challenges to longstanding diversity programs.”
NCPPR asked shareholders to vote to evaluate the “risks” of such policies, citing an instance where an unnamed company was successfully sued for $25 million in a DEI case for discriminating against a white man. (The activists also mention John Deere, Meta, Alphabet, Zoom and other well-known companies they say have pared back or eliminated DEI initiatives.)
The Costco Board nevertheless advised shareholders to vote against taking that DEI risk evaluation action, asserting that the inclusive policies remain integral to the Costco brand and its customer experience. (One assertion implied by Costco’s response is that the “reputational risk” NCPPR warns against is greater if the company abandons, rather than sustains, its principles on the DEI issue.)
“We believe (and member feedback shows) that many of our members like to see themselves reflected in the people in our warehouses with whom they interact,” the proxy statement to shareholders reads, addressing “PROPOSAL 4: SHAREHOLDER PROPOSAL REQUESTING REPORT ON THE RISKS OF MAINTAINING DEI EFFORTS.”
Some recent pertinent legal decisions have affirmed the importance of seeking diversity despite the risk of potentially hindering opportunities for members of historically privileged groups like white males.
In a major decision, a federal district court upheld the race-conscious admissions process at the United States Naval Academy, deciding that the Naval Academy “established a compelling national security interest in a diverse officer corps” for the U.S. Navy and Marines, noting specifically the advantages of an “officer corps that represents the country it protects and the people it leads.”
The Costco Board has eleven members, the majority of whom are white. The Chairman of the Board, Hamilton E. James, is a billionaire former Executive Vice Chairman at The Blackstone Group, the enormous asset management firm run by Steven A. Schwarzman, a top Donald Trump supporter and donor. James, who was appointed to the President’s Intelligence Advisory Board by President Joe Biden, has been a board member at Costco since 1988.