Costco Wholesale, one of America’s most beloved retail giants, may have declared victory over critics of its diversity, equity, and inclusion (DEI) policies, but activist investors are warning that this fight is just beginning.
Despite a resounding 98 percent vote against a proposal to reassess its DEI initiatives during Friday’s shareholder meeting, the company’s defiance has only ignited further outrage among those seeking to purge ‘woke’ practices from corporate America.
Ethan Peck, deputy director of the National Center for Public Policy Research’s Free Enterprise Project (NCPR), says Costco’s decision to double down on DEI might not hold up as the political tides shift and consumer sentiment against such policies grows.
‘A board opposing a shareholder proposal is a typical and expected part of the shareholder proposal process—nearly every shareholder proposal, regardless of topic, is opposed by every board,’ Peck told Fox News.
The NCPR is a program of the right-of-center think tank based in Washington, D.C and works to promote center-right shareholder resolutions at corporate meetings.
But what may appear as an emphatic stance by Costco is, in Peck’s view, nothing more than a temporary blip.
At the heart of the drama is a proposal spearheaded by NCPR that called for Costco executives to investigate whether the company’s DEI efforts could pose risks to its profitability.
The proposal was rejected overwhelmingly, with Costco Chairman Hamilton ‘Tony’ James delivering a polished defense of the company’s policies: ‘We owe our success to the more than 300,000 employees who serve our members every day.
‘It is important that they all feel included and appreciated and that they transmit these values to our customers.’
This statement resonated with shareholders, who voted overwhelmingly against the NCPR’s challenge. However, Peck isn’t convinced.
Drawing parallels to other corporate giants including Boeing, Walmart, and McDonald’s that have reversed their DEI commitments, Peck warns that Costco’s apparent resolve may not be as strong as it seems.
‘Just months before Boeing dropped DEI, they opposed our shareholder proposal requesting an audit of their DEI efforts. So Costco doubling down on DEI in the proxy statement is not as meaningful as has been made out to be,’ Peck explained.
‘There’s still a decent chance that Costco drops DEI by the end of the year.’
Costco now finds itself as a high-profile outlier in a corporate world increasingly distancing itself from DEI initiatives.
In recent months, companies like Harley-Davidson and McDonald’s have rolled back their diversity programs amidst a wave of cultural and political opposition, emboldened by President Trump’s aggressive stance against DEI.
The former president, who has labeled such initiatives as ‘discriminatory’ and ‘absolute nonsense,’ has banned DEI from the federal government and urged corporations to abandon similar practices.
Peck believes the political winds are shifting in favor of those opposing DEI, a sentiment echoed by Trump’s sweeping executive orders.
Costco’s stance on DEI appears to be influenced, at least in part, by prominent voices within its leadership.
Board member Jeff Raikes, former CEO of the Bill & Melinda Gates Foundation and a vocal advocate of diversity initiatives, has passionately defended DEI, calling it a cornerstone of economic and business success.
‘Attacks on DEI aren’t just bad for business—they hurt our economy. A diverse workforce drives innovation, expands markets, and fuels growth. Let’s focus on building a future where all talent thrives,’ Raikes wrote in a November 2024 post on X.
But such a perspective is at odds with the growing skepticism surrounding DEI policies.
Critics argue that these initiatives prioritize optics over merit, alienate employees, and fail to deliver meaningful results.
‘This fight is far from over,’ Peck said, hinting at further challenges to come.
Prominent technology companies, including Amazon and Meta – the parent company of Facebook and Instagram – also have rolled back DEI initiatives, which are expected to face opposition during the Trump administration.
Other major companies such as Walmart, Ford, John Deere, and Tractor Supply also bowed to pressure and rowed back on their DEI commitments – and that was before Trump returned to office.
Last July, John Deere made a huge U-turn on its DEI practices in the face of opposition and a damaging boycott from farmers and conservatives
In July, John Deere made a huge U-turn on its DEI practices in the face of opposition and a damaging boycott from farmers and conservatives.
The company said in a statement it would drop ‘socially motivated messaging’ and ‘diversity quotas and pronoun identification’ and distance itself from ‘cultural awareness parades.’
The $61 billion-a-year firm had come under fire over sponsoring a Pride event for children as young as three and other DEI efforts, even as it shuttered plants and sacked American workers.
Emboldened by the Supreme Court’s decision on affirmative action at colleges and universities , conservative groups have filed lawsuits making similar arguments about corporations, targeting initiatives such as employee resource groups and hiring practices that prioritize historically marginalized groups.
Last week, Trump signed an executive order aimed at terminating DEI programs within federal agencies.
Conservatives have long condemned them, arguing they violate the U.S. Constitution by considering factors such as race, gender and sexual orientation.
The plan includes leveraging the Justice Department and other agencies to probe private companies pursuing training and hiring practices that conservative critics consider discriminatory against people who do not belong to minority groups, such as white men.
As for Costco, the National Center for Public Policy Research alleged that at least 200,000 of the company’s 300,000 employees worldwide ‘are potentially victims of this type of illegal discrimination because they are white, Asian, male or straight.’
If only a fraction of those employees were to sue Costco, the legal costs could be significant, the center said.
Costco has a chief diversity officer, but the company’s executive ranks do not reflect the diversity of its customers.
Nearly 81 percent of the executives Costco had in place last year were white, and 72 percent of them were men, according to data published on its website.
Saunders said members of Costco’s management team typically stay a long time given the company’s solid and stable financial performance.
In other ways, Costco has been a bit of a maverick in the corporate world. It doesn’t have an official corporate public relations team, and it hasn’t focused on building up online business as much as rivals Walmart and Target.
The National Center for Public Policy Research intends to present a proposal at Apple’s February 25 shareholder meeting that goes beyond what the think tank wants from Costco.
The center’s resolution asks the tech company to abolish its inclusion and equity department, policies and goals, describing them as ‘consistent with, if not more radical than, most corporate DEI programs.
Apple’s board wants shareholders to vote down the proposal, saying the company strives ‘to create a culture of belonging where everyone can do their best work.’