Costco Shareholders Overwhelmingly Support DEI Programs Amid Broader Corporate Scrutiny

Costco shareholders recently delivered a resounding vote of confidence in the company's Diversity, Equity, and Inclusion (DEI) programs. At the annual meeting, more than 98% of shareholders voted against a proposal that sought a report on the risks associated with maintaining DEI policies. This proposal, submitted by the National Center for Public Policy Research, a free-market think tank, aimed to assess potential business risks linked to these initiatives.

The proposal's rejection reflects a broader trend in corporate America, where similar shareholder resolutions garnered less than 2% support on average last year. The vote at Costco not only underscores investor support for DEI programs but also stands in contrast to the scrutiny many such policies face. Companies like Meta Platforms, Amazon.com, JPMorgan Chase, and Boeing have either modified their DEI initiatives or ended their participation in related equity indexes. This vote at Costco was seen as an early test of investor views on the value of corporate DEI programs.

Costco, which employs over 300,000 people globally, including approximately 219,000 in the United States, saw its board actively urging shareholders to vote against the proposal. The board argued that producing the report would not provide "meaningful additional information" to shareholders. This stance was echoed by Lindsey Stewart of Morningstar Sustainalytics, who noted the significant aspect of the vote at Costco.

"suggests that even if the political environment on inclusion in the workplace is changing, investors' low propensity to support anti-DEI resolutions is thus far unchanged." – Lindsey Stewart

The proposal at Costco arose in a climate where corporate DEI programs have faced increased scrutiny. Many companies enhanced their DEI efforts following the Black Lives Matter movement in 2020. However, some have since adjusted their goals or ended participation in certain diversity initiatives. Furthermore, former U.S. President Donald Trump issued an executive order directing federal agencies and contractors to dismantle DEI policies, reflecting a shift in political attitudes towards these programs.