• Costco appears to be bucking the anti-DEI wave with its defense of its diversity initiatives.
• Data published last year suggests shareholders largely support diversity efforts.
• Costco's move challenges the perceived popularity of anti-DEI proposals.

Costco's board didn't mince words when it came to supporting the company's stance on diversity, equity, and inclusion — a move that openly challenges the staying power of DEI critics ahead of a new presidential administration that has been critical of the measures.

"Our commitment to an enterprise rooted in respect and inclusion is appropriate and necessary," the board wrote last month in its proxy statement in response to a shareholder proposal from the conservative National Center for Public Policy Research, which would have the company prepare a report on its DEI efforts.

Costco's recommendation that shareholders vote against the proposal stands in contrast to several major companies opting to roll back their DEI initiatives over the past year and a half amid a slate of lawsuits and shareholder proposals. Some companies have also taken to referencing DEI policies as a risk factor in their financial filings, pointing to potential legal action or reputational impact.

Although Costco appears to be bucking the anti-DEI wave by defending its diversity initiatives, data suggests shareholders largely support diversity efforts in spite of the backlash.

A study by the Conference Board indicated that while the volume of shareholder proposals targeting diversity and equity more than tripled year-over-year during the January to June proxy season in 2024, actual support for anti-ESG proposals has fallen from 5% to 2% during the same period. 

While the tripling of proposals might seem large, the actual numbers are relatively small: five such shareholder proposals in 2023 and 17 in 2024 out of the 3,000 publicly traded firms that represent the bulk of the US stock market.

In other words, less than 1% of public companies in the US saw shareholder proposals on DEI matters, with anti-DEI proposals receiving less than 2% support, according to the study. By comparison, proposals on social issues that weren't backed by anti-ESG groups saw roughly 20% support.

Costco's move could flip the script on the perceived popularity of anti-DEI proposals and requests to look into the matter in the first place.

"We believe that the proponent's request for a study reflects a policy bias with which we disagree and that further study and reporting would not be an efficient use of Company resources," the famously frugal company said.

LA Times columnist Michael Hiltzik, who has been a vocal critic of companies' inconsistent positions on social and political issues, wrote approvingly of Costco's "straightforward response."

"Shareholders, workers, and customers may hope for their own sake," he said, "that other businesses follow Costco's example."

Costco shareholders are set to vote on the matter during the annual meeting on January 23, just days after Donald Trump retakes the White House.

Trump has been critical of DEI measures on the campaign trail, arguing that they discriminate against white Americans and vowing to remove or challenge diversity policies within the Federal government and academia.