Corporate board members interested in maintaining diversity equity and inclusion programs at their companies will want to take note of what Costco's board is doing in the fight against anti-DEI activists.
The National Center for Public Policy Research (NCPPR) has filed a motion asking Costco to discontinue its DEI efforts, saying they are discriminatory and exposing the company to financial and legal risk. “DEI poses litigation, reputational, and financial risks to companies, and therefore to shareholders,” the conservative think tank said in a statement. NCPPR is asking shareholders to vote in favor of the proposal at Costco's annual meeting, scheduled for January 23.
Costco's board of directors is urging shareholders to vote against the NCPPR proposal and publicly demonstrating its commitment to the DEI program. In a message to investors, the board said: “Our commitment to diversity, equity, and inclusion is guided by our Code of Ethics. For our employees, these commitments are built around inclusion, ensuring that all employees are valued and respected. Our commitment to diversity, equity and inclusion reminds and reinforces the importance of creating opportunities for everyone. We believe these efforts will improve our ability to attract and retain employees who contribute to the success of our business. ”
The Jan. 23 vote will include Walmart, Harley-Davidson, Ford Motor Co., Tractor Supply, John Deere, Home Depot, Lowe's, Microsoft, Southwest Airlines, and several other major companies that have taken a stance against the DEI initiative. will help determine whether Costco will join. Some of this is due to pressure from conservatives. In 2024, some companies faced legal action and threats of boycotts due to their support for DEI initiatives. There are reports that Costco may soon face a boycott.
Regardless of which side of the DEI debate a board member is on, corporate boards are likely to pay close attention to what happens with a vote on this anti-DEI proposal. Costco is one of the largest companies facing calls to eliminate its DEI program, and its board has chosen to fight. As the debate over DEI continues, it may be helpful to examine Costco's efforts. A company's board of directors may want to:
Communicate your organization's commitment to diversity to investors. In a message to investors, Costco's board explained why it believes in and implements a diversity program. The Board also explained how diversity has contributed to and strengthened the current business. This business is highly profitable and highly valued all over the world. It was highlighted that the majority of employees are in favor of the program and that it helps recruit the best talent from all backgrounds. Other boards may want to demonstrate that their business is not experiencing the negative impacts suggested by anti-DEI activists because they have diversity programs in place.
Connect DEI with company value. Shortly after the NCPPR proposal was submitted, Costco quickly reached out to investors with a message linking diversity to the company's code of ethics. Establishing an organization as ethical will help deter attempts to denigrate it as discriminatory. Also, proving that the company has a culture that promotes tolerance and respects differences can go a long way in fending off allegations of discriminatory behavior.
Prepare a legal defense for your DEI program. Ultimately, if shareholders do not vote to eliminate the DEI program, anti-DEI activists will likely sue. Boards must ensure that the programs they implement are not considered quotas and do not discriminate against whites, Asian men, or straight men. The language used to describe and defend DEI programs is subject to the most scrutiny possible, so it may be wise to consult an outside legal consultant.
