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By Giulia Carbonaro
Senior Reporter
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As companies across the U.S. are dropping diversity, equity and inclusion (DEI) programs to avoid criticism and backlash by conservative activists, retail giant Costco is standing firm.
"If these are the policies you see as offensive, I must tell you I am not prepared to change," the warehouse retailer's CEO Ron Vachris told a customer who had emailed him earlier this month asking him if Costco was hiring staff based on "skin color" or "gender identification," The Wall Street Journal reported.
Newsweek contacted Costco for comment by email on Friday morning, outside of standard working hours.
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Why It Matters
Costco has reinforced its commitment to its DEI initiatives even as many companies—including Walmart, Tractor Supply, Ford Motor, Harley Davidson, Toyota, Boeing, Microsoft, Home Depot, Southwest Airlines, and Deere—have recently rolled back theirs amid the political and legal storm surrounding such programs.
Many gave in to the social-media firestorms started by conservative activists against DEI programs as well as climate initiatives, fearing backlashes and so-called anti-woke boycott campaigns. The Supreme Court's 2023 race-based admissions ruling, and the slew of lawsuits against corporate DEI programs that have followed, have accelerated rollbacks of diversity, equity and inclusion initiatives.
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As Donald Trump has pledged to be more critical of DEI initiatives in the federal government and the public sector once back at the White House, it will be interesting to see if Costco will remain committed to its diversity programs in the face of likely growing pressure.
What To Know
Vachris' steadfast commitment to Costco's DEI initiatives is shared by the company's board of directors.
Ahead of the retailers' annual meeting next week, its board has urged stakeholders to vote against a proposal by the National Center for Public Policy Research (NCPRR) asking for Costco to reconsider its DEI programs in the face of the "litigation, reputation and financial risks" these pose to the company.
"Our board has considered this proposal and believes that our commitment to an enterprise rooted in respect and inclusion is appropriate and necessary," Costco's board of directors said in a December statement mentioned by CNN.
"Our success at Costco Wholesale has been built on service to our critical stakeholders: employees, members and suppliers. Our efforts around diversity, equity and inclusion follow our code of ethics."
The NCPRR's proposal asks Costco to research the potential impact of maintaining the company's current DEI "roles, policies, and goals" following the Supreme Court's 2023 ruling that found Harvard University to be discriminating on the basis of race in college admissions.
While the ruling doesn't directly impact hiring practices for retailers like Costco, it has opened the door to the likelihood of future litigation around companies' DEI programs. Voting on the NCPRR's proposal will take place on Thursday, January 23.
Costco employs roughly 310,000 people around the world and the median retailers' worker is paid $47,000, the WSJ reported. According to the NCPRR's proposal, Costco "likely has at least 200,000 employees who are potentially victims of this type of illegal discrimination because they are white, Asian, male or straight."
Even if "only a fraction of those employees were to file suit," the company could face some very costly judgments.
Costco's board of directors said that "the report requested by this proposal would not provide meaningful additional information to our shareholders and the Board unanimously recommends a vote against this proposal."
Despite the company's steadfast commitment to its DEI initiatives, the majority of Costco's managerial workforce is white and male: according to the WSJ, 72 percent of Costco managers are men and 81 percent are white.
What People Are Saying
Consultant and Professor of Management at the New School in New York City Mark Lipton wrote on LinkedIn: "While corporate America plays musical chairs with its diversity commitments, Costco is doing what it does best—bucking trends and sticking to its guns.
"The retail giant just told shareholders to reject a proposal questioning its DEI initiatives, arguing that diversity isn't just good ethics—it's good business that fuels the beloved 'treasure hunt' experience its customers crave."
Dave Marcotte, senior vice president at Kantar Retail, told Retail Dive:"Overall this provides a media narrative of conservatives winning over progressives which was a big theme for 2024. Costco has run directly contrary to that narrative.
"And its formal response to an investor tactic ('DEI raises stockholder risk'), is a statement that [not only] refutes the premise but also states that these investors are not doing so in the interest of Costco but a larger political agenda. As the 5th largest retailer in the world, this is a loud statement."
Alison Taylor, author of "Higher Ground: How Business Can Do the Right Thing in a Turbulent World," told Retail Dive: "Other companies may follow through because Costco gives them a bit of top cover. Whoever goes first takes the flak, right? So I think it kind of gives a license and opens up a space to say that there's a different way to handle this."
What's Next
Calls from conservative activists to boycott Costco as punishment for its commitment to DEI initiatives are growing on social media. Charles Gasparino, senior correspondent for Fox Business, wrote on X earlier this week: "Looks like Costco is just begging to get sued because DEI is illegal."
"For now I suggest conservative consumers find other places to spend their money if Costco is so dedicated to doubling down on DEI," Robby Starbuck, a pro-Trump filmmaker, wrote on X. "If they're smart, Costco will do right by their shareholders and change before we turn our attention to them."
An X user who described himself as a member of the MAGA movement urged people to boycott Costco and cancel their memberships. "Nothing can stop We The People to Make America Great Again," he wrote.
It is unclear how a potential boycott could impact Costco and whether it could force the company to reconsider its policies.
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