Costco Wholesale Corporation shareholders have overwhelmingly voted against an anti-diversity, equity and inclusion (DE&I) resolution that the company’s board recommended against. At a time when other US companies are facing similar proposals and other anti-ESG pressures, the proposal garnered just 1.7 percent of the votes cast at Costco’s January 23 AGM.
Costco is not alone in facing anti-DE&I shareholder proposals this proxy season. Nor is its board alone in objecting to them. Apple’s board is currently urging shareholders to vote at its February 25 AGM against a proposal asking the tech company to consider dropping its diversity efforts.
Shareholders in Deere & Company, also known as John Deere, will vote at the firm’s February 26 AGM on two contrasting proposals concerning its DE&I efforts. The board has asked shareholders to vote against both of them.
The National Center for Public Policy Research, which is among the more high-profile filers of anti-ESG shareholder proposals, submitted a resolution asking that Costco’s board ‘conduct an evaluation and publish a report… on the risks of the company maintaining its current [DE&I] (including ‘people and communities’) roles, policies and goals.’
In its supporting statement, the center referred to the 2023 US Supreme Court ruling that effectively barred race-based affirmative action in college admissions programs and that, in the wake of that decision, Republican attorneys general from 13 states sent a letter to large US companies warning that continuing with their DE&I efforts would put them at legal risk.
‘It’s clear that [DE&I] holds litigation, reputational and financial risks to the company and therefore financial risks to shareholders,’ the center wrote. ‘And yet Costco still has such a program, though it was apprehensive enough to recognize this as it recently and quietly rebranded its [DE&I] program to ‘people and communities’. But sticking a new label on discriminatory practices does not protect Costco and its shareholders from these risks.’
Board opposition
Costco’s board had urged shareholders to vote against the resolution, writing in the company’s 2025 proxy statement: ‘[O]ur commitment to an enterprise rooted in respect and inclusion is appropriate and necessary. The report requested by this proposal would not provide meaningful additional information to our shareholders.’
The board added: ‘Consistent with our commitment to ‘obey the law,’ we regularly evaluate our practices concerning compliance with law, including evolving Supreme Court decisions. We believe that our [DE&I] efforts are legally appropriate and nothing in the proposal demonstrates otherwise.
‘As part of our obeying the law, all decisions regarding recruiting, hiring, promotion, assignment, training, termination and other terms and conditions of employment will be made without unlawful discrimination on the basis of race, color, national origin, ancestry, sex, sexual orientation, gender identity or expression, religion, age, pregnancy, disability, work-related injury, covered military or veteran status, political ideology or expression, genetic information, marital status or other protected status.
‘Combined with our obedience to the law, service to our employees, members and suppliers has rewarded our shareholders. This is our code of ethics. Our focus on [DE&I] is not, however, only for the sake of improved financial performance but to enhance our culture and the well-being of people whose lives we influence,’ it continued.
‘The proponent professes concern about legal and financial risks to the company and its shareholders associated with the diversity initiatives. The supporting statement demonstrates that it is the proponent and others that are responsible for inflicting burdens on companies with their challenges to longstanding diversity programs. The proponent’s broader agenda is not reducing risk for the company but abolition of diversity initiatives.’
A National Center for Public Policy Research official says in a statement: ‘Given the mounting legal and reputational risks surrounding [DE&I], the votes against our proposal – which merely sought an evaluation of those risks – say more about the financial and ideological conflicts of the asset managers and proxy advisers driving the bulk of that voting than the merits of our proposal. However, we have not made any decisions about next year's proposal.’
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
