Costco shareholders decisively voted down an anti-diversity, equity, and inclusion (DEI) proposal during the company's annual meeting on Thursday, with more than 98% rejecting the measure. The proposal, brought forth by the National Center for Public Policy Research, sought to mandate a report on the potential risks of the retailer's DEI policies.
The lopsided vote underscores strong investor support for corporate DEI initiatives, even as such efforts face growing political and legal scrutiny. With President Donald Trump issuing executive orders aimed at dismantling DEI policies in the public and private sectors, the vote at Costco signals a sharp divergence between shareholder priorities and shifting political winds.
The proposal's backers argued that DEI programs could create legal, reputational, and financial risks for the company, potentially affecting shareholder returns. However, Costco's board of directors unanimously recommended voting against the measure, stating that such a report would not offer "meaningful additional information" to shareholders.
The vote result aligns with broader trends in shareholder sentiment. Last year, anti-DEI resolutions at U.S. corporations garnered less than 2% support on average, according to Morningstar Sustainalytics. Lindsey Stewart, director of stewardship research and policy at the firm, noted, "Even if the political environment on inclusion in the workplace is changing, investors' low propensity to support anti-DEI resolutions is thus far unchanged."
Jonas Kron, chief advocacy officer at Trillium Asset Management, emphasized the vote's significance. "The fact that 98% of investors voted against the proposal shows that almost all investors are not buying what the anti-ESG and anti-DEI organizations are selling," Kron said in a statement to Axios. "The investing community clearly understands the importance and value of these ESG and DEI approaches and are ready to express that through their votes."
Costco, which employs over 300,000 workers globally, including 219,000 in the United States, has maintained its commitment to fostering diversity within its workforce. The company's board recently issued a robust defense of its DEI initiatives, highlighting their alignment with Costco's corporate values and long-term strategy.
The vote also comes amid a broader debate over the future of corporate social responsibility programs. In recent months, several major corporations, including Meta, Amazon, JPMorgan Chase, and Boeing, have modified or scaled back their DEI goals. Critics of such initiatives argue that they risk fostering discrimination or creating additional legal liabilities.
President Trump's executive order has added to the pressure, mandating federal agencies and contractors to dismantle DEI policies and warning private companies of potential investigations. These actions have fueled a wave of anti-DEI shareholder proposals, which proponents say aim to protect businesses from the fallout of perceived overreach.
