Costco is not here for the anti-DEI rhetoric, pushback or bullying.
During their latest shareholder meeting, the Costco board of directors was asked to vote on a shareholder proposal to address the risk of their DEI efforts.
Since the U.S. presidential election on November 4, multinational companies have continued to eliminate, downsize, rename, recalibrate, retool, realign, reposition, rethink or reimagine their diversity, equity and inclusion (DEI) efforts.
With much of the pressure coming from outside influences, directed at corporations’ shareholders and boards to make a change to DEI, the responses have been consistent: fold.
But Costco bucked the trend and doubled down on DEI.
Recently, American Airlines was fined $50 million for treatment of passengers using wheelchairs. Yet less than two months later, they reportedly agreed to end their DEI hiring and employment practices.
Whether organizations are willing to admit it or not, navigating DEI issues can be challenging—especially when you’re deploying a reactive, instead of a proactive, approach.
Costco’s Proxy Statement
We can learn a lot from Costco’s Proxy Statement, to see how they’ve addressed the topic of DEI.
I’ll use their own words, with portions from both the proposal and the board’s response, to address how this topic came about, and how they responded.
“PROPOSAL 4: SHAREHOLDER PROPOSAL REQUESTING REPORT ON THE RISKS OF MAINTAINING DEI EFFORTS
The following shareholder proposal has been submitted to the Company for action at the Annual Meeting by the National Center for Public Policy Research.
It’s clear that DEI holds litigation, reputational and financial risks to the Company, and therefore financial risks. And yet Costco still has such a program, still employs a ‘Chief Diversity Officer’, and still contributes shareholder money to organizations that advance the discriminatory agenda of DEI.
With 310,000 employees, Costco likely has at least 200,000 employees who are potentially victims of … illegal discrimination because they are white, Asian, male or straight … even if only a fraction of those employees were to file suit, and only some of those prove successful, the cost to Costco could be tens of billions of dollars.”
The board’s response:
“Our Board has considered this proposal and believes that our 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, and the Board thus unanimously recommends a vote AGAINST this proposal.
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 … and reinforce with everyone at our Company the importance of creating opportunities for all. We believe that these efforts enhance our capacity to attract and retain employees who will help our business succeed … As our membership diversifies, we believe that serving it with a diverse group of employees enhances satisfaction … And we believe (and member feedback shows) that many of our members like to see themselves reflected in the people in our warehouses with whom they interact.
Having diversity in our supplier base, including appropriate attention to small businesses, is beneficial for many of the same reasons diversity benefits our Company. We believe that it fosters creativity and innovation in the merchandise and services that we offer our members.
The board of directors recommends a vote AGAINST Proposal 4.”
What We Can All Learn
While those speaking out against DEI are seemingly getting louder and louder, there is a committed group of businesses and leaders who refuse to deny what diversity has done to grow their companies.
This is a masterclass in how to address this topic in a clear and conscience way, in the boardroom, and with the information posted live online, where it can be accessed and referred to as needed.
The politics of DEI should not overshadow its power and potential.
By 2045, America will be majority people of color, and building a bridge to be inclusive of these voices allows companies to overcome the historic blind spot with these consumers, when it comes to messaging, marketing and elevating their importance to business, society and the economy at large.
How big is this blind spot? Over $6 trillion domestically, and $16 trillion globally.
It is estimated that Black Americans’ spending power sits between $1.4 trillion and $1.8 trillion annually, a powerful economic bloc that’s comparable to the gross domestic products of Mexico, Canada and Italy. Latinos’ purchasing power in the U.S. reached $3.4 trillion in 2021 and grew over two times faster than non-Latino counterparts. Asian Americans, with $1.3 trillion in buying power, have a median household income of $104,646, well above the average income in the U.S. This demographic has grown 314% over the past two decades, becoming the fastest-growing of all ethnicity groups.
And when you step outside the U.S., to discuss global diversity in areas such as accessibility and LGBT+, those with disabilities and their families spend an estimated $13 trillion per year, while the LGBT+ community’s financial strength is estimated to be around $3.9 trillion.
Tapping into these consumer markets is not only smart but also necessary for robust corporate bottom lines. An added bonus is that the collective intelligence, insights and skillsets of diverse populations provide opportunities for employers to strengthen their workforce headcounts.
And by watching companies like Costco tackle these issues in the boardroom, we can see why DEI is worth defending.