By Juveria Tabassum and Ross Kerber
(Reuters) -Costco Wholesale shareholders voted strongly against a proposal requesting a report on the risks of maintaining its diversity and inclusion initiatives, the U.S. company said on Thursday, sending a message running counter to the intense scrutiny many such corporate policies face.
The vote was seen as an early test of investor views about the value of corporate diversity, equity and inclusion (DEI) programs, which many companies added or beefed up starting in 2020 amid the Black Lives Matter movement.
More than 98% of the shareholders voted against it at the annual meeting, Costco (NASDAQ:COST) said.
Last year, shareholder resolutions at U.S. corporations looking to counter DEI programs and other corporate social considerations garnered less than 2% support on average.
Lindsey Stewart, director of stewardship research and policy for Morningstar Sustainalytics, said the similar result at Costco “suggests that even if the political environment on inclusion in the workplace is changing, investors’ low propensity to support anti-DEI resolutions is thus far unchanged.”
U.S. President Donald Trump has issued an executive order that directed government agency chiefs to dismantle DEI policies at federal agencies, federal contractors and in the private sector.
He has also suggested that some companies will face investigations and legal action if their programs are deemed to be discriminatory.
The proposal at Costco came from the National Center for Public Policy Research, which describes itself as a free-market think tank and had asked the company to assess the potential business risks related to its DEI policies.
The group, which did not immediately comment on the result, contended that such efforts could pose legal, reputational, and financial risks, potentially impacting shareholder returns.
Costco’s board, which urged votes against the proposal, said the report would not provide “meaningful additional information” to shareholders.
Companies such as Meta Platforms (NASDAQ:META), Amazon.com (NASDAQ:AMZN), JPMorgan Chase (NYSE:JPM) and Boeing (NYSE:BA) have modified their initiatives, scrapped their DEI goals or ended participation in the Human Rights Campaign Foundation’s corporate equity index. But only now are most shareholders getting a chance to weigh in on such matters.
The membership-only retailer has more than 300,000 employees globally and about 219,000 in the United States, according to its 2024 annual report.