Costco is sticking with DEI

Costco (COST-0.52%) shareholders on Thursday soundly rejected a conservative think tank’s proposal requesting a report on the risks of maintaining diversity and inclusion initiatives, even as other companies back down.

Costco said that an “overwhelming margin” of 98% of shares voted against the measure, according to preliminary results. In pre-recorded comments broadcast to shareholders during the retailer’s annual meeting, the National Center for Public Policy Research called diversity, equity, and inclusion programs “illegal, immoral and detrimental to shareholder value,” while the DEI acronym helps conceal a “radical Marxist agenda.”

Costco repeatedly stuck by its DEI efforts, writing in securities filings that employing a diverse group of people helps it serve members from different walks of life. CEO Ron Vachris even took the step of responding directly to customers, emphasizing that the company doesn’t rely on quotas but instead focuses on offering equal opportunities and fair pay to all employees.

Tony James, the chairman of Costco’s board of directors, on Thursday said the programs are “consistent” with the company’s values and that the company has always been “purposefully non-political” with an emphasis on a “welcoming workforce.”

While many companies – such as Walmart, Google, Meta, Microsoft, and McDonald’s – have scaled back or reassessed their DEI goals, Costco’s position stands out. Especially as conservatives threaten boycotts over DEI, which helped push change at a number of companies, including Ford Motor Co. (F-0.49%), Lowe’s, Harley-Davidson (HOG-1.84%), Molson Coors (TAP+2.07%), and Boeing (BA-1.52%).

President Donald Trump has continued the anti-DEI push at the federal level.

Earlier this week, he ordered that all DEI efforts across the federal government be shut down by 5:00 p.m. on Wednesday, with most of those staff expected to be laid off by Jan. 31. Trump also revoked a 60-year-old executive order that banned discrimination in hiring practices in the federal government, and directed the Federal Aviation Administration to halt DEI-related hiring practices.

His Tuesday executive order also urges federal agencies to identify up to nine potential civil compliance investigations of public companies and other groups to end “illegal DEI discrimination.” In response, defense company Lockheed Martin (LMT-0.04%) on Thursday said it was taking “immediate action” to comply with Trump’s order.

“Merit-based talent management programs and compliance with all applicable laws, regulations, contracts, and directives have always been central to this mission,” the company said in a statement. “We will not have goals or incentives based on demographic representation or Affirmative Action Plans.”

—Francisco Velasquez contributed to this article