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Costco has become an unlikely flag-bearer for DEI against the continued right-wing assault on inclusion policies, with its board of directors taking a firm stand to defend and expand diversity initiatives despite shareholder pressure.
At the center of the debate is Jeff Raikes, a Costco board member and vocal proponent of DEI, who has urged businesses to resist scaling back their inc efforts. Raikes, also co-founder of the Raikes Foundation and former CEO of the Bill & Melinda Gates Foundation, has been outspoken on social media, emphasizing the economic and innovative benefits of diverse workplaces.
In a November post, Raikes argued: “Attacks on DEI aren’t just bad for business - they hurt our economy. A diverse workforce drives innovation, expands markets, and fuels growth.”
Board pushback on anti-DEI rhetoric
Costco’s board recently rejected a shareholder proposal to dismantle its DEI program, a move brought by the National Center for Public Policy Research ahead of the company’s January 23 annual meeting.
The proposal cited legal concerns following the US Supreme Court’s decision in SFFA v. Harvard, which ruled against race-based affirmative action in college admissions. Critics argue the ruling could extend to corporate DEI programs, and 13 state attorney generals have warned Fortune 100 companies of potential legal challenges.
Costco’s board, however, maintains that its DEI practices are “legally appropriate” and essential to the company’s success. In a letter to shareholders, the board wrote, “Our efforts around diversity, equity, and inclusion remind and reinforce with everyone at our company the importance of creating opportunities for all. We believe these efforts enhance our capacity to attract and retain employees who will help our business succeed.”
The board dismissed the proposal as “policy bias” and accused the National Center for Public Policy Research of pursuing an agenda to abolish diversity initiatives rather than mitigating company risk.
Corporate trends and consumer reactions
The decision comes amid an industry-wide rollback of DEI programs, with companies like Meta, Microsoft, and John Deere scaling back DEI departments or roles. Critics of Costco’s stance, including activist Robby Starbuck, have called for boycotts and membership cancellations, urging consumers to shop at competitors such as Sam’s Club.
“Costco is doubling down on DEI. If they’re smart, they’ll reverse course before more consumers take their business elsewhere,” Starbuck posted on social media.
Despite the backlash, Raikes and the board remain resolute, describing DEI as critical to employee engagement, customer satisfaction, and innovation. “We welcome members from all walks of life and backgrounds. Serving a diverse membership with a diverse team of employees enhances satisfaction,” the board stated.
With the January 23 shareholder meeting on the horizon, Costco’s DEI policies will be under intense scrutiny. While proponents hail the company’s commitment as a bold stand against the anti-DEI tide, critics warn of potential financial and reputational risks.
For HR leaders, Costco’s response shows the difficulty of embracing inclusivity while navigating legal and shareholder pressures in a polarized environment. While there is still plenty of support for DEI among well-established and well-known corporations, with a new Government that is vocally opposed to DEI taking office shortly, the ongoing uncivil war over diversity will continue to occupy both their time and head-space.
