GOP Attorneys Pressure Costco Over Diversity Initiatives

Costco Wholesale store exterior with entrance and exit signs.

Nineteen Republican attorneys general are challenging Costco’s DEI practices, citing legal concerns and advocating for a merit-based approach.

Key Takeaways

Republican attorneys general from 19 states urge Costco to abandon its DEI initiatives.
The attorneys general have given Costco 30 days to respond or justify maintaining DEI policies.
Shareholders overwhelmingly rejected a proposal to assess financial risks of diversity policies.
Major corporations are reevaluating DEI strategies due to increased scrutiny.
Despite pressures, some companies continue to support DEI initiatives.

Legal Challenges to Costco’s DEI Policies

A coalition of 19 Republican attorneys general has issued a formal request to Costco to terminate its diversity, equity, and inclusion (DEI) practices. They argue that these policies could potentially violate anti-discrimination statutes. In their communication to Ron Vachris, Costco’s CEO, they emphasize the legal risks associated with race-based employment policies and propose a return to merit-based hiring practices.

Backing their claims, the attorneys general reference existing legislation and legal precedents. They highlight that similar DEI policies have faced legal objections in other corporations. The letter claims DEI initiatives may conflict with the principle of equality, thereby running afoul of legal and moral standards.

Corporate and Shareholder Responses

98% of Costco shareholders recently voted against a proposal for a report assessing financial risks tied to diversity policies. This resistance showcases an apparent alignment between investors and the attorneys general concerning potential risks associated with DEI initiatives. Additionally, major corporations such as McDonald’s and Toyota are also reconsidering their DEI strategies, echoing the broader corporate landscape’s shift amid heightened scrutiny.

The Costco board said, “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. “

Despite the overwhelming pressure, some companies like JPMorgan remain steadfast in their support of DEI initiatives. They argue that promoting diversity enhances creativity and business success. However, the ongoing legal and public scrutiny is forcing many others to pause and reevaluate these policies to avoid potential litigation and reputational risks.

"Nineteen Republican attorneys general have called on Costco Wholesale to abandon its diversity, equity, and inclusion policies, citing concerns about discrimination and legal risks."https://t.co/F1XGFqACWW

— R.L. Stollar (@RLStollar) January 28, 2025

A Critical Examination of Corporate Values

The attorneys general criticize Costco’s DEI initiatives, suggesting they are inconsistent with the company’s motto to “do the right thing.” They urge a reevaluation to ensure all employees are treated equally based solely on their merit. The coalition further demands Costco provide a formal decision on the repeal of its DEI policies within 30 days or justify their continuance, implying significant legal pressure.

In response to these demands, the Human Rights Campaign and other advocacy groups have voiced concerns over the potential retreat from DEI policies. They warn that eliminating such initiatives could lead to public backlash and boycotts, emphasizing the societal shifts in diversity expectations.

"Nineteen Republican attorneys general have called on Costco Wholesale to abandon its diversity, equity, and inclusion policies, citing concerns about discrimination and legal risks."https://t.co/F1XGFqACWW

— R.L. Stollar (@RLStollar) January 28, 2025