After Costco shareholders overwhelmingly supported the company's diversity, equity, and inclusion programs, a group of 19 Republican state attorneys general urged the company to eliminate its programs.
Last week, 98% of the company's shares voted against a proposal that would have eliminated certain DEI programs within Costco, according to a preliminary count.
The vote came after the company's board urged its shareholders to vote against a proposal submitted by the National Center for Public Policy Research that called on Costco to eliminate DEI programs. The group claims that DEI programs are discriminatory and put the company at financial risk.
The attorneys general argued that Costco's policies are illegal and run afoul of President Donald Trump's recent executive orders that limit DEI programs in both the private and public sectors.
"Although Costco’s motto is 'do the right thing,' it appears that the company is doing the wrong thing—clinging to DEI policies that courts and businesses have rejected as illegal," the AGs said in a letter. "Costco should treat every person equally and based on their merit, rather than based on divisive and discriminatory DEI practices. That reflects President Trump’s executive order encouraging 'the Private Sector to End Illegal DEI discrimination and Preferences.'"
The attorneys general gave Costco 30 days to respond. The letter did not state any consequences if Costco fails to respond.
Costco's policy states, "All decisions regarding recruiting, hiring, promotion, assignment, training, termination and other terms and conditions of employment will be made without unlawful discrimination on the basis of race, color, national origin, ancestry, sex, sexual orientation, gender identity or expression, religion, age, pregnancy, disability, work-related injury, covered military or veteran status, political ideology or expression, genetic information, marital status or other protected status."
The National Center for Public Policy Research said the Supreme Court decision reached in 2023 in SFFA v. Harvard indicated that companies' DEI programs could potentially be illegal. The Supreme Court ruled that affirmative action policies by colleges violated the equal protection clause of the 14th Amendment.
Costco's board countered that the group was incorrect in its belief that the company's DEI policies violate the law.
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The vote came as numerous companies have eliminated DEI programs in response to backlash from conservatives and President Trump.
Within hours of taking office, President Trump signed an executive order essentially ridding the federal government of DEI training and positions. The president also eliminated a past executive order that required federal contractors to have non-discriminatory practices in hiring and employment.
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