Dive Brief:
- The attorneys general of nineteen states on Monday sent a letter to Costco’s president and CEO, Ron Vachris, urging the company to “end all unlawful discrimination imposed by the company” through DEI policies.
- “The Supreme Court has repeatedly warned against using race-based preferences and classifications,” the AGs wrote, citing Students for Fair Admissions v. Harvard, which called racial discrimination “invidious in all contexts.” The AGs added, “Race-neutral practices, on the other hand, honor the founding ideals of this country.”
- The AGs concluded by requesting Costco either notify them that it has dropped its DEI programs within 30 days or “explain why [it] has failed to do so.”
Dive Insight:
The letter follows directly from Costco bucking the current trend of companies dumping DEI programs. Costco’s board of directors earlier this month urged shareholders to reject a proposal submitted by the right-leaning National Center for Public Policy Research that would have required them to conduct an evaluation and produce a report on the risks of maintaining its DEI programs.
Responding unanimously, the board of directors said its DEI efforts “follow our code of ethics,” help with recruitment and retention, help to reflect the diversity of its customer base, and help to bring “creativity and originality” to its inventory.
“We regularly evaluate our practices concerning compliance with law, including evolving Supreme Court decisions,” the directors wrote. “We believe that our diversity, equity and inclusion efforts are legally appropriate, and nothing in the proposal demonstrates otherwise.”
According to results from the Jan. 23 annual meeting, shareholders followed the board of directors’ advice, overwhelmingly voting against the proposal, various media outlets have reported.
The attorneys general said the board’s commitment to DEI was “not surprising,” pointing to the board of directors’ “composition,” including the membership of a former CEO of the Bill and Melinda Gates’ Foundation, Jeff Raikes, who has spoken in favor of DEI.
Attacks on DEI aren’t just bad for business—they hurt our economy. A diverse workforce drives innovation, expands markets, and fuels growth. Let’s focus on building a future where all talent thrives. #DEI #Leadership #InclusiveEconomy https://t.co/15hIvSo5L5
— Jeff Raikes (@jeffraikes) November 20, 2024
“Costco’s position runs contrary to the Supreme Court’s recent decisions and raises concerns about Costco’s compliance with State and federal laws,” the AGs wrote.
Pressure on companies to drop DEI programs has ramped up over the past year, and especially in the past week, following President Donald Trump’s inauguration. The AGs pointed to Trump’s Jan. 21 executive order targeting private-sector DEI programs.
Over the past year, a growing number of companies — including Amazon, McDonald’s, John Deere, Ford, Target and Meta — have dismantled or toned down their DEI programs in apparent response to mounting pressure from conservative activists and government officials, which the AGs called “a refreshing change.”
Iowa Attorney General Brenna Bird co-led the effort alongside Kansas Attorney General Kris Kobach. Alabama, Arkansas, Georgia, Idaho, Kentucky, Louisiana, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas and Virginia all signed on.
Costco did not respond to a request for comment by press time.
