It has long been clear that relying on business leaders to stand strong for social and economic progress is a fool’s game.
Big companies said they would stop making campaign contributions to lawmakers who voted against certifying Joe Biden’s election or who played a role in the insurrection in Washington.
Some have made similar promises regarding state laws restricting abortion or voting rights, or talked openly about scaling back their activities in states adopting such measures. They promoted their commitment to programs promoting diversity, equity and inclusion, known as DEI.
However, when push came to shove, most of these companies folded like a poker player with a bad hand. This has been particularly evident on DEI, which became a target in the “anti-woke campaign” waged by right-wing cultural warriors such as Florida Republican Gov. Ron DeSantis late in the presidential campaign.
Throughout this year, large companies have retreated from the DEI landscape. The largest to do so is Walmart. In November, the company said it would not renew the five-year, $100 million commitment it made to create its Center for Racial Equity following the killing of George Floyd, which it would stop using the term DEI and would end other diversity initiatives.
“We’ve come a long way and know we’re not perfect, but every decision comes from a desire to foster a sense of belonging, open doors to opportunity for all of our associates, customers and suppliers and to be a Walmart. for everyone,” the company said.
Ford, Harley-Davidson, Lowe’s and other companies said they would no longer provide workplace data to the Human Rights Campaign, a gay rights group, in part because the index widely published company progress allowed anti-LGBTQ+ activists to mount a backlash against participating companies.
This brings us to Costco. Almost uniquely among large public companies, Costco’s board has explicitly rejected the anti-DEI backlash.
The response from Costco, based in Issaquah, Washington, was released in the Dec. 11 proxy statement for its annual shareholder meeting, scheduled for Jan. 23. a shareholder resolution proposed by the right-wing National Center for Public Policy Researchinsinuating that Costco’s DEI program “carries litigation, reputational and financial risks to the company, and therefore financial risks to shareholders.”
The resolution calls on the board to report on “risks related to the company maintaining its current DEI roles, policies and goals.”
Costco’s board of directors unanimously advised shareholders to vote against the resolution. “Our commitment to a business rooted in respect and inclusion is appropriate and necessary,” he said in his response. “Our diversity, equity and inclusion efforts remind and reinforce to everyone in our company the importance of creating opportunity for all. We believe these efforts strengthen our ability to attract and retain employees who will help our business succeed.
The board took direct aim at the center, the sponsor of the resolution, which it accused of hiding its true objective. Although the center “expresses concern about the legal and financial risks associated with diversity initiatives for the company and its shareholders,” the board said, “it is the sponsor and others who are responsible for placing burdens on businesses with their challenges to long-standing diversity programs. The developer’s broader agenda is not about reducing corporate risk but about abolishing diversity initiatives.
This shot seems to have hit the mark. “The recent wave of companies rolling back their DEI in response to a greater threat than just revealing the truth about their DEI programs,” center staff member Stefan Padfield told me via email, “shows clearly that any burden associated with these companies”
Costco says it has no comment on the shareholder resolution beyond the board’s statement.
Although Costco’s board didn’t go into detail, the center has amassed quite a track record as a culture warrior. It is a “partner” of Stop Corporate Tyranny Coalitionwhich describes itself as “a one-stop shop for educational resources exposing the left’s nearly complete takeover of corporate America.” He has opposed to initiatives to combat global warmingclaiming that global warming is not happening and favors cryptocurrency.
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Costco’s direct response to the center’s proposed resolution may not be much of a surprise. The company is generally known for being employee friendly, with favorable ratings from workers posting on Glassdoor. Among its benefits, health coverage with a low co-payment is available to workers employed at least 23 hours per week for 180 days.
Its approach to organizing activity may not be entirely welcoming, but appears to lack the truculence and hostility exhibited by retailers such as Starbucks and Amazon.
Of Costco’s approximately 219,000 employees, about 18,000 are represented by the Teamsters. It is notable that when 238 Costco employees in Norfolk, Virginia, voted to join the Teamsters a year ago, Chief Executive Officer Ron Vachris and his immediate predecessor, W. Craig Jelinek, issued a joint statement saying blaming themselves.
They said they were “not disappointed in our employees; “We are disappointed in ourselves as managers and leaders…The fact that a majority of Norfolk employees felt they wanted or needed a union is a failure on our part,” they said. they wrote in a memo dated December 29 and sent to all American employees. CNN obtained a copy of the memo.
That’s not to say labor relations are free of conflict: In early December, the Teamsters union filed unfair labor practice complaints with the National Labor Relations Board against the company for what it called the company’s “calculated efforts to undermine and disrupt workers’ rights.” the collective bargaining process.
Claiming the company’s reputation for protecting workers is undeserved, the Teamsters said Costco had “expelled union representatives from stores, harassed and intimidated workers for wearing buttons and clothing of the Teamsters, sent employees home and even changed the locks on union bulletin boards” to prevent the union from disseminating information to workers. Costco said it had no comment on the charges.
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A few words about shareholder resolutions are appropriate here. Following the Supreme Court’s ruling on college affirmative action, the number of resolutions regarding DEI programs receiving a vote at corporate annual meetings increased significantly, from May 25 to May this year, from May 13 in 2023according to the Conference Board.
To be fair, that still represents a small number among the roughly 3,000 public companies making up the Russell 300. But what’s more notable is that the anti-DEI proposals have remained deeply unpopular. Resolutions opposing workplace diversity programs garnered support from less than 2% of shareholders on average; those who favored such programs, however, received support from an average of 21% of shareholders. (Shareholder resolutions proposed by almost anyone who is not a corporate officer rarely gain majority support.)
The Conference Board, a nonprofit corporate research consultancy, has found that diversity programs aimed at managers and the rank-and-file improve the fortunes of companies. Companies with diverse leadership teams “show 19% higher revenues due to innovation,” the board says.
Those with “greater racial and ethnic diversity (are) 35% more likely to have financial returns above their industry median.” Commitments to diversity attract candidates and tend to improve productivity.
On the other side of the coin is what the center’s Padfield said is “the wave of customer backlash we’ve seen against DEI.” He added: “Rather than doing the right thing and assessing relevant risks…Costco is apparently doubling down on divisive and value-destroying DEI.”
The center told me via email that “one day Costco will no longer have a DEI program. We hope, for the sake of shareholders, that this will be as soon as possible.” Shareholders, workers, and customers can hope for their own sake that the opposite is true and that other companies follow Costco’s lead.
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This story was originally published in Los Angeles Times.
