Attorneys general in 19 states on Tuesday demanded Costco ditch its DEI policies – and give staff jobs on merit.
They point to concerns the practices open the retailer up to legal challenges since they can discriminate against those who are best qualified.
‘Racial discrimination is both immoral and illegal hiring violates state and federal law,’ Kansas Attorney General Kris Kobach said.
State officials in a letter to Costco’s top boss Ron Vachris accused his company of doubling down on policies they allege violate merit-based principles and federal law.
The 19 Republican officials, co-led by Texas’s Ken Paxton and Iowa’s Brenna Bird have given Costco 30 days to repeal its DEI policies or explain why it is keeping them.
‘It is clear that DEI is divisive, and it is toxic. The America people do not want it. The American people are craving a society where hard work and talent is rewarded,’ Emily Sturge, a student at the University of Florida told Fox News on Tuesday.
The host on Fox & Friends had asked her why – when most Costco customers are rural and suburban Trump voters – would Costco ‘Bud Light themselves’ when they know American people do not want DEI anymore.
The pressure from the Republicans comes after Costco was in the news twice in the past week over DEI.
Costco CEO Ron Vachris defended the company’s policies to a complaining customer
On Thursday last week, Costco and its shareholders defied President Donald Trump and conservative activists by voting to stick to their DEI policies.
On Sunday, Rev Al Sharpton’s led a ‘buy in’ celebrating Costco’s DEI policies after backlash to the vote.
The controversial civil right activist led 100 members of his National Action Network through the Harlem Costco to spend their money in a show of gratitude for the decision.
President Trump has already introduced anti-DEI initiatives, claiming they are unfair and distracting.
Companies such as Meta Platforms, Amazon.com, JPMorgan Chase and Boeing have modified their initiatives and scrapped their DEI goals.
Meanwhile, vocal figures on social media, like Robby Starbuck, have also pushed for boycotts of so-called ‘woke’ companies.
Costco, however, has stood its ground. The company’s board had urged investors to reject an investigation into whether if DEI policies harmed the retailer, for example by forcing it to overlook the best candidates.
More than 98 percent of the shareholders voted against it on Thursday.
Costco is banking on its status as a much-loved store with loyal customers
The proposal voted down Costco’s shareholder meeting was from the National Center for Public Policy Research.
The conservative activist group was pressuring Costo to produce a report outlining the potential risks of its DEI initiatives – as it says they backfire and hit the stock price.
In its shareholder proposal, the group stated, ‘DEI clearly poses litigation, reputational, and financial risks to the company.’
All businesses have a duty to avoid practices that harm their share price – since it harms investors.
But Costco’s directors argued that DEI policies are an asset, not a liability.
Executives emphasized that a diverse workforce and supplier base help attract top talent, foster innovation, and enhance the ‘treasure hunt’ shopping experience that customers value.
Costco also argued that the conservative group bringing the motion have ulterior motives other than DEI risks to share price.
The retailer also said its customers enjoy seeing diversity reflected in its workforce.
Robby Starbuck successfully pressured Walmart to reverse some of its DEI policies
Costco is banking on its status as a much-loved store with loyal customers that have helped it stay out of political frays in the past.
‘They are not the worst of the worst, so they weren’t my focus,’ Starbuck, who successfully pressured Walmart to reverse some of its DEI policies, has said of Costco.
Retail expert Neil saunders told DailyMail.com that Costco takes the view that its various programs have helped it to build a strong business.
‘Given the positive results over recent years it is impossible to argue that Costco management doesn’t know what it’s doing,’ Saunders, of Global Data, said.
‘There is an element of them saying leave us to get on with the job. While some customers might dislike the policy, I doubt many will defect as it is not something that is visible or that directly impacts shoppers.’
It comes after major companies such as Walmart, Ford, John Deere, and Tractor Supply bowed to pressure and rowed back on their DEI commitments.
In July, John Deere made a huge U-turn on its DEI practices in the face of opposition and a damaging boycott from farmers and conservatives.
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