Hiltzik: Costco opposes right-wing anti-DEI campaign

It has long been clear that relying on corporate leaders to act decisively for social and economic progress is completely impossible.

Big companies talk the talk. As we have written previously, after the January 6, 2021 riots, many business leaders publicly vowed to oppose the attack on democracy by the political right.

Major companies announced they would stop making campaign contributions to members of Congress who voted against certifying Joe Biden as the winner of the election and who were involved in the Washington insurrection.

Others made similar promises about state laws restricting abortion and voting rights, or spoke openly about scaling back operations in states that have enacted such measures. They promoted a commitment to programs that promote diversity, equity, and inclusion, known as DEI.

But when push came to shove, most of these companies folded like poker players with a bad hand. This is especially true of DEI, which became a target of the “anti-woke campaign” waged by right-wing culture warriors like Florida Republican Gov. Ron DeSantis late in the presidential campaign.

Right-wing anti-DEI activism gained momentum after the Supreme Court struck down universities’ affirmative action admissions policies in June 2023.

Throughout this year, large companies have exited the DEI landscape. The biggest company doing so is Walmart. In November, the company did not renew a five-year, $100 million commitment it made to establish the Center for Racial Equity in response to the killing of George Floyd, stopped using the term DEI, and It was announced that efforts to do so would be terminated. .

“We’re on a journey and we know we’re not perfect, but every decision we make fosters a sense of belonging and opens doors of opportunity for every employee, customer and supplier, and we strive to help Walmart “It comes from the idea that we want to be for everyone,” the company said.

Companies including Ford, Harley-Davidson and Lowe’s have announced they will no longer provide workplace data to the gay rights group Human Rights Campaign. That’s partly because the campaign’s widely publicized metrics on company progress have allowed anti-LGBTQ+ activists to mount a backlash. Participating companies.

So I go to Costco. Almost alone among major publicly traded companies, Costco’s board explicitly rejected anti-DEI backlash.

The response from Issaquah, Wash.-based Costco was a Dec. 11 proxy statement for its annual shareholder meeting scheduled for Jan. 23. The general meeting’s agenda includes a shareholder resolution proposed by the right-wing National Center for Public Policy Research. Costco’s DEI program “poses litigation, reputational, and financial risks to the company and, therefore, to its shareholders,” the company insinuates.

The resolution asks the board to report on “the company’s current DEI risks…roles, policies, and goals.”

Costco’s board of directors unanimously recommended that shareholders vote against the resolution. “Our commitment to companies rooted in respect and inclusion is appropriate and necessary,” it said in its response. “Our commitment to diversity, equity, and inclusion reminds and reinforces the importance of creating opportunities for everyone. These efforts drive the success of our business. We believe it will improve our ability to attract and retain contributing employees.”

The board directly targeted the resolution’s sponsor, the Center, accusing it of hiding its true objectives. Although the center has “expressed concerns about the legal and financial risks to companies and shareholders associated with diversity initiatives,” boards have argued that “responsibilities that burden companies with challenges to long-standing diversity programs” There are proponents and others.” . The proponents’ broader agenda is not to reduce the company’s risk, but to eliminate its diversity efforts. ”

It looks like that swipe was a hit. “The latest wave of companies are pulling back on DEI in response to threats even bigger than exposing the truth about their DEI programs,” center staffer Stephen Padfield told me via email. . What they are experiencing as they try to misuse shareholder funds to promote neo-Marxist and neo-racist “equity” policies is of their own making. ”

Costco said it has no comment other than a statement from its board of directors regarding the shareholder resolution.

Costco’s board didn’t go into details, but the center has had quite a track record as a culture warrior. It is a “partner” of the Stop Corporate Tyranny coalition, which describes itself as a “one-stop shop for educational resources exposing the left’s near-complete takeover of corporate America.” He opposes efforts to combat global warming, claims global warming is not happening, and promotes cryptocurrencies.

Costco’s candid response to the center’s resolution may not be all that surprising. The company is generally known for being employee-friendly and has positive employee reviews on Glassdoor. One of its benefits is that workers who are employed for at least 23 hours a week for 180 days can access health insurance at low copayments.

The company’s approach to union organizing efforts may not be entirely welcoming, but it appears to lack the heavy-handedness and hostility exhibited by retailers like Starbucks and Amazon.

Of Costco’s approximately 219,000 employees, approximately 18,000 are Teamster representatives. Notably, a year ago, when 238 Costco employees in Norfolk, Virginia, voted to join the Teamsters, CEO Ron Vacris and his immediate predecessor W.・Jellinek issued a joint statement condemning himself.

They said they were “not disappointed in our employees.” “We are disappointed in ourselves as managers and leaders. …The fact that the majority of Norfolk’s employees wanted or felt they needed a union made us… A failure on the part of…” they wrote in a memo dated December 29 and sent to: All U.S. employees. CNN has obtained a copy of the memo.

This does not mean that there are no conflicts in labor-management relations. In early December, the Teamsters union filed unfair labor practice charges against the company with the National Labor Relations Board, calling it a “calculated effort to violate workers’ rights and disrupt public order.” Collective bargaining process. ”

The Teamsters claim the company’s worker-friendly reputation is unfair, saying Costco has banned union representatives from its stores and harassed and intimidated workers who wear Teamsters buttons and attire. “We sent employees home and even changed the locks on the union bulletin board.” Protect unions from communicating information to workers. Costco said it had no comment on the charges.

Let me briefly touch on shareholder resolutions. Following the Supreme Court’s ruling on college affirmative action, the number of DEI program resolutions voted on at companies’ annual meetings has increased from 13 in 2023 to 25 by May of this year, according to the Conference Board. The number of cases increased significantly.

To be fair, this is still a small number of the roughly 3,000 publicly traded companies included in the Russell 300 index. But even more remarkable is that the anti-DEI proposal remained deeply unpopular. On average, resolutions opposing workplace diversity programs received support from less than 2% of shareholders. However, companies that supported such programs received support from an average of 21% of shareholders. (Shareholder resolutions proposed by most people other than corporate executives rarely receive anything close to majority support.)

The Conference Board, a nonprofit corporate research and consulting firm, has found that diversity programs aimed at managers and the general public improve corporate wealth. Companies with diverse management teams “have been proven to increase revenue by 19% through innovation,” the board said.

“Those with high racial and ethnic diversity are 35% more likely to earn financial returns above the industry median.” Diversity efforts tend to appeal to job seekers and improve productivity.

On the other side of the coin is what the center’s Padfield claimed was “the wave of customer backlash we’ve seen against DEI.” He added, “Rather than doing the right thing and assessing the risks involved…Costco appears to be doubling down on DEI that is clearly divisive and value-destroying.”

The Center told me in an email that “Costco will eventually eliminate its DEI program.” I hope that happens quickly for the sake of our shareholders. ” Shareholders, workers, and customers may wish for themselves that the opposite is true and that other companies follow Costco’s example.