Summarize this content to 2000 words in 6 paragraphs Costco Wholesale shareholders overwhelmingly rejected a proposal that had urged it to evaluate the risks of maintaining its diversity, equity and inclusion initiatives after President Donald Trump moved to dismantle DEI efforts nationwide since taking office earlier this week.Newsweek has contacted Costco and the White House for comment via email.Why It MattersTrump signed an executive order on Monday that ordered a sweeping dismantling of the federal government’s diversity and inclusion programs. The Trump administration is also targeting private companies that pursue training and hiring practices that conservative critics consider discriminatory against nonminority groups.The president signed an executive order on Tuesday that seeks to deter private companies from using DEI programs, which it called “illegal DEI discrimination.” It directs federal agencies to investigate private companies and compile a report outlining a plan “of specific steps or measures to deter DEI programs or principles,” including that each agency identify up to nine publicly-traded companies or other entities that could be subject to civil investigation.That order also rescinded the Equal Employment Opportunity Act of 1965, which had prohibited discrimination in hiring and employment based on race, color, religion, sex, or national origin.
File photo. A Costco store on July 11, 2024, in Richmond, California.
File photo. A Costco store on July 11, 2024, in Richmond, California.
Justin Sullivan/Getty Images
What To KnowMore than 98 percent of Costco shareholders voted against the proposal at its annual meeting on Thursday, The Associated Press reported.The National Center for Public Policy Research, a conservative think tank, had submitted the proposal, asking Costco to assess the risks associated with its DEI initiatives.Costco’s DEI initiatives hold “litigation, reputational and financial risks to the Company, and therefore financial risks to shareholders,” the think tank argued in the proposal, citing the Supreme Court’s decision in July 2023 that outlawed affirmative action in college admissions.Since then, conservative groups have filed lawsuits targeting DEI initiatives in the working world and some companies have scaled back or changed their diversity policies.Costco’s board of directors voted unanimously to recommend shareholders reject the motion.The board said it “has considered this proposal and believes our commitment to an enterprise rooted in respect and inclusion is appropriate and necessary. The report requested by this proposal would not provide meaningful additional information to out shareholders.”What People Are Saying The Costco board of directors’ message to shareholders also said: “We welcome members from all walks of life and backgrounds. As our membership diversifies, we believe that serving it with a diverse group of employees enhances satisfaction. Among other things, a diverse group of employees helps bring originality and creativity to our merchandise offerings, promoting the ‘treasure hunt’ that our customers value.”Trump’s executive order said that “critical and influential institutions of American society, including the Federal Government, major corporations, financial institutions, the medical industry, large commercial airlines, law enforcement agencies, and institutions of higher education have adopted and actively use dangerous, demeaning, and immoral race- and sex-based preferences under the guise of so-called ‘diversity, equity, and inclusion’ (DEI) or ‘diversity, equity, inclusion, and accessibility’ (DEIA) that can violate the civil-rights laws of this Nation. Illegal DEI and DEIA policies not only violate the text and spirit of our longstanding Federal civil-rights laws, they also undermine our national unity, as they deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system.”Lindsey Stewart, director of stewardship research and policy for Morningstar Sustainalytics, told Reuters that the Costco result “suggests that even if the political environment on inclusion in the workplace is changing, investors’ low propensity to support anti-DEI resolutions is thus far unchanged.”What’s Next Trump’s order gives agencies 120 days to compile a report with recommendations for “enforcing Federal civil-rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI.”It suggests that companies with DEI programs could face legal action.
