Costco shareholders overwhelmingly rejected a proposal to probe its diversity, equity and inclusion practices for legal risks.

The Issaquah-based company’s board characterized the proposal from an activist shareholder as a bad-faith effort to undermine its DEI initiatives. The National Center for Public Policy Research, a Washington, D.C.-based conservative think tank, pitched the proposal and argued the company’s policies could hurt it financially due to discrimination lawsuits.

The proposal, which shareholders voted 98% against during a shareholders meeting on Thursday, said “Employees who are white, Asian, male or straight,” could tie the company up in litigation over DEI initiatives.

The Center for Public Policy Research said its concern over litigation comes from the U.S. Supreme Court’s ruling that ended affirmative action in college admissions in June 2023. It said that since the ruling, corporations are open to more discrimination lawsuits.

Costco’s board urged shareholders to vote against the proposal in a regulatory filing leading up to the meeting.

“We believe that our diversity, equity and inclusion efforts are legally appropriate, and nothing in the (Center for Public Policy Research) proposal demonstrates otherwise,” the board’s statement said.

The board said it already regularly evaluates its practices and said the company’s success depends on a diverse, inclusive workplace.

During an annual meeting for a public company like Costco, shareholders vote on items put forth by the company. Routine measures include voting on top executive pay and new board members.

But they also vote on proposals put forth by shareholders to change something about the company or to address a pressing issue the board hasn’t brought up.

The Center for Public Policy Research announced last year that shareholder activists involved with it were presenting proposals to American Express, Intel, General Electric, Progressive, Ford and Duke Energy. All of them denounced DEI, decarbonization and disarmament policies.

Since President Donald Trump was elected in November, companies have backed away from DEI initiatives. Walmart, Amazon, Meta have all scaled back their policies. Companies like John Deere and Tractor Supply have eliminated roles and community outreach associated with its DEI programs.

Microsoft, JPMorgan Chase and Apple have notably joined Costco in standing against the trend.

Microsoft faced a wave of headlines in July that said it had laid off an entire DEI team, which the Center for Public Policy Research cited in its proposal. However, that wasn’t correct.

The Redmond-based tech giant cleared the air by saying it laid off two employees from its events team that worked with the talent, diversity, inclusion and learning team but did not report to it.

“As we move forward, our D&I commitments remain unchanged,” Microsoft spokesperson Jeff Jones said in July, using the company’s shorthand for diversity and inclusion. “Our focus on diversity and inclusion is unwavering and we are holding firm on our expectations, prioritizing accountability, and continuing to focus on this work.”

Apple’s board urged shareholders to reject a proposal from the Center for Public Policy Research similar to the one given to Costco shareholders.

And on Wednesday, JPMorgan Chase CEO Jamie Dimon said in an interview with CNBC that the bank wouldn’t retreat from DEI initiatives despite potential pushback.

On Inauguration Day, Trump signed an executive order to end DEI programs within the federal government.

During the shareholders meeting, Costco Teamsters rallied outside the company’s headquarters in Issaquah. The Teamsters are “demanding the strongest possible contract and are prepared to strike if the company fails to deliver,” according to a news release.

More than 18,000 Costco employees are set to strike if an agreement isn’t made on a new contract by Jan. 31, when the current contract expires. They voted to authorize a strike this week.

The Teamsters said workers are looking for an industry-leading contract that “matches Costco’s record-breaking profits and holds the company accountable for its so-called ‘pro-worker’ reputation.”

The company reported $254 billion in revenue last year with $7.4 billion in profit.

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