Costco Faces Legal Battle From Republican Attorneys General

Costco Wholesale building exterior with prominent logo sign.

Facing a challenge from 19 Republican attorneys general, Costco must decide its future on diversity, equity, and inclusion policies.

Key Takeaways

  • Nineteen Republican attorneys general are pressing Costco to eliminate its DEI policies, citing legal risks.
  • The attorneys general have set a 30-day deadline for Costco’s response.
  • Costco insists its DEI commitment aligns with its values, arguing that these policies are essential.
  • 98% of Costco shareholders voted against a proposal addressing financial risks tied to diversity policies.
  • Other major companies have retracted DEI policies following similar scrutiny.

Costco’s Diversity Policies Under Scrutiny

A coalition of 19 Republican attorneys general has put Costco Wholesale in the spotlight, urging the company to abandon its diversity, equity, and inclusion (DEI) policies. The coalition addressed a letter to CEO Ron Vachris, contending that these initiatives contravene anti-discrimination laws. The group highlights potential legal repercussions and emphasizes a need to revert to merit-based hiring practices.

Costco received a formal document demanding a decision within 30 days, either confirming the repeal of DEI initiatives or providing rationale for their continuation. This action mirrors similar industry pressures as companies reassess diversity strategies, comparable to the reevaluations by McDonald’s and Toyota.

Shareholder Decisions and Corporate Stance

Costco recently witnessed its shareholders reject a proposal to review financial risks tied to DEI policies, with 98% voting against it. This decision comes amid heightened scrutiny over DEI initiatives, leaving corporations to balance shareholder expectations with public and legal demands.

A statement from a coalition of attorneys general from 19 Republican-led states reads, in part: “Although Costco’s motto is ‘do the right thing,’ it appears that the company is doing the wrong thing—clinging to DEI policies that courts and businesses have rejected as illegal.”

In defense of its DEI efforts, Costco’s board insists that “the commitment to respect and inclusion is necessary.” They argue against the proposal’s demand, suggesting it would not yield beneficial insights. This defense stands in contrast to companies like Walmart and Meta, which have stepped back from similar DEI practices amid backlash.

Broader Implications of DEI Policy Reevaluation

The letter from the Republican attorneys general draws on past judicial decisions and an executive order previously issued by President Donald Trump, which encouraged companies to cease DEI activities. They argue that DEI policies potentially produce discriminatory practices in hiring based on race or gender, posing ethical and legal threats to firms adhering to these policies.

Despite the prevailing conservative pressure, some corporations, such as JPMorgan, remain firmly supportive of DEI efforts, aiming to foster workplaces that balance opportunity for all while respecting diversity. As corporate America faces mounting legal and social scrutiny, the coming weeks will determine whether Costco adjusts its stance and how it may affect other industry players.

Sources:

  1. https://nypost.com/2025/01/28/business/republican-ags-from-19-states-push-costco-to-revoke-dei-policies/
  2. https://www.yahoo.com/news/costcos-dei-programs-face-scrutiny-203753261.html
  3. https://www.usatoday.com/story/money/2025/01/28/costco-dei-policies-republican-attorneys-general/77986371007/
  4. https://www.theepochtimes.com/business/republican-led-states-demand-costco-ditch-dei-5800108