Costco Wholesale’s actions ahead of an upcoming annual shareholder meeting scheduled for late January 2025 are making headlines. Of particular note is a proposed agenda item for a proposal calling for a vote on reporting to outline the risks associated with Costco’s diversity, equity and inclusion (DEI) policies. In particular, the group that submitted the proposal expressed concerns about financial, legal and reputational harm to Costco if the organization continues to engage in DEI. The proposals warn against discriminatory lawsuits like Starbucks’, retain the chief diversity officer position and raise concerns about Costco’s unwavering commitment to equity. However, Costco’s board reviewed the proposal and unanimously recommended it. He pointed to ineffective content and evidence of the rigor of structures to ensure fairness to justify investment in studying the effectiveness of DEI at Costco. The board’s response also highlighted doing the right thing for its communities and highlighted concerns about ulterior motives in submitting the proposal. Essentially, the board voted for inclusive leadership and encouraged stakeholders to vote for inclusion. Costco’s attempt to resist competitive pressure and meet DEI commitments earns it the title of Inclusion Hero of the Week.

Inclusive leadership is about walking the talk:

A guiding principle of inclusion is ensuring that leaders walk the talk. This essentially means that the language, behavior and actions of leaders are aligned. otherwise it may seem disingenuous. Costco has done this and demonstrated a commitment to workplace inclusion in several ways.

• Leadership buy-in to DEI is clearly a priority. Costco’s website message includes a quote directly from the CEO about the value of valuing inclusion: “We thrive on having employees with diverse views, experiences and ideas.” Additionally, the board’s actions are consistent with the goal an integrative workplace. For example, there are dedicated resources to promote appreciation for differences across the organization.
• Costco’s mission states that the organization is committed to “doing the right thing – for our members, our employees, our suppliers, our communities and the environment.” The decision to stay the course is consistent with the company’s mission, which is also reflected in the proxy information to support decision-making.

Greater representation is important for inclusive leadership:

There has been much discussion about the importance and necessity of representation in leadership to enable inclusive workplaces to thrive. While Costco is to be commended for its decision to stick with DEI, FY24 demographic data shows opportunities for greater representation. The organization reports that 54.2% of employees are male and 45.6% are female. The management figures show that 62.9% are men and 37.1% are women. When it comes to executives in the US, the numbers show that 72.3% are male and 27.7% are female. Of non-management positions based on race and ethnicity, 33.1% are Hispanic, 9.3% are Black and 8.5% are Asian. Costco’s board of directors is 36% gender diverse and 9% racial/ethnic diverse. Costco reporting shows further demographic breakdowns.

Inclusive leaders are taking note. Organizations don’t have to be perfect to make effective progress in creating inclusion in the workplace. Costco continues to march forward, undeterred by the actions of competitors such as Walmart (owner of Sam’s Club), which decided to go the other way and scale back its DEI commitments. The example above shows that Costco is staying the course to value employees, suppliers, and customers.