At a time when some major companies in the United States are stepping back from their diversity, equity and inclusion (DEI) commitments, Costco is taking a different path.

Corporate DEI programmes are facing mounting scrutiny in the United States. In the last few months, a number of multinational companies – including Lowes, Walmart and John Deere – have abandoned, scaled back or otherwise diluted their DEI initiatives following pressure from shareholder groups.

But while parts of corporate America appear to be retreating from their commitment to diversity, Costco is charting its own course. “We welcome members from all walks of life and backgrounds”, declared its board of directors in a bold rejection of pressure to retire its DEI initiatives.

Costco’s strategic response

In its Notice of Annual General Meeting, the company’s board of directors unanimously dismissed a proposal from the National Center for Public Policy Research (NCPPR), a conservative think tank, to investigate the reputational and financial risks associated with the company’s DEI initiatives.

The retail giant’s response was unequivocal and stands out, not just for its firmness but also for its business-focused rationale. Rather than caving in to the anti-DEI rhetoric, Costco doubled down on its commitment to building an inclusive workplace while reframing the conversation around business performance.

The company may have rebranded its programme to ‘People and Communities’, but that reflects an evolution in approach rather than a retreat. For Costco, diversity isn’t a separate initiative; it’s a core business strategy that drives success across multiple dimensions.

What stands out is Costco’s articulation of how DEI initiatives directly support its business success. In its response to the NCPPR, the board emphasises that inclusion helps attract and retain talented employees, provides valuable insights into customer preferences and brings “originality and creativity” to its merchandise offerings.

The board of directors’ statement also notes that customers appreciate seeing people like themselves in the workforce they interact with at Costco warehouses. Customer satisfaction scores and employee retention rates validate the fact that representation matters – particularly in frontline retail where customer interactions are constant, so it makes good business sense for Costco’s 300,000-strong workforce to represent and reflect its 129.5 million members.

The business case for DEI

We’ve already written about why DEI is good for business, but the numbers are compelling. Traditionally underserved communities represent massive economic power: Black American spending exceeds $1.4 trillion annually, Latino purchasing power in the US reached $3.4 trillion in 2021 and Asian Americans command $1.3 trillion in buying power. Globally, communities including people with disabilities and LGBTQ+ individuals represent over $16 trillion in spending potential.

Furthermore, effective DEI strategies support talent attraction and retention, which is crucial at a time when acquiring and training talent was ranked as one of the biggest drivers for growth by almost a third of CEOs according to the Winter 2024 Fortune/Deloitte CEO survey. Research indicates that 76% of job seekers and employees report that a diverse workforce is an important factor when evaluating companies and job offers according to Glassdoor, while organisations with diverse workforces experience a 20% increase in employees’ intent to stay.

A blueprint for resilient inclusion

For organisations seeking to maintain strong DEI commitments despite external pressure, Costco’s approach offers some valuable lessons:

• Highlight the business benefits of DEI. Costco demonstrates how diversity enhances its ability to understand and serve its diverse customer base, driving both innovation and member satisfaction. This approach helps deflect criticism that DEI programmes are merely social initiatives with no relation to business success.
• Integrate DEI into core business strategy rather than treating it separately. Costco shows how inclusive practices support key functions like talent acquisition, customer service and supplier relationships. Embedding DEI initiatives into how the company operates makes them more resilient to external criticism.
• Stay true to your values and principles. While acknowledging the legal landscape around DEI, Costco remains committed to creating an inclusive environment for the benefit of all stakeholders.

Looking forward

While those speaking out against DEI are seemingly getting louder, many corporate leaders – including the board members of Costco – continue to endorse and reiterate the benefits of diversity to their businesses.

As organisations continue to face questions about their diversity commitments, Costco’s response provides a blueprint that combines principled conviction with practical business sense. By clearly connecting DEI initiatives to business performance and stakeholder value, Costco – and other like-minded organisations – can build more resilient and inclusive cultures that are able to withstand, reject and counter any external pressure.

Costco’s approach suggests that the future belongs not to those who retreat from diversity commitments but to those who strengthen them through a clear business case and unwavering leadership.

If you need support to build the business case for DEI, get in touch at info@flag.co.uk.