Financial firms and Costco face continued pressure over DEI policies

January 31, 2025

Companies remain under scrutiny for their diversity, equity and inclusion (DEI) policies, with two separate coalitions—both led by Texas Attorney General Ken Paxton—targeting a group of financial firms and Costco.

A letter, co-signed by nine state attorneys general, including those in Alabama, Idaho, Indiana, Iowa, Montana, Nebraska, South Carolina, Utah and Virginia, was sent to six financial institutions, warning of potential legal action regarding their diversity and climate investing policies.

BlackRock, Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup and Morgan Stanley have all been accused of violating their fiduciary duty to make financially sound decisions in the best interest of maximising the return on shareholder investors without any ulterior political agenda.

In the letter, the attorneys general argued that the firms’ political objectives, such as adopting race- and sex-based quotas, have shifted business and investment decisions away from maximising shareholder value and towards advancing political agendas.

However, financial firms are not the only ones facing pressure over their DEI policies as 19 attorney generals have urged Costco to discontinue its DEI policies.

In a letter to Costco CEO Ron Vachris, state officials accused the company of reinforcing policies they claim violate merit-based principles and federal law.

They have demanded Costco to inform the states within 30 days whether it intends to revoke its DEI policies or provide a justification for maintaining them.

The move comes as the National Center for Public Policy Research submitted a proposal for Costco to evaluate any potential risks associated with its DEI practices and policy.

However, more than 98% of shareholders voted against the proposal, and Costco’s board of directors asserted that the company’s DEI policy is both appropriate and necessary, stating that it positively impacts the company’s financial performance.

Minerva’s blog focuses on the latest developments in ESG investing and stewardship. Minerva is a global provider of sustainable stewardship solutions with over 25 years of expertise. Minerva empowers investors by providing essential tools, including ESG research and data, enabling them to navigate the intricate landscape of stewardship and proxy voting, whilst ensuring their decisions are well-informed and aligned with sustainable principles.

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