In an aerial view, the Costco logo is displayed on the exterior of a Costco store on July 11, 2024 in Richmond, California. - Justin Sullivan/Getty Images
Diversity, equity and inclusion (DEI) has been losing with corporate America, with one big exception: the people who actually own the companies.
This year, investors at some of America’s biggest companies — Costco, Apple, Levi’s, John Deere, Goldman Sachs and others — have overwhelmingly voted against proposals targeting DEI programs. The proposals include requiring companies to scrap their DEI policies entirely or remove diversity goals from executive pay packages and audit the legal risks of pursuing DEI. Two conservative think tanks, the National Center for Public Policy Research and the National Legal and Policy Center, have brought most of the proposals.
The near-unanimous shareholder votes show two things — large and small investors alike do not want companies’ boards of directors and management to bend to activist shareholders, and investors believe maintaining DEI programs is good for business.
The rejections of anti-DEI proposals “reveal that the investor community doesn’t think that having a tough stance on DEI makes financial sense,” said Matteo Gatti, a professor of law at Rutgers University who studies corporate governance. “Investors are saying they don’t want ideological shareholders to drive business.”
Levi's jeans 50% off sale Vineland Premium Outlets, Orlando, Florida, on December 10, 2021. - Jeffrey Greenberg/UCG/Universal Images Group/Getty Images
DEI in the workplace is generally a mix of employee training, resource networks and recruiting practices. The goals are to advance representation of different races, genders and classes, people with disabilities, veterans and other groups. But opponents like Elon Musk, the Tesla and X CEO and close advisor to President Donald Trump, say DEI represents “reverse racism.”
From Target to Meta, dozens of companies have modified or rolled back their diversity programs in recent months under pressure from the Trump administration, right-wing activists such Robby Starbuck and conservative legal groups. But shareholder votes are a rare area where DEI opponents are losing.
It’s no surprise. Large institutional investors, such as BlackRock, Vanguard and State Street, are the top shareholders of most companies. They typically oppose outside shareholder resolutions, siding with company management in around 90% of the votes.
“Just because DEI is falling out of the political winds doesn’t mean the votes have changed,” said Jon Solorzano, a partner at Vinson & Elkins who advises companies on environmental, social and governance issues.
Alternate aims
Winning a shareholder vote is not the sole purpose of conservative groups bringing the proposals.
Anti-DEI resolutions are an inexpensive way for activist shareholders to draw media attention, gin up financial and political support for the groups bringing the resolutions and keep up pressure on companies over their DEI policies, Gatti said.
“Part of it is to get people to pay attention,” he said.
Win or lose, the proposals may add momentum for banning shareholder votes on climate, social and political issues in companies’ proxy statements. A proxy statement precedes a meeting where investors vote on nominees for board of directors, executive compensation packages and other business issues. The Business Roundtable, an influential business lobbying group, called for reforms to the proxy process last week, claiming activist investors have increasingly used it to “promote public policy agendas unrelated to company performance.”
Conservative groups say anti-DEI shareholder proposals give them leverage to negotiate with companies and seek changes. For example, the National Legal and Policy Center withdrew an anti-DEI shareholder proposal at PepsiCo after PepsiCo said it would end its goals for minority representation in managerial roles.
“We think that the work we’ve done with shareholder proposals elevates the conversation and puts companies on the defensive,” said Luke Perlot, the associate director of the National Legal and Policy Center’s Corporate Integrity Project. Shareholder proposals are “one of the most effective tools” of the group’s corporate activism work.
Weak support for anti-DEI proposals
Opponents of DEI are taking a page from DEI advocates.
Shareholder proposals urging companies to improve DEI policies surged in 2020 and 2021, but have dwindled in recent years. Investors and companies have become fatigued with following through on their DEI commitments, and pressure has increased on companies to steer clear of social issues.
Meanwhile, anti-DEI shareholder proposals have grown, part of a broader campaign on the right to crack down on DEI.
Shareholder proposals opposing DEI accounted for only 7% of all DEI-related proposals in 2022. In 2024, that accelerated to 23%. As of April 1, approximately 40% of proposals around DEI oppose DEI efforts, according to a recent report by The Conference Board.
But these anti-DEI proposals have received little investor support, averaging less than 2% of shareholder support.
People are reflected in a mirrored ceiling at the Apple Store at the Grove shopping center in Los Angeles, California, on January 4, 2025. - Daniel Slim/AFP/Getty Images
“Institutional investors and proxy advisors consistently oppose these resolutions, viewing them as misaligned with corporate governance best practices and investor priorities,” the Conference Board said in the report. “The proposals also originate from a small group of activists rather than mainstream investor coalitions, further limiting their appeal.”
More than 98% of Costco shareholders voted down a proposal brought by the National Center for Public Policy Research that would have required the company to evaluate and issue a report on the financial risks of maintaining its diversity and inclusion goals.
Costco’s management opposed the proposal. The company said its DEI efforts help it attract and retain a wide range of employees and improve merchandise and services in stores.
“Among other things, a diverse group of employees helps bring originality and creativity to our merchandise offerings, promoting the ‘treasure hunt’ that our customers value,” Costco said in its proxy statement to investors.
Most institutional shareholders like BlackRock and Vanguard still believe having a diverse workforce and customer base are good for business, said Atinuke Adediran, an associate professor of law at Fordham University who studies corporate governance and racial diversity.
“The rhetoric has been DEI is dead, but you have large, multinational shareholders upholding what companies are doing on DEI,” she said.
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