Attorneys general in 19 states have warned Costco (COST) to end diversity, equity and inclusion (DEI) initiatives, in the latest sign that U.S. companies are facing increasing political pressure from the new administration.
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Republican state attorneys led by Texas AG Ken Paxton and Iowa AG Brenna Bird accused Costco of doubling down on policies that they say pose discrimination and legal risks.
It comes after 98% of COST shareholders rejected a proposal requesting a report analyzing the risks of continuing the company’s diversity initiatives.
The AGs have given Costco 30 days to repeal its DEI policies or explain why it should keep them.
DEI Pressure Builds for COST and Others
There is mounting pressure on companies after President Donald Trump issued an executive order to dismantle DEI policies in government and in the private sector.
Last week Paxton and ten state AGs warned Wall Street’s largest financial institutions that certain DEI and environmental, social, and governance (ESG) commitments could lead to enforcement actions if they are found to violate state or federal law following a review.
He accused BlackRock (BLK) Goldman Sachs (GS), JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), and Morgan Stanley (MS) of prioritizing “politics over consumer and investors.”
“Banks and financial institutions are finally starting to realize that the ESG and DEI policies pushed by radical activist groups are bad for consumers and potentially violate the law,” said Paxton.
While pressure is mounting on companies to abandon DEI and ESG initiatives, Costco seems to be holding the line for now.
Is Costco a Good Stock to Buy Now?
According to the consensus rating on TipRanks, COST stock has a Moderate Buy rating, based on 16 Buys and eight Holds. The Costco share price forecast is $1,058.58, which is almost 10% above the current price level.
