MW Target joins Walmart in pulling back on DEI. But this big retailer and its shareholders are staying the course.

By Bill Peters

Target said it wanted to stay 'in step with the evolving external landscape'

Target Corp. on Friday said that it was ending its diversity, equity and inclusion goals as it tries to align itself with an "evolving external landscape" - the latest turn by a corporation away from those efforts as legal threats intensify and President Trump takes steps to eliminate the practice.

Yet Target $(TGT)$ made the announcement a day after Costco Wholesale Corp. $(COST)$, at its annual shareholder meeting, said shareholders overwhelmingly voted against a proposal asking the membership warehouse retailer to report on the risks of its workplace inclusion initiatives.

Target on Friday said it was "concluding our three-year diversity, equity and inclusion goals." It also said it would stop all external diversity-oriented surveys, including the corporate equality index for the Human Rights Campaign, an LGBTQ+ civil-rights group.

The retailer also said it was re-examining corporate partnerships "to ensure they are directly connected to our roadmap for growth."

"We remain focused on driving our business by creating a sense of belonging for our team, guests and communities through a commitment to inclusion," the chain said in a statement. "Belonging for all is an essential part of our team and culture, helping fuel consumer relevance and business results.

"Throughout 2025, we'll be accelerating action in key areas and implementing changes with the goal of driving growth and staying in step with the evolving external landscape," it added. "We will continue to monitor and adjust as needed."

The decisions by Target and Costco arrived after President Trump earlier in the week took executive action to order an end to DEI practices across the federal government. That order also directs government agencies to find ways to get corporations to abandon DEI and identify "up to nine potential civil compliance investigations of publicly traded corporations," nonprofits and other groups.

Many corporations rushed to embrace workplace diversity policies following George Floyd's murder in 2020. But some have since backtracked amid conservative outrage and the Supreme Court's 2023 decision to end affirmative action in college admissions.

Over the past year, companies like Walmart Inc. $(WMT)$ - one of Target's main rivals - McDonald's Corp. $(MCD)$ and others have also rolled back their diversity goals. Before Trump's election, some experts said the practice of DEI could become less direct and more subtle. But since then, others have advised companies to expect deeper scrutiny.

The DEI-related proposal at Costco came from the National Center for Public Policy Research, a conservative think tank. The group argued that DEI posed "litigation, reputational and financial risks" to Costco and its shareholders. More than 98% of shareholders voted against the proposal, Costco said Thursday.

"Our members are increasingly diverse, and we believe having a heterogeneous employee base that enhances members' identification with us is important," Hamilton James, chairman of Costco's board, said during the shareholder meeting. "In addition, that base brings varied experiences and knowledge and provides insights into the tastes and preferences of our members."

In a statement on Friday, the think tank accused Costco of discrimination.

"While we are disappointed by the result, we are also not surprised, given the forces aligned against us," said Stefan Padfield, executive director of the group's Free Enterprise Project. "These forces include conflicted asset managers and proxy advisers that profit from ESG and DEI."

Shares of Target finished the regular session 0.5% higher on Friday. Costco's stock closed 0.3% lower.

-Bill Peters

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January 24, 2025 17:58 ET (22:58 GMT)

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