‘No Action’ Retraction: Costco Accepts Anti-ESG Proposal Despite SEC Overhaul

12 November 2025

---

By Jack Grogan-Fenn

Costco has opted to include a shareholder proposal in its 2026 proxy statement from an anti-ESG proponent despite previously submitting a ‘no action’ request to the US Securities and Exchange Commission (SEC) to exclude the resolution.

Costco’s inclusion of the shareholder proposal from the National Center for Public Policy Research (NCPPR), a renowned anti-ESG proponent, comes after the SEC recently announced that it will not respond to company no action requests to exclude shareholder proposals during the 2026 proxy season, as reported by Minerva Analytics.

---

Key Client Takeaways:

Costco Accepts Anti-ESG Proposal

• Costco will allow shareholders to vote on a proposal requesting an evaluation of financial risks tied to its climate commitments at the January 2026 AGM. This decision contrasts with its earlier stance in a no-action relief request, where it argued the proposal was unrelated to ordinary business.

Strategic Choice Amid SEC Policy Shift

• Despite the SEC granting companies broad discretion to exclude shareholder proposals without formal no action responses for the 2026 proxy season, Costco chose transparency over exclusion. The company opted to include an anti-ESG proposal from NCPPR in its proxy statement, signalling a commitment to shareholder engagement even when given the option to sideline such resolutions.

Broader Governance and Political Context

• Costco continues to demonstrate strong ESG and governance leadership amid political backlash. It defended DEI policies, appointed Gina Raimondo to its board and even sued the Trump administration over tariffs. Meanwhile, Republican-led efforts and SEC rule changes are reshaping the landscape for shareholder proposals, potentially reducing their overall number in 2026.

---

As we highlighted when the news was announced last month, the SEC’s decision that hands unprecedented discretion to corporate management and threatens to sideline investor voices on key environmental and social issues. While this move is expected to most acutely impact ESG proposals, it could also have an effect for resolutions that are anti-ESG or anti-diversity, equity and inclusion (DEI) in nature.

NCPPR’s resolution requests the board to evaluate and report on the financial risks and costs associated with the company’s climate commitments. Costco had previously stated that NCPPR’s proposal was not related to ordinary business and failed to meet resubmission requirements in its no-action relief request sent to the SEC in September. However, despite the SEC handing the company the ability to exclude this resolution without a response from the commission, Costco has not exploited this opportunity and instead chosen to include it on its 2026 proxy statement. Shareholders are now set to vote on the proposal at the company’s 2026 AGM on 15 January.

The only shareholder proposal being voted on at Costco’s 2026 AGM is from the NCPPR. During the firm’s 2025 AGM a proposal from the NCPPR was also the only one from shareholders, which requested the Board to report on risks created by the company’s DEI efforts. Despite the vote taking place at a time of escalating hostility towards the concept of DEI, less than 1.7% of votes from shareholders were cast in favour of this proposal. This level of support was similar for other anti-DEI proposals as shown in research by Minerva Analytics, showing that investor opinions on ESG-related topics had shifted little.

However, Costco’s board of directors unanimously recommended that shareholders reject the proposal, stating that the company’s commitment to fostering respect and inclusion is “appropriate and necessary”, as reported by Minerva Analytics. In fact, Costco’s board has stressed that its DEI policies contribute positively to the company’s financial performance. Costco has demonstrated to other US companies that ESG and governance leadership can coexist with resilience and profitability, standing firm in the face of political backlash and defending DEI being as financially relevant.

Costco has this year become a standout example of strong governance and ESG leadership despite influence from the administration of Donald Trump seeing many companies retreat on ESG-related issues. The company has recently sued the Trump administration over emergency tariffs, arguing it had violated constitutional limits on executive power. Costo has demanded a full refund of import duties incurred if the Supreme Court rejects President Donald Trump’s authority to impose tariffs without congressional approval. Trade data from the US customs agency shows major importers such as Costco have already paid about U$90 billion in International Emergency Economic Powers Act-related tariffs as of late September. Costco operates in 14 different countries including Australia, China and the UK meaning it is highly impacted by Trump’s tariff war with most of the rest of the world.

Costco has this month also appointed Gina Raimondo, who served as Commerce Secretary in the administration of Joe Biden, to its board of directors. Tony James, Chairman of the Board, said that Raimondo’s “vast experience in global business, politics and international security at the highest level will add an important dimension to our current expertise”.

In January, a letter was sent by 19 attorney generals of Republican states to the CEO of Costco accusing the company of reinforcing policies they claim violate merit-based principles and federal law, as reported by Minerva Analytics. They demanded that Costco inform the states within 30 days whether it intended to revoke its DEI policies or provide a justification for maintaining them. The letter was co-led by Texas Attorney General Ken Paxton who this year has waged war on ESG, DEI, proxy advisors, and asset managers as reported by Minerva Analytics, positioning Texas at the forefront of the Republican-driven anti-ESG push. The Trump Administration also issued a letter In March urging several major EU-based companies to comply with a US executive order prohibiting DEI programmes, as reported by Minerva Analytics.

In November before the change in the SEC’s no action approach for the 2026 proxy season was announced, tech giant Microsoft controversially blocked a shareholder proposal from its AGM agenda without written no action support from the commission, as reported by Minerva Analytics. This decision arguably helping to set a precedent for 2026 and emboldened the SEC to pull back on the long-standing no action practice.

It remains to be seen to what extent companies use the opportunity provided to them by the SEC to exclude shareholder resolutions, both pro- and anti-ESG, during the 2026 proxy season. Some have suggested that there could be a drastic decline in the overall number of shareholder proposals during the 2026 proxy season compared with this year and other prior years.

Minerva Analytics data has shown that 514 US shareholder proposals were filed between 1 January and 30 September 2025, with 41% from individuals, 18% from institutions and 14% from anti-ESG proponents – effectively debunking claims that only ‘activist’ investors drive the filing of proposals.

Republican-led attacks on Rule 14a-8 continue, with Congress scrutinising whether shareholder proposals serve narrow activist goals or broader investor interests. This year, Rule 14a-8 has been amended, introducing more stringent requirements over the amount of investment required to file and the support needed to resubmit proposals, as reported by Minerva Analytics. Investor groups have warned that the SEC’s retreat leaves shareholders with only litigation to enforce their rights, injecting increased uncertainty into the market.

You can read more of our articles by clicking here.

Last Updated: 12 December 2025