SEC Must Reject Costco’s Effort to Block Greenwashing Proposal

30 Sep 2025SEC Must Reject Costco's Effort to Block Greenwashing Proposal

Washington, D.C. - The National Center for Public Policy Research's Free Enterprise Project (FEP) has asked the U.S. Securities and Exchange Commission (SEC) to block an attempt by the Costco Wholesale Corporation to exclude its greenwashing shareholder proposal.

The National Center's shareholder proposal, entitled "Greenwashing Risk Audit," calls on Costco's board to issue a report assessing the financial and reputational risks associated with potential greenwashing in connection with the company's Climate Action Plan.

In its formal reply to Costco's no-action request, the National Center urged the SEC to deny Costco's request to exclude its proposal from the company's 2026 proxy materials, arguing that Costco's attempt to block the proposal mischaracterizes its scope and ignores the proposal's relevance to investors and the broader public.

"Costco is trying to frame our proposal as interference in day-to-day management," said FEP Executive Director Stefan Padfield. "In reality, this is about transparency. Shareholders deserve to know whether the company's climate commitments expose it to litigation, regulatory penalties or reputational damage for misleading claims. That is not ordinary business-it's material risk. Put more bluntly, Costco shareholders deserve to know what, if anything, Costco has done to calculate and assess the expected value and return on investment of its net-zero and other climate commitments."

In its letter, the National Center makes three key points:

1. Not Ordinary Business - The proposal does not attempt to dictate operational decisions but instead seeks disclosure about potential fraud and reputational risks, which fall outside the "ordinary business" exclusion under SEC rules.

2. Social Significance - Issues of climate accountability and greenwashing are both financially material and socially significant, making them appropriate subjects for shareholder consideration.

3. Not Duplicative - Costco's claim that the proposal is substantially similar to a prior filing is unfounded. The earlier proposal focused on the feasibility of net-zero goals, while the National Center's proposal addresses greenwashing and fraud risk-an entirely different concern.

The National Center further argues that Costco's position potentially reflects viewpoint discrimination, as the company has refused to engage with the National Center year after year while repeatedly reaching friendly agreements with the left-leaning shareholder proponent As You Sow. Costco has repeatedly stiff-armed the National Center - to the point that last year Attorneys General from 19 states sent Costco a letter concerned about Costco doubling down on its leftist Diversity, Equity and Inclusion (DEI) goals.

In addition, Costco may be misleading shareholders when it claims that net-zero goals achieved via suppliers are costless, because limiting the market of suppliers accessible to Costco based on utopian climate goals likely excludes the least expensive suppliers, which would obviously incur increased costs for Costco.

"The SEC has long recognized that fraud and environmental stewardship are matters of significant shareholder interest," Padfield added. "Allowing Costco to silence this proposal would set a dangerous precedent, undermining shareholder rights and accountability."

The National Center filed the proposal to ensure that investors have the information they need to evaluate Costco's sustainability claims and financial exposure. If the SEC agrees to reject Costco's request, shareholders will be able to vote on the measure at the company's next annual meeting.

About

The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 60,000 active recent contributors.

The Free Enterprise Project, the original and premier opponent of the woke takeover of American corporate life, aims to push corporations to respect their fiduciary obligations and to stay out of political and social engineering. More information about this proposal can be found in FEP's mobile and web app, ProxyNavigator.

Contributions are tax-deductible and may be earmarked for the Free Enterprise Project.

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