Target, Costco, Marriott: Global lessons for New Zealand directors

In the United States, the politics of diversity, equity and inclusion (DEI) have become a battleground for companies. Retail giants Target and Costco offer sharply different case studies. 

Target, which has rolled back DEI initiatives, has faced an intense backlash from consumers and declining customer traffic – 11 consecutive weeks of falling in-store foot traffic. 

In contrast, Costco has held its course and maintained a clear DEI focus, even amid shareholder proposals seeking greater disclosure of DEI-related legal risks, which its board recommended voting against, arguing that existing practices were sufficient. It has seen 16 consecutive weeks of rising in-store foot traffic. 

Meanwhile, Marriott International Hotel CEO Anthony Capuano spoke out in favour of DEI. The next day, he had 40,000 supportive emails from his associates across the company, with a total staff of around 800,000. 

He said a focus on diversity and inclusion was fundamental to business strategy, not merely a social obligation, noting that all were welcome at the company’s hotels. His comments reinforced the view – still contested by some investors – that diversity strengthens organisational resilience and market performance. 

These contrasting corporate approaches raise a central question for boards: how to pursue diversity and inclusion in a way that strengthens, rather than exposes, the organisation and strengthens boards to meet increasingly complex challenges?

There is wide discussion of these issues in Australia, too. 

Leading Australian director John Mullen, chair of Qantas and Brambles, has called for a reset in how boards approach diversity. In a recent speech, Mullen argued that too many boards have focused narrowly on gender targets without challenging homogeneous thinking, professional backgrounds or socioeconomic sameness. 

Genuine diversity, he emphasised, is not cosmetic. It is essential for better risk identification, broader perspectives and, ultimately, better governance. Diversity of thought – across ethnicity, class, age and experience – builds resilience, not fragility. 

Mullen’s warning is timely for New Zealand directors: tokenistic diversity is not enough and will not meet the demands of today’s boardroom, particularly in the current geopolitical environment. 

Practical implications for New Zealand boards 

The Institute of Directors in New Zealand’s Four Pillars of Governance Best Practice makes clear that effective boards should both reflect the communities they serve and anticipate the challenges they will face. 

Diversity and inclusion are not ‘nice-to-haves’ – they are strategic necessities. Annual General Meeting ‘proxy’ material for many US companies also reinforces this. 

In today’s world, boards must deal with risks and opportunities that are increasingly complex, interconnected and global. A homogeneous board is ill-equipped to navigate: 

• Cybersecurity threats requiring technical literacy and generational diversity
• Geopolitical instability needing cross-cultural understanding and global outlooks
• Sustainability and climate risk demanding new expertise beyond traditional finance or legal skills
• Shifts in customer expectations calling for directors who understand new markets and social movements

Boards composed of directors from varied backgrounds, industries, communities and ways of thinking are better positioned to anticipate emerging risks, challenge orthodoxies and innovate effectively. 

For New Zealand boards, the practical path forward is clear: 

• Broaden recruitment channels beyond the traditional networks 
• Embed an inclusive culture where different perspectives are valued and acted upon
• Report candidly on diversity efforts, connecting them directly to company strategy and risk management

Those boards that view diversity and inclusion through a practical, strategic lens – rather than as a reputational exercise – will be far-better placed to deliver sustainable value in an increasingly uncertain world.