ESG Is On Costco's Board Agenda: Chairman Hamilton E. 'Tony' James discusses the company's focus on environmental, social and governance (ESG) issues.

• Author: Tahminciogiu, Eve
• Position: THE CHARACTER OF THE CORPORATION

"It's not just shareholder value. We're not running this for the next quarter, we're running this to build a great company for the long term."

Pay and benefits for the rank and file is an issue the board addresses periodically. "We try to make sure our employees, all of them, have the wherewithal to retire comfortably. We encourage them to save, including through automatic enrollment in the 401 (k) program and When it comes to environmental, social and governance issues, Costco chairman Hamilton E. "Tony" James says most companies are playing catch up. ESG, he maintains, has been "central to the company's mission since its creation over 30 years ago."

Right from the start, he explains, "Costco was set up with the feeling that they're there to serve the community in the broadest definition," including charitable giving and providing good jobs.

Costco, the membership warehouse club, has often been derided by Wall Street for paying their employees more than industry standards. To that, James says, "We're very committed to our employees. It's in the company's business interest to do that. We get better quality employees who are motivated to work hard. They're proud to be at Costco." company contributions (including matching)," says James, who is executive vice chairman at investment firm Blackstone and the author of "Rescuing Retirement: A Plan to Guarantee Retirement Security for All Americans."

Focusing on ESG issues isn't just about the bottom line for the company's leadership. It is one of the reasons people feel so good about Costco and why there's such a cult following by consumers, maintains James.

"That's just how we run Costco. It's not just shareholder value," he says. "Our belief is we're not running this for the next quarter, we're running it to build a great company for the long term. We think corporate citizenship is a core character value and a matter of principle. We're not worried about just maximizing the short term."

To that end, the board spends a lot of time discussing ESG issues, issues that are increasingly being brought to the table by a host of...