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GE’s 2010 Citizenship Report: Are They Doing Their Share?

RP Siegel | Thursday October 6th, 2011 | 0 Comments

GE’s 2010 Corporate Citizenship  Report makes the following statement early on:

“GE businesses depend on the infrastructure, skills and institutions of stable, prosperous societies and healthy environments. To succeed as a global business, we need to be a part of building these societies where we operate. We do this through the products and services we create, the way we work with employees, customers, suppliers and investors, the public policies we advocate and the philanthropic partnerships we support.”

This brings to mind the recent quote by Elizabeth Warren, especially in light of the fact that GE, despite $150 billion in revenues, paid zero taxes last year:

“There is nobody in this country who got rich on his own. Nobody. You built a factory out there— good for you! But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea — God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

GE, in response to the criticism they have received over this, point out that they are simply playing by the rules. They lost a lot of money in their finance business in the previous years, and they were able to carry those losses forward against future earnings. So they were simply taking advantage of legitimate tax policy that was available to them.

Of course, can is never the same as should, something that even Reinhold Niebuhr’s popular Serenity Prayer fails to point out. But, one thing that is very clear to me, as I read through this material, is the fact that the 3P’s (people, profit, planet) are still not created equal in GE’s view of the world.

So, if we are to take GE’s opening comment about dependence on infrastructure, skills and institutions seriously, it would seem to be incumbent on them to do as much as possible through other channels of their choosing to see to see that those dependencies that Ms. Warren so eloquently points out, are supported.

GE claims that they are in the business of meeting the world’s greatest challenges These include:

  • Energy and climate
  • Water scarcity
  • Resource depletion
  • Chronic disease
  • Uneven economic development
  • Skills gap
  • Conflict and corruption
  • Financial volatility
  • Struggling Cities

 

The first three refer to planetary system boundaries in relation to human activity, while the others deal with specifically human issues. GE’s response to these challenges is to make money, ethically, through a combination of innovative products and services, and operational excellence, as well as through public policy advocacy and philanthropy.

GE has an expert advisory panel, convened by Dr. Simon Zadek, that consistently challenges the company from an ethical citizenship perspective, pointing out that they can always do more with those tools mentioned above.

CEO Jeff Immelt says, “As the Citizenship Advisory Panel highlights in this report, the challenge of sustainable and resilient growth goes beyond what can be achieved by individual projects and programs. The key problem is how to scale up solutions to meet the size and urgency of global challenges.”

The report goes on, in the Energy and Climate Change section to tout the great technological advances the world has seen over the past 30 years in telecommunications and healthcare, while there has been little change, until recently, in the way that energy is produced. (The same can also be said for transportation systems). That’s quite an admission for a company that produces the lion’s share of power generation technology. Clearly they are not entirely to blame for this. With fossil fuel prices being kept artificially low for so long, there was little incentive until recently to look for alternative sources, and GE has always kept its eye on the market.

Today, they acknowledge the existence of an energy revolution, though they continue to hedge their bets, claiming that “fossil fuels like coal, oil and natural gas are projected to be a large portion of our energy mix for decades to come.” Given how much of their portfolio depends on these fuels, they are standing by, ready to provide equipment to utilize them.

“We believe these fuels can be used as part of the overall energy mix, but innovation is needed to reduce the CO2 emissions associated with the process of extracting and upgrading the oil and gas, and to improve the use and treatment of water used.”

In fairness, they have done some impressive innovation themselves, including the recently announced Flex Efficiency 50 power turbines, a high efficiency system that integrates renewables into the grid that I reported on previously. And of course they are also big in wind and solar as well as part of their vast ecoimagination initiative.

Having invested $5 billion in the program during its first five years they are doubling up for the next five. Their latest targets are:

  • Invest $10 billion in green R&D over the next five years
  • Grow ecomagination revenue at twice the rate of the Company’s growth
  • Improve our own energy intensity by 50% by 2015
  • Reduce GHG emissions by 25% by 2015
  • Reduce our freshwater use by 25% by 2015

Ecoimagination products include home appliances, aircraft engines, water filtration systems to high-speed rail engines. They also include loans for energy-efficiency investments. GE Capital Real Estate’s ArdenACCESS uses smart-building technology to monitor and reduce energy use in commercial buildings.

In 2010, sales under this eco-umbrella grew to $18 billion, accounting for 12 percent of revenue.

The citizenship report describes several new energy initiatives such as:

  • Reduced use of rare earth minerals such as rhenium by reducing processing waste, using as little as possible, and recycling
  • Design for a healthy planet – using lifecycle analysis to improve the impact of materials, energy consumption, shipping weight, etc. of products
  • Development of sugarcane ethanol power plant in Brazil
  • Employee initiatives for saving energy – “Treasure Hunts” identified $150 million in savings and reduction of over 250,000 metric tons of CO2.
  • The challenge and opportunity of natural gas- developing technology to purify water contaminated by fracking

GE topped the Global 100 list of most sustainable companies in 201. This year, they were ranked #11. Clearly, one has to be impressed with the sheer magnitude of their efforts. And even if not all of their eco-initiatives are cutting edge and a number of them are really only minor tweaks on business-as usual, that are really more in the do-less-harm category than taking things in the kind of direction they truly need to go now; they have done some significant things in the name of sustainability, and perhaps more importantly, as a role model, they have made money at it.

They concede that they are not moving far enough or fast enough. But then, they can not do it alone. As the report states:

“The global challenge of providing reliable, affordable, accessible and clean energy to people around the world, and to do this within the limits that would prevent catastrophic climate change, is just too great for companies acting on their own. Without certainty about what the market will look like in years to come, no business is able to invest enough in the breakthrough technologies needed for energy system transformation.

GE supports development of market-based programs to slow, eventually stop, and ultimately reverse the growth of greenhouse gases. To accelerate innovation it is crucial that governments send the right signals and create demand for clean technologies. Although there was some encouraging progress at the international climate change negotiations in Cancun in 2010, the commitments of the world’s governments do not yet provide the loud, long, legal signals needed.”

RP Siegel is the co-author of the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water.  Like airplanes, we all leave behind a vapor trail. And though we can easily see others’, we rarely see our own.

Follow RP Siegel on Twitter.


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