A greener–and more open–GE

General Electric and Wal-Mart are the two most important companies in America, for different reasons: GE’s reputation for management excellence means that its ideas spread widely, while Wal-Mart’s size and clout put it at the center of the consumer economy. Last week Wal-Mart announced its plans for a sustainability index, generating lots of excitement, and today GE releases a citizenship report that demonstrates that the $183-billion company is becoming not just cleaner and greener, but more open.

“We just crushed our energy consumption goals,” Bob Corcoran, GE’s vice president for corporate citizenship, told me when we talked recently about the report. “We have crushed our greenhouse gas emission goals. I feel very good about that.”

He added: “I’m sitting in a building right now” – GE’s corporate HQ in Fairfield, Connecticut – “that has solar panels on the roof.”

As you’d expect from the company that popularized the precision-driven Six Sigma approach to quality, GE’s citizenship report, its fifth, has no shortage of facts, numbers and metrics. But what struck me most about the report were the insights it offers into the changing GE culture.

GE is the No. 1 U.S. wind turbine maker

GE is the No. 1 U.S. wind turbine maker

Before looking at the softer side of GE, a few hard facts.

On greenhouse gas and energy reductions, the report says:

In 2008, the Company reduced greenhouse gas emissions by 13% compared to 2004 levels. GHG and Energy Intensity have been reduced by 41% and 37%, respectively, compared to 2004. As a result, the Company achieved one of its three ecomagination goals in this area — to reduce GHG Intensity by 30% by 2008.

Of course, reducing “GHG intensity” isn’t as meaningful as reducing emissions in absolute terms. It’s noteworthy that GE did both.

The company also reports that sales of Ecomagination products, which are products identified by GE as helping to solve environmental problems, grew briskly, from $14 billion in 2007 to $17 billion in 2008. Ecomagination has had another big payoff, Jeff Immelt has told me—it makes people feel better about working at GE and helps attract new people to the company.

A key driver of the EcoMagination revenues is the wind turbine business acquired from Enron in 2002. According to the report:

GE is the number one wind turbine manufacturerin the U.S., and number two worldwide, with more than 8,700 wind turbines installed. Wind will be a $6 billion business for GE this year, up from $300 million when we bought it just six years ago.

Apart from all that, what the report shows is that GE is better than ever at listening to its critics, as well as to its own people. Pardon the jargon, but the company is becoming more of a learning organization.

As Corcoran put it: “The big change is probably that our ears are more open in more places.”

One example is the report itself: It includes comments from an advisory panel of outsiders, most from NGOs, who were invited to review an early draft of the report and recommend changes. The experts publish two pages of comments in the report, praising GE for paying greater attention to human rights and development issues this year, but saying that in the year ahead “should address how far its energy and climate commitments go in contributing to U.S. and global goals for climate stabilization.”

Here’s another way GE is tapping into the wisdom of crowds: It’s using “Treasure Hunts” in which its employees are enlisted to seek ways to save energy inside the company. Again, the driving notion here is that all intelligence does not reside with the senior execs of GE. (Watch this You Tube video of a 2008 Treasure Hunt at Universal Studios or read How GE’s ‘Treasure Hunts’ Discovered More Than $110M in Energy Savings at Greenbiz.com.)

More broadly, GE regularly convenes “stakeholder dialogues” where it brings in NGOS, including critics, to talk with the company about emerging issues. Recently, for example, the company convened a group in Washington to talk about how the world will adapt to (as opposed to mitigate) the impacts of climate change. Adaptation isn’t currently a business for GE, but you never know.

The regular conversations with outsiders have “helped us to really understand the impact that GE has, and can have, outside of our normal employee and customers relations,” Corcoran told me.

As Jeff Immelt puts in the report:

In the early years of my career, I had a typical businessperson’s reluctance to seek external opinions. A reset world brings a renewed opportunity to engage. Success in tomorrow’s markets means working with stakeholders to understand, predict, and shape our future environment and ways of living….Transparency and accountability will be more important than ever.

The evolution of GE—and Wal-Mart—around sustainability and corporate citizenship will eventually be recognized as one of the great business stories of this decade.

Solar panels on the roof of GE's headquarters

Solar panels on the roof of GE's headquarters

Comments

  1. Marc,

    You are right to highlight the influence that GE has on the way others manage their businesses. And it is fitting that you praise GE for its comprehensive and extremely well-crafted citizenship report. It is especially rewarding to see how well GE deals with the bigger issues of the day, and how hard the reporting team worked to get outside voices into the report.

    But I feel you are doing yourself and your readers a disservice by failing to point out that GE provides very few quantitative environmental performance goals. These are considered fundamental to good management. You don’t have to scrutinize the numbers, just read the statement from GE’s stakeholder panel.

    “[The Panel] encourages GE to identify more specific and quantitative performance metrics and targets and to report how its performance measures up to relevant external benchmarks and standards…we encourage GE to consider identifying a set of waste reduction targets…”

    This is pretty fundamental stuff and it is surprising that GE is so far behind the competition in setting targets and then reporting its performance.

  2. I have been searching for a reliable bunch of videos to watch to create our own Wind Turbine For the Home, I am for sure that I could save on our electricity costs. I am certain that alternate forms of energy is what is in the close future.

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