by Michael Connor
There’s an easy tendency to read corporate responsibility reports with skepticism, discounting high-sounding language about policies and principles as “greenwashing” that largely serves a company’s public relations goals.
When the report is issued by GE, however, I think it pays to read the language carefully and take notes. With operations in 100 countries and about 300,000 employees, GE generates annual revenue of $156 billion. The company’s stock is the most widely-held in the world, with more than 5 million shareholders.
While GE’s corporate behavior doesn’t always please everyone (and, in fact, often infuriates many), the company’s rigorous attention to management and best practices for over a century has regularly placed it at the head of the corporate pack. As Fortune magazine put it: “Through good years and bad, GE consistently does things the rest only wish they could.”
And so it is with GE’s 2009 Citizenship Report – Renewing Responsibilities – a 40-page document, supported with additional materials on the GE web site, in which the company sets forth a vision of addressing global concerns with confidence, integrating sustainability into its core business strategy.
“Our goals,” GE says, “are to make money, make it ethically and make a difference.”
In fact, the company views two of the world’s most pressing societal issues – the environment and health care – as huge commercial opportunities, central to its future. GE’s “ecoimagination” product line, launched in 2005, last year generated $18 billion in revenue, or 28% of the corporate total.
Not an Accounting Exercise
Assume that GE’s corporate citizenship team has spent considerable time and attention formulating the message it wants to convey in this report. Assume the message has been crafted by well-paid writers and – maybe even more importantly – vetted by high-priced lawyers. And then assume that the highest-levels of management are comfortable not only with the facts and figures in the report, but with the overall tone of the message from the top.
Then pay attention to the language.
“In light of what many have called the Great Recession,” says CEO Jeffrey R. Immelt, “the world is reset. Now we must lead an aggressive renewal to win the future.”
“Citizenship is not a spectator sport,” writes Sam Nunn, chair of the GE board of directors’ Public Responsibilities Committee. “Companies with global reach and impact like GE must set commercial priorities to increase shareholder value while recognizing that our business foundation rests on forward progress on public policy imperatives. GE is making a dedicated effort to develop its business strategy so that its products and services have a positive human impact and produce long-term business success.”
The report goes to considerable lengths to address the big picture: “Economies are rebuilding after the financial crisis, and with that comes the opportunity to reshape systems toward a pathway of sustainability — one that enables positive human impact. The challenge of meeting the needs of today’s nearly seven billion people, and tomorrow’s nine billion, is immense. The limits of the planet’s natural resources — clean water, air, energy and land — are already stretched. Closing the global gap between where we are and where we need to get to cannot be achieved by a return to business as usual.”
And this: “In the end, the return on investment for corporate citizenship is a world fit to live in, do business in, and hand down to our children — and this requires long-term commitment. The impact of successful corporate citizenship comes from driving the conversations (with employees, customers, regulators, competitors and markets) needed to catalyze systemic change. Turning corporate citizenship at this level into an accounting exercise linked to profit and loss calculations is wrong, a waste of time and a concept mistaken from the very beginning.” (Emphasis added.)
OK, it’s just language. But language can matter greatly. One of the tactical truisms of corporate responsibility reporting is that once a company has taken the plunge (and in this case, GE seems to be diving into some pretty deep water), retreat from the commitment is far more difficult. The language doesn’t guarantee that GE or one of its businesses won’t be in the news in a negative context sometime soon. It does mean, however, that the company is in the game and on record with some long-term thinking regarding corporate priorities.
There are no startling statistics in the GE report. Compliance, which many companies place in a silo separate from corporate responsibility, gets featured up front. GE uses about 700 designated ombudspersons throughout he company who act as independent resources for reporting integrity or compliance concerns; the company says anyone reporting a problem is “fiercely protected from any retribution.” Last year, there were 1,641 “integrity concerns” reported through the process, with a resulting 420 disciplinary actions, including 118 firings. (Not bad, when placed in the context of almost 300,000 employees.)
On a broader scale, GE’s citizenship strategy is focused on three areas: energy and climate change, sustainable healthcare, and community building – all “underpinned by our commitment to operational excellence.” Greenhouse gas emission and intensity are improving relative to established benchmarks; new technologies are driving healthcare breakthroughs; and the company seems mindful of how delicately an enterprise of its size must tread in dealing with governments around the world.
“We recognize that any business that is promoting a view on how best to achieve public policy goals while also advocating for its own commercial priorities runs the risk of running into conflicts of interests, both real and perceived,” the report says. “There are legitimate concerns that businesses may influence public processes unduly to achieve private ends, or conversely may lose commercial focus by aligning too closely with governments’ goals.”
Heavily influencing GE’s corporate citizenship strategy is an economic reality: more than half the company’s revenue now comes from outside the United States, “increasingly from emerging markets such as China and Brazil,” reports CEO Immelt. The result is a focus on localized research and development in countries around the globe and “a plan to sell these products in every corner of the world.”