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GE Report Reveals Sustainability is Becoming a Material Issue

By Melissa J. Anderson

In July, GE released its 2010 Corporate Citizenship Report. A follow-up to last year’s report, which included a lengthy discussion of the purpose of business in today’s new complex, global context, this one features perspectives from business leaders across the corporation (and various outside experts as well), discussing GE’s strategy, successes, and challenges moving forward in the corporate citizenship space.

One of the most important developments in this year’s reports is the growing recognition that sustainability is more than a “nice to have.” The issue has become a costly concern.

According to the report, the urgency of environmental, social, and regulatory challenges have forced the company’s corporate responsibility response to “shift up a gear.” Here are a few ways that GE is responding to the material challenges represented in the new global marketplace.

Corporate Responsibility Becomes Strategic

To address these changing demands within the global marketplace, GE put together an Expert Advisory Panel in 2007. Since then, the report explains, the panel has evolved in scope, helping the company with”identifying strategic priorities and achieving goals.”

This year, the panel addressed some of the new demands the company faces in terms of sustainability.

Nick Robins, Head, HSBC Climate Change Centre of Excellence, and member of the panel explained:

“Responding to the increasingly acute sustainability imperative depends on companies demonstrating to their investors how short-term returns are connected to long-term challenges. This year, GE has shown it has grasped this agenda, pointing to a catalytic role in capital markets in the years ahead.”

The members of the advisory panel believe it is GE’s duty to investigate and respond to sustainability and societal issues – going beyond a philanthropic response to a business-based one.

Another member of the panel, Valdemar de Oliveira Neto, institutional Policy Director, Avina Foundation said:

“What is striking about GE’s approach is how it has evolved from community engagement or corporate philanthropy to really incorporating a conception of citizenship at the heart of strategy. But to really solve systemic challenges they will need to take another step up in scale and ambition in the way they collaborate to address social issues, particularly at a national level.”

He continued, “The challenge is to manage their engagement on social issues with the same rigor as their R&D programs; developing and testing out solutions in country-for country, and working out how to go from promising innovations to scalable solutions.”

Stacking up the Data

According to CEO Jeff Imelt’s opening letter, the company is taking these challenges seriously – because it sees an opportunity there. In the past ten years, he says, GE has tripled the amount of revenue it puts back into research and development (from 2% to 6%). Not only that, he says, but it’s also doubled its business outside the US (from 30% to 60%).

But, he says, the company knows it will have to do more to get ahead. He writes, “We are investing in clean technologies like energy efficiency, wind and solar, nuclear, smart grid and electric vehicles, because we believe it is not a question of “if” but “when” the world will shift toward more sustainable growth.”

Finally, he adds, it is part of GE’s responsibility to share its profits with the communities in which it operates. He says, “The public investments needed for a competitive economy all cost money, and it is part of the corporate responsibility of business to contribute a fair share of its profits.”

With nearly 300,000 employees working within the companies 100-country global footprint, it will have to do more than give back to communities – it will have to invest in their growth, to build the sustainable workforce of the future.

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