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by Guy Morgan, Center Research Associate
June 2007
The saying used to be, "As GM goes, so goes the country." But replace one letter in that phrase and the updated version might be referring to Center member GE. One of the largest companies in the world (based on market capitalization), companies concerned with corporate citizenship have long looked to GE as a leader in this field and have used the company to benchmark their own programs and practices.
We recently spoke with Frank Mantero, Director of Corporate Citizenship Programs at General Electric, to get an update on the company's corporate citizenship efforts, and were given a sneak preview of GE’s latest citizenship report, published on June 21, 2007. Here’s the debrief:
The Center: We hear that GE’s forthcoming citizenship report is going to be a knock-out.
MANTERO: Well, it is very transparent. At almost 120 pages in length, it is more detailed than our last report. The report details a number of what I would term success stories.
For example, it outlines the fact that GE has reduced its worldwide greenhouse gas emissions by four percent, already surpassing its 2012 goal of a one percent reduction. It also includes our new statement of principles on human rights. Finally, in terms of addressing public policy issues, we detail all our political contributions in the U.S.
The Center: It certainly sounds very transparent.
MANTERO: We wanted to outline an approach to citizenship at GE that is enhanced by a series of very successful stakeholder panels, including the convening of a special panel whose responsibility was to review and comment on the report. Another example is the decision to publish data on political contributions, which was an important result of feedback from investors and shareowners.
The Center: In our experience, companies often talk about the fact that the citizenship reporting process unearths items that were not expected or anticipated. Did you unearth anything through the reporting process at GE this time around?
MANTERO: Interesting you should say that. In preparing for the 2007 Citizenship Report, we became aware of an inaccurate statement concerning one application of a product. The 2005 and 2006 GE Citizenship Reports discussed product-specific issues, including the statement “GE is not involved in any way in land mine or cluster bomb production and does not make these devices, nor sell parts or components for use in production of these devices.” However, a recently acquired business unit is presently supplying a sensor for use by a U.S. manufacturer of a next-generation cluster weapon for supply to the U.S. military. In 2005, sales of this sensor generated less than 0.001% of consolidated GE revenues. Of more than 250 million sensors produced each year, only 15,000 are used for this application.
This issue highlights the data-gathering challenges that the company faces due to its size and complexity. Conversely, this is a perfect example of how the citizenship report development process — in only its third year — is helping overcome structural barriers to identify gaps between stated policy and practice.
We have taken a number of corrective actions. The business will not accept any new orders for products used in this type of application and will not renew the contract at the end of 2007. More important, we examined the steps taken to date to ensure that the statements in this report are accurate and reflect a living commitment by the GE businesses. In 2007, GE businesses will review corporate citizenship commitments as part of the regular Session D, compliance-review process. GE is also launching a new company-wide review process that will be rolled out to new acquisitions going forward, allowing us to review and strengthen our acquisition integration processes.
The Center: We realize that GE’s latest report is hot off the presses, but we were wondering how plans for next year’s report are shaping up?
MANTERO: We already know that there is increasing interest in the "base of the pyramid" work in which GE is involved, but we are just in the beginning stages of planning for next year. In terms of ongoing process, we’re working with stakeholder groups again to help identify areas of interest to a broad array of stakeholders, so we’ll be well covered when it comes to producing the final report.
The Center: GE has rightly received plaudits for its ecomagination commitments. Can you talk about how this fits with the rest of GE’s citizenship strategy?
MANTERO: Ecomagination is an important environmental and financial component of our Triple Bottom Line. We produce a separate report for ecomagination that is an important summary of our environmental efforts over the past year as it relates to our product strategy, R&D program, greenhouse gas reduction efforts and ability to keep the public informed. The ecomagination report truly enhances the more detailed environmental data that exists within our overall citizenship report. We have been pleased with the visibility GE has been getting from ecomagination, and at the same time have been working to convey the fact that our approach to responsible business practices is a holistic one, incorporating environmental, economic and social performance metrics.
The Center: We’ve heard that GE is conducting a webcast to talk about the citizenship report. Can you tell us more about that?
MANTERO: We are indeed hosting a webcast on June 25 to discuss GE’s citizenship performance and ecomagination. The webcast will be hosted by Senior Vice President and General Counsel Brackett Denniston; Vice President of Corporate Citizenship Bob Corcoran; Vice President of Environmental Programs Steve Ramsey; Vice President of Investor Relations Dan Janki; and Executive Director of Corporate Communications Gary Sheffer. Again, I think this speaks volumes about our commitment to transparency and the fact that we are very open to feedback.
The Center: One final question for you. What advice do you have for other companies that are already issuing citizenship reports or thinking about doing so?
MANTERO: In putting our report together, we engaged a number of people, divisions, and business lines across the company and experts outside the company to get a complete view of our citizenship performance. Along the way, we got a better understanding of the myriad pieces that make up our commitment to investing in a sustainable future. From my own perspective, I would say that companies that are committed to transparency have to reach out both internally and externally during the reporting process to ensure they gather an accurate picture of their company’s overall citizenship performance. The process is complex but, certainly in GE’s case, a rewarding one.
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