Jeffrey Immelt: Making GE Sustainable

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"I'm responsible for this company. I stand behind the results. I know the details, and I think the CEO has to be the moral leader of the company, ... I think high standards are good, but let's not anybody be confused, it's about performance with integrity. That's what you have to do."

-Jeffrey R. Immelt, Chairman and CEO, General Electric Company.

In mid-2011, Jeffrey R. Immelt (Immelt), Chairman and CEO of US-based technology giant General Electric Company (GE), was thinking of new ways of expanding the company's green technologies and clean energy portfolio. He knew that in these tougher times marked by an economic slowdown, the sustainability movement would face more challenges than when economic times were good. Immelt wondered why in tough economic times, people saw sustainability as something that companies could not afford.

Since the beginning of his tenure as CEO in 2001, Immelt had transformed GE into a world leader in technological innovation in emerging markets and environmental solutions. Under his leadership, GE became one of the first companies to recognize the broad scope of applications available to green technology, investing in technologies that added cleaner and more environmentally responsible products to the company's portfolio. In 2005, Immelt laid the foundation for the company-wide green initiative called Ecomagination designed to promote GE's commitment to building clean energy technologies, fulfilling customers’ demands for energy-efficient products, and bringing reliable growth for the company. As part of the program, GE developed products and services with lower environmental impact, such as energy-efficient engines, appliances, locomotives, and wind turbines, solar power, and water-purification systems, and a range of cleaner coal technologies. Some analysts hailed Immelt as a responsible leader who was preparing GE to face future challenges through innovative strategies focused on growth. However, he also received criticisms from various quarters. While some critics questioned Immelt's seriousness in this initiative and dismissed it as eyewash, others criticized him for being too serious, saying that his lobbying for global warming regulations might harm GE's interests.

Taking the initiative forward, it was felt that Immelt would have to face several challenges. Not only would he have to make the initiative profitable to the company while operating in a difficult economic environment, he would also have to garner the support of the government as innovations in clean technology required substantial investments and government assistance. In the words of Amanda Griscom Little (Little), an environmental journalist: "It's the story of the birth of a truly new kind of business strategy, and the reconciliation of longtime foes-nature and commerce. Will technology be able to temper, and even solve, the immense and mysterious challenge of climate change? ... Can G.E., the company historically responsible for so many environmentally damaging technologies, now solve the world's toughest problems with planet-saving machinery? The answers depend, in part, on Immelt and the creativity of his engineers-but equally on the rest of America’s business leaders and the federal officials whose responsibility it is to call industry to action."

In 2010, GE generated US$18 billion in revenues and developed 22 new products and solutions under the Ecomagination initiative. The company cut its energy intensity by 33% and reduced greenhouse gas¹ (GHG) emissions by 24% compared with a 2004 baseline. GE also planned to invest US$10 billion in environmentally friendly products by 2015. According to Immelt, Ecomagination products would generate US$21 billion in revenue in 2011, which while less than its initial projection of US$25 billion by 2010, was still more than four times the US$5 billion recorded in 2005. “We did it from a business standpoint from Day 1. It was never about corporate social responsibility," he said. GE's revenues from its Ecomagination products were growing, but its stock prices were languishing. A disgruntled section of shareholders felt that Immelt should be more concerned about the company's struggling business units than about green initiatives. They contended that Immelt’s green initiative was fraught with a number of political and scientific risks that the investors had not been made adequately aware of.

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1] Greenhouse gases are those components in the atmosphere which contribute to the 'greenhouse effect' or global warming. The main natural greenhouse gases are carbon dioxide, water vapor, and ozone.

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