GE realizes the value of philanthropy

GE underscores the bottom-line impact of Ecomagination in order to sell it to stakeholders

GE underscores the bottom-line impact of Ecomagination in order to sell it to stakeholders

Companies are often disparaged for CSR efforts that lack teeth. Critics peg them as an afterthought, or a haphazard Band-Aid on an ailing image.

But General Electric didn't see it that way. Although the company was undertaking one of the most extensive environmental sustainability initiatives in its history, it also made sure that stakeholders were under no illusions about its motives.

Its message, quite clearly, was that CSR would make the company money.

"We had to be clear about why we were doing it," says Peter O'Toole, PR director for GE. "It's a business strategy."

GE's global Ecomagination initiative, which launched in May, has four goals: to double the amount of money invested in R&D by 2010; to introduce a greater portfolio of products that are cleaner and more energy efficient; to reduce greenhouse gas emissions by 2012; and to keep the public informed about its progress.

"A traditional observer of GE might see this as a change, but we see it as an evolution. [CEO] Jeff Immelt's main focus right now is growth," O'Toole says. "The real upshot is that Ecomagination is a long-term strategy."

In the months before the program launch, GE officials engaged stakeholders to find out what they wanted from the company. They spoke with customers, NGOs from Brussels to Japan, staff, and even critics.

"The goal was to make sure our customers agreed with us and we were meeting their goals," O'Toole says. "We wanted to not only speak, but also listen."

"It's a wonderful cross-company branding opportunity," says Lorraine Bolsinger, corporate VP of Ecomagination. "In simple terms, [the message is] that these products will have a great economic value for customers, and they will be green products."

The company hired Edelman for the project in December 2004. Bob Knott, Edelman EVP and head of the agency's corporate communications group, reiterates that GE wanted to underscore its focus on profit.

"GE has a well-worn tradition of only entering profitable markets," he says. By focusing on business objectives, "it signaled with unmistakable clarity that this was real."

Andrew Aulisi, a senior associate at the World Resources Institute (WRI), an environmental think tank, notes that activists generally are skeptical of "green-washing" campaigns that are designed to boost a company's image.

GE was already the target of activist ire for polluting the Hudson River with PCBs, a chemical that might be linked to birth defects and cancer. Activists have criticized the company for fighting a 2002 Environmental Protection Agency order to clean
up the river; the company and the agency finally reached an agreement last October.

"In the abstract, it can be a hard sell," Aulisi says about green marketing campaigns. But with Ecomagination, "a lot of shareholders were really pretty impressed."

He adds that Ecomagination was credible because it embraced a booming market opportunity.

"On the business side, I don't see any challenges," Aulisi says. "There's a solid market for this. What's good for business happens to be good for the environment."

The company also sought to open a dialogue on the issues driving Ecomagination, such as looming scarcities of energy and water, as well as the requirements of the Kyoto Protocol.

"We really worked the other side of the street, the Op-Ed side, very strenuously," Knott says.

He notes that rather than holding a press conference to launch the initiative, Immelt unveiled Ecomagination during a speech at George Washington University, an academic setting. Joining him was WRI president Jonathan Lash.

GE also retained GreenOrder, a consultancy that helps companies maximize profits from their sustainability efforts, to develop scorecards for products it had developed.

"If you're not credible, you get blown out of the water by advocates," says Andrew Shapiro, the firm's founder and CEO. "We knew going into this that GE hasn't always had a pure history. A lot of journalists wanted to know what's really behind this."

Shapiro recalls how vital it was to help the media understand what the facts and figures meant. "We did a lot of translation," he says.

According to O'Toole, GE is already on track to double its revenue, exceed its planned R&D investment (its current goal is $1.5 billion), and surpass its target for reducing greenhouse emissions.

"Because we're generating results, we've had positive reaction," O'Toole says. "It's had a real burnishing effect on our brand."

Aulisi notes that both governments and other businesses are closely watching Ecomagination.

"It's partly the strength of the program, but it's also General Electric," Aulisi says. "GE is the company that other companies benchmark themselves against. It has so much influence in the private sector."


AT A GLANCE

Company:
General Electric

CEO:
Jeff Immelt

Headquarters:
Fairfield, CT

REVENUES AND LATEST EARNINGS:
$18.3 billion, 2005 year-end earnings exceeded expectations with 12% increase in net profiT

COMPETITORS: 
Citigroup, Philips Electronics, Siemens

KEY TRADE PUBLICATIONS:
Energy Washington Week, Industry Week, Power Engineering, B to B

PR BUDGET:
Undisclosed

MARKETING TEAM:
CMO, Dan Henson
Executive director of communications and public affairs, Gary Sheffer
Director of PR, Peter O'Toole

MARKETING SERVICES AGENCIES (ECOMAGINATION):
PR: Edelman
Advertising: BBDO
Branding: Interbrand

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