May 16, 2005 |
"GE's goal is not to promote one or two energy technologies above the
others, but to push them all aggressively. Washington could learn a lot from
that strategy."
- Joel Makower, RE Insider
General Electric, the 125-year-old behemoth born out of Thomas Edison's electric light company, is casting a bright light on sustainability. Its chairman and CEO, Jeffrey Immelt, announced that the $150 billion company is hitching its future to the growth of clean energy, clean water, and other clean technologies through a commitment to what GE is calling "ecomagination." By almost any measure, it's a bold move. For GE, the fifth-largest U.S. company, it represents a strategic shift that could catalyze competition among some of the world's largest companies to accelerate the emerging clean-tech economy.
Working with my colleagues at GreenOrder, a New York-based consultancy
specializing in sustainable business, I have helped GE prepare for this day over
the past year or so, working at both the strategic and ground levels. Having had
a front-row seat, I've watched "ecomagination" catch fire at GE. I
thought I'd share what I learned.
First, some background. In announcing ecomagination, GE is committing itself to:
- more than double its research investment in cleaner technologies, from $700
million in 2004 to $1.5 billion in 2010;
- introduce more clean-tech products annually, doubling its current $10 billion
in annual revenues from ecomagination products and services to at least $20
billion by 2010, "with more aggressive targets thereafter."
GE also is pledging to improve its own environmental performance by:
- reducing its greenhouse gas emissions 1% by 2012 and the intensity of its
greenhouse gas emissions 30% by 2008, both compared to 2004 (based on the
company's projected growth, GE says its emissions would have otherwise risen 40%
by 2012 without further action);
- reporting publicly on its progress in meeting these goals.
What's driving GE to do this? First and foremost, it's a huge business
opportunity. Clean Edge recently estimated that global markets for just three
technologies -- wind power, solar photovoltaics, and fuel cells -- will grow to
more than $100 billion within 10 years, from about $16 billion today. That
doesn't include clean-water technologies, in which GE has invested heavily. (A
study last year predicted that the market for world water treatment technologies
will reach $35 billion by 2007.) And it doesn't include energy efficiency --
technologies that significantly reduce energy use -- which is, arguably, the
biggest market of all.
Beyond that, Immelt believes the private sector needs to step up to the plate in
addressing environmental challenges, and to stop viewing the environment as a
no-win business proposition. Immelt doesn't advocate abandoning government
action on the environment, but he sees an alternative pathway for business, one
in which the private sector embraces today's realities of environmental,
national security, and other concerns and invests in creating new markets for
cleaner fuels and technologies.
True, GE still manufactures nuclear power plants (which are not part of its
ecomagination goals) and is investing heavily in "cleaner coal"
technologies (which are part of the goals) -- not everyone's definition of clean
technology, though Immelt firmly believes they should be part of our energy
future.
Reasonable people can disagree on this, but it's hard to argue with Immelt's
willingness to put his company out front of the debate in a very visible way.
GE's goal is not to promote one or two energy technologies above the others, but
to push them all aggressively. Washington could learn a lot from that strategy.
GE seems to be doing several other things right in making ecomagination central
to its strategy. In many ways, it represents a textbook approach to what a major
corporate sustainability effort can look like. Here are six specific reasons I
believe GE is headed in the right direction:
- It's being viewed as a business opportunity. Few other large companies
-- BP, Dupont, and Interface are rare exceptions -- have set their sights on
making sustainability a cornerstone of topline business growth -- new products,
larger markets, stronger customer ties, etc. GE sees ecomagination as an engine
for creating new sources of business value for years to come. That's likely to
make it sustainable within the company, and not just the flavor of the month.
- It's got solid top-level commitment. Experts always talk about the
importance of having CEO buy-in to make sustainability more than just a
nice-to-do company initiative. (Again, BP's John Browne, Dupont's Chad Holliday,
and Interface's Ray Anderson are among a handful of exemplars.) Immelt seems to
be making ecomagination a personal quest, from his high-profile announcements
this week all the way to his personal appearance on the ecomagination Web site.
I'm guessing you'll be hearing Immelt preach the ecomagination gospel for the
foreseeable future.
- It's both aspirational and specific. GE's ecomagination pledge marries
high-level strategy and vision with specific targets and timetables. Both are
critical for sustainability to succeed inside a company, and having one without
the other is a recipe for failure. In providing both, GE has signaled its
intention to be an environmental and clean-tech leader, and has provided a road
map of how they plan to get there.
- They've done their homework. GE has identified 17 products representing
about $10 billion in annual sales as part of the ecomagination platform on which
it plans to build. In doing so, the company undertook an intensive process to
identify and qualify current ecomagination products, analyzing the environmental
attributes of GE products relative to benchmarks such as competitors' best
products, the installed base of products, regulatory standards, and historical
performance. (Doing this analysis was one of the key roles played by GreenOrder.)
For each ecomagination product, GE created an extensive "scorecard"
quantifying the product's environmental attributes, impacts, and benefits
relative to comparable products. The scorecards were used to create the product
claims that can be found in GE's printed materials, ads, and Web site.
- It's being integrated with the brand. GE says the ecomagination
"brand" will be integrated into its overall marketing -- at least for
the products that qualify. This is no small matter. Most companies have been
reluctant to play up their products' environmental benefits (if you don't count
those feel-good image ads that come primarily from energy, chemical, and
forestry companies), fearing that their green claims won't stand up to scrutiny
when weighed against the company's overall environmental footprint. GE's leaders
seem willing to take the risk -- largely because they're making specific claims
and are willing to back them up.
- They're in it for the long haul. Clearly, ecomagination -- like
sustainability itself -- is not a one-off campaign or short-term proposition. GE
seems determined to make ecomagination part of its identity. It plans not just
to market the brand aggressively to the world, but also internally, to GE's
300,000-employee base, to ensure that the notion of leadership through clean
technology is part of everyone's job.
Time will tell, of course, how effective this strategy will be in helping GE
gain business -- and shareholder -- value. If it works, it may provide a model
for how a company can strike out as an environmental leader in today's cynical
marketplace.
About the author...
Joel Makower (www.makower.com) is co-founder of Clean Edge (www.cleanedge.com),
a research and publishing firm, and founder of GreenBiz.com (www.greenbiz.com),
a portal on business and sustainability. See below for hotlinks.
Please Note: RenewableEnergyAccess.com and Arizonaenergy.org do not endorse the sites behind these links. We offer them for your additional research. Following these links will open a new browser window.
Copyright © 1999 - 2005 - RenewableEnergyAccess.com
Please visit www.RenewableEnergyAccess.com for great coverage on energy today!!