ge 2006 citizenship report
General Electric Company
Fairfield, Connecticut 06828
www.ge.com/citizenship
Solving
General Electric 2006 Citizenship Report
General Electric Company
GE Citizenship Report BC FC
CYAN MAG YELO BLK pms292
61832
05.03.06
Big
Needs
Table of contents
Overview
Ecomagination and Emerging Markets
Compliance and Governance
Human Rights
Environment, Health & Safety
Public Policy
Communities
Customers, Products and Services
Employees
Suppliers
Shareowners
Contact Information
GE by the numbers: strong, sustained
performance and stakeholder impact
1
20
36
44
48
58
62
68
76
82
88
92
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GE is the most widely held stock in the
world with more than 6 million shareholders
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GE buys ~$55 billion in materials, components, goods and services from suppliers
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GE has substantial financial resources,
remaining one of only six “Triple-A” rated
U.S. industrial companies with more than
11,000 debt holders
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GE invests ~$14 billion in its intellectual
foundation, including more than $5 billion
in product, services and information technologies; GE filed 2,561 patents in 2005
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The total GE family is comprised of more
than one million people, including 316,000
employees and more than 700,000
dependents; the GE family contributed
$215 million and more than one million
volunteer hours on community and relief
initiatives worldwide in 2005
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GE delivered earnings from continuing
operations of $18.3 billion, up 12%;
GE returned $14 billion to investors in the
form of dividends and share repurchase
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GE has earned the respect of the business
world; GE was named “America’s and Global
Most Admired Company” by Fortune
Magazine and “World’s Most Respected
Company” by Barron’s Magazine
GE AROUND THE WORLD
(White indicates GE locations, Revenues in $ billions 1)
Europe
$40.2B, +16%
~83,000 employees
U.S.
$71.8B, +6%
~161,000 employees
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GE’s global pension plans have more than
$54 billion in assets serving more than
520,000 retirees
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GE serves hundreds of millions of
customers; for example, GE Aviation has
~19.000 engines installed, GE Energy has
3,000 turbines installed providing nearly
700 gigawatts of energy capacity, and
GE Consumer Finance has more than 100
million cardholders or other customers
across the globe
Middle East,
Africa & Others
$7.7B, +7%
~2,000 employees
Americas
$10.6B, +13%
~24,000 employees
Visit GE’s interactive
online citizenship report at
www.ge.com/citizenship
This report is printed on Mohawk Options 100% PCW
manufactured entirely with wind energy and contains
100% post-consumer recycled fiber. This paper is
certified by Green Seal.
1 Includes U.S. exports to
external customers
General Electric Company
GE Citizenship Report IFC IBC
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05.03.06
back cover Earthquake survivors walk in a
refugee camp in Pakistan, where GE contributed
2,000 winterized tents in addition to healthcare
and energy equipment. In 2005, GE and its
employees contributed $215 million globally,
including $50 million in cash, products, and
services to support disaster relief efforts in
South Asia, the U.S. Gulf Coast and Pakistan.
Photograph ©2005 UNICEF Pakistan / Asad Zaidi
Today’s interdependent global economy
is creating new opportunities for growth—
and the corresponding challenges of
managing that growth responsibly.
In both instances, GE’s size is an advantage.
GE is solving big needs for countries that
need the broad range of infrastructure,
financing and healthcare that economic
growth demands.
GE is also solving big needs on behalf
of the challenges that face all of us—
including access to clean water, limited
natural resources and the need for more
energy-efficient products and services.
Asia Pacific
$19.4B, +24%
~47,000 employees
Totals
$149.7B, +11%
~316,000 employees
GE is committed to being a good global
citizen and leveraging its size to make a
positive impact—by solving big needs.
Ecomagination
A business strategy
for GE and a commitment
to solve big needs
for the environment.
Emerging Markets
Where GE takes a holistic
approach to growing revenue
while integrating its
citizenship responsibilities.
Compliance
and Governance
Remain non-negotiable
aspects of GE’s operations.
Environment,
Health & Safety
The focal points of GE’s
operational systems and
metrics to track performance.
A letter from Jeff Immelt
Dear Friends,
Since GE’s inception, its fortunes as a
company and its impact on society have
been inextricably linked. Inventions like the
light bulb and the X-ray, the first U.S. jet
engine and television broadcasting have all
had an influence that is much more farreaching than financial performance alone.
This simple idea of interdependence between
business and society remains at the heart of
our Company. What has changed, however,
is the size and scope of our Company and
of the growing needs of society.
4 ge 2006 citizenship report
Today, even as the world has seemingly
grown smaller through the enablement of
technology, communications, travel and a
global economy, it has also grown bigger
through the demographics of population
growth and all of its subsequent needs—
healthcare, housing and clean water to
name a few.
Within this new landscape, our opportunities and responsibilities as a company are
greater, and our response is more important
than ever before. In an era when the idea of
“big” is often viewed as a negative, we see
the potential of “big” with great optimism.
We call this year’s report “Solving Big Needs.”
It’s a look at how one company sees its
responsibility, mission and place in the world.
Making an impact on big problems takes
two qualities. We must be a great company—
with the capability, reach and resources to
make a difference. But we must also be a
good company—because true impact means
defining success in ways that go well
beyond the bottom line.
There is an alignment between the world’s
most pressing needs and the areas of our
most aggressive investment. As the world’s
need for cleaner, efficient forms of energy
grows, we are creating new technology and
building new capacity to meet those needs.
As sources of clean water become scarce,
our filtration and desalination technologies
expand supplies. Our technologies and
products are making possible a new era of
efficiency and environmental performance
in rail and aircraft engines. Our leadership in
diagnostics and biosciences puts us on the
front lines of a revolution in how we can see
and treat the human body. We are at the
forefront of new processes and structures—
like nanotechnology—with potential so
great the world is just beginning to grasp
the possibilities.
Beyond these market-facing efforts,
we believe that we can have a positive
impact through the way we manage size
within our own walls. This report details our
systems of governance, compliance and our
Environment, Health & Safety programs that
benefit from the rigor and oversight that
size requires. It provides metrics that show
where we are improving—and where we
must continue to focus to raise our performance to our aspirations.
Clearly, we have the resources and focus
to make an impact across a range of pressing needs. But does that alone define a
good company? Not entirely.
The difference is in how we engage with
all those who have a stake in our success,
the standards we set for ourselves, and our
responsibility to the world around us. The
baseline is integrity. We believe a company—
especially a leader with our visibility—must
perform with integrity in its interactions
with customers, employees, regulators and
communities. A good company leads by
example, not words.
In this report we offer a closer look at
two areas where an innovative company
and a better world come together. One is
our portfolio of ecomagination products
and services. The other is how we are helping to provide the infrastructure to improve
economies and lives in emerging markets.
“Solving Big Needs” is an aspiration that
inspires us—and reminds us of our responsibility and our challenges. Each year we strive
to reach the right balance and fulfill our
opportunity to be both a great company—
and a good one.
Jeffrey R. Immelt
Chairman of the Board
and Chief Executive Officer,
General Electric Company
ge 2006 citizenship report 5
A letter from Brackett Denniston and Bob Corcoran
Dear Friends,
It is a lot easier to say you are a good
corporate citizen than to be one. Citizenship
is not a promise, not a program, not a set of
good intentions. It is a full-time commitment—
with the same kind of goals, strategies
and accountabilities that drive any other
part of our business.
1.
Strong economic
performance
and stakeholder
impact
2.
Rigorous compliance
with fundamental
accounting and legal
requirements
3.
Going beyond
compliance
by supporting
ethical actions
GE’S CITIZENSHIP FRAMEWORK
Citizenship at GE is based upon three
key interrelated dimensions.
6 ge 2006 citizenship report
At GE, we believe the essence of corporate
citizenship is the ability to link integrity and
performance so tightly and on so many levels that good corporate citizenship is simply
part of who we are, what we do, and the
results we achieve.
Good citizenship sets a challenging goal—
high performance with high integrity.
Citizenship at GE has three key interrelated
dimensions.
Strong economic performance over a
sustained period of time. Such long-term
performance provides multiple benefits to
shareholders, creditors, employees, retirees,
customers, suppliers and communities.
Rigorous compliance with fundamental
accounting and legal requirements.
Sustained economic performance must be
built on the foundation of rigorous compliance
with all financial and legal rules—and on
compliance systems and a compliance culture
that require time, effort, resources and, most
importantly, leadership.
Going beyond compliance by supporting
ethical actions and the reasonable concerns
of stakeholders where there are opportunities
to create benefit for society and the longterm health of the enterprise.
One important way we support our culture
is to tap into the power of learning—the same
fundamental force that drives consistent
improvement in all our businesses. By that
we mean a tone and an environment of productive skepticism with the way things are.
There are always better ways, and it is our
job to find them—whether that is growing a
business or reporting our results or building
our communities.
You’ll see the results of our continuous
improvement in citizenship throughout the
company. At the same time, in this report we
have highlighted the following four specific
areas in which we aspire to be a leader:
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Ecomagination—accelerating the development, marketing and visibility of products
that will help our customers meet pressing
environmental issues across a variety
of industries. We have also set ambitious
targets for reducing the emission of
greenhouse gases and increasing the
energy efficiency of our operations.
R
Emerging Markets—a vital part of GE’s
growth strategy in the years ahead—but to
be successful we must integrate citizenship
from day one, solve big needs and create
value for local communities.
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Compliance and Governance—our
compliance systems have brought all our
business leaders into the process—not just
our finance and legal staffs. Maintaining
high standards of compliance and governance supports a high performance, high
integrity culture.
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Environment, Health & Safety—our
EHS management system is designed
to establish global standards, promote
business leadership, responsibility and
accountability for performance. GE does
this by providing our employees with the
information and training they need to meet
GE’s demanding EHS expectations and
maintain the monitoring systems to ensure
we meet these expectations everywhere
we operate, including emerging markets.
We have selected these areas based on
their relevance to our business today and see
them as vital to maintaining our business and
strengthening our citizenship performance.
Further, they reflect our belief that GE is well
positioned, because of our size and scale, to
solve big needs. Over time, we will identify
new areas where we hope to lead.
Even with the best intentions, size and
success make it easy to become insulated—
even isolated—from constituencies, leading
to a creeping satisfaction that because we’re
GE, we’re right. We work hard to beat down
that big-company arrogance.
The best way to fight that temptation is
to listen. To drive continuous improvement in
policies that truly address the concerns of
our stakeholders, we must have a very clear
understanding of what those concerns are.
We work very hard to establish candid twoway communications. One example: asking
our stakeholders around the world to
review our first Citizenship Report and to
give us their ideas on the efforts it describes.
We have integrated feedback from those
sessions into this report and in our citizenship targets moving forward.
Ultimately, turning good intentions into
results comes down to leadership. It’s the
difference between intention and impact.
We are developing the kind of leaders who
understand what true corporate citizenship
means, and know how to drive it into the
DNA of their businesses. We work with them
to set the right goals. We give them the
support they need. We demand accountability. And we keep score.
This is not an effort of a few of us—but of
all of us. And of that we are very proud.
Sincerely,
Brackett B. Denniston III
Senior Vice President & General Counsel
Robert L. Corcoran
Vice President, Corporate Citizenship
& Chief Learning Officer
ge 2006 citizenship report 7
Focus area
Overall
2005 progress
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Delivered 11% continuing revenue and
12% earnings growth
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Compliance and Governance
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Globalization/Human Rights
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Environment, Health & Safety
R
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Public Policy
R
Communities
R
Customers, Products and Services
R
Employees
R
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Ranked first for corporate governance in
the Financial Times annual “World’s Most
Respected Companies” survey
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Shareowners
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8 ge 2006 citizenship report
Published first annual citizenship report
Conducted timely investigation of
ombudsperson concerns, with 97% closed
to date, averaging ~50 days to close
Updated version of The Spirit & The Letter
published in 31 languages and distributed
to 300,000+ employees in 100+ countries
Achieved 16% global revenue growth
R
Reorganized businesses and implemented
“Company to Country” approach
Reduced injuries and illnesses by 5% and
lost-time cases by 8%
Certified GE’s 100 th U.S. VPP site and
200 th VPP/Global Star site
Invested in “localization” through training,
best practices and global technology centers
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Announced greenhouse gas and energy use goals
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Completed more than 2 million training units
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Achieved GE’s best performance ever on
air exceedances
Reached an agreement with the U.S.
Environmental Protection Agency on dredging
the PCB-containing sediments in the Upper
Hudson River
Assumed a more visible role with public
statements on the need for government
leadership on energy policy
Contributed $215 million globally, including
$50 million in cash, products and services for
disaster relief, from the GE family
Launched ecomagination; delivered $8.5 billion in
revenues and increased product pipeline by
more than 75% with 30 certified products
Paid out $2.4 billion in pensions and nearly
$2 billion in healthcare and other insurance costs
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Invested ~$1 billion in training and development
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Suppliers
Awarded Fortune’s “Global and America’s
Most Admired Company”
Conducted extensive supplier audits that generated 12,045 findings, with 93% closed to date
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Extended auditor certification program to India
Named “Most Respected Company” by Barron’s
(inaugural survey)
Maintained inclusion in Dow Jones Sustainability
Index; added to KLD Global Climate 100 Index and
Innovest Global 100 “Most Sustainable” Companies
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GE volunteers gave more than one million
volunteer hours on community and relief
initiatives worldwide
Invested $14 billion in intellectual foundation,
including more than $5 billion in product,
services and information technologies;
filed 2,561 patents
Improved total diverse and global female
representation and received several diversity
awards, including Working Mother Magazine’s
“100 Best Companies for Working Mothers”
Achieved record 95% employee survey response
rate and improvements in most categories
Digitized audit finding tracking
Improved introduction of supplier program
into new acquisitions
Conducted more than 350 analyst and
investor meetings
Moving forward
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R
R
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Conduct ongoing stakeholder
dialogues and incorporate
feedback
Focus on acquisition integration
processes to ensure prompt
implementation of policies
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Establish more forward-looking
targets
GE citizenship highlights
Focus on compliance in
emerging markets
Develop a human rights “statement of principles” and identify
areas where GE can most effectively serve as a positive influence
and further the adherence to
human rights
Further implement GHG
emissions and energy efficiency
program
Report on new waste and water
metrics (data being collected in
2006 for first time)
Continue to address needs
for increasingly complex global
regulatory environment
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Increase GE volunteers
participation
Continue progress on ecomagination commitments, including
doubling GE’s R&D expenditures
on eco-related technologies
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Implement best practices
from U.S.-based pension plans
to strengthen governance
procedures globally
Find efficient ways to encourage
suppliers to improve overall
management of EHS, labor and
security compliance in addition
to closing specific findings
Continue to provide transparent
communications
Continue support for EHS
programs in emerging markets
Play key role in energy policy
and early health
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Execute “Healthcare Re-imagined”
initiative (focus on predict,
inform, diagnose and treat)
Continue to provide a stable base
of development, opportunities,
jobs and benefits
Continue to expand Waste Site
Qualification Program beyond
current 28 countries
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Continue focus on data-driven,
research-based community
initiatives in targeted locations
to increase sustainable impact
Implement “Responsible Lending
Standards” and expand financial
literacy programs in countries
where GE Consumer Finance
does business
Focus on managing global
diversity—in a range of different
cultural settings
Continue to focus on individual
competitiveness by improving
employee tools and resources
Continue to focus on verifiable
finding closure
Go beyond auditing to consider
how capacity building can increase
adherence to supplier standards
“GE’s ‘Solving Big Needs’ approach
shows how a company can transform
its business model to create value for
society and shareholders. In the future
we would like to see GE continue to
build its systematic approach to the
prioritization of its most important
citizenship issues. In this way, it will
be able to make further progress on
its forward-looking priorities and
commitments, and cement its
leadership on the big issues at the
core of its strategy.”
Aron Cramer
CEO, Business for Social Responsibility
Maintain listing in Dow Jones
Sustainability Index
ge 2006 citizenship report 9
About this report
GE has a three-pillar framework for citizenship and
the organization of this report follows the sequencing
of these principles as they relate to key reporting content:
1. Strong economic performance and
stakeholder impact (Sections 1, 7–10)
2. Rigorous compliance with fundamental accounting
and legal requirements (Sections 2–4)
3. Going beyond compliance (Sections 5–6)
Content selection
GE operates in more than 100 countries around the world and has
a diverse business portfolio covering sectors as varied as finance,
infrastructure, healthcare, consumer appliances and entertainment.
It is important that GE takes a systematic approach to the selection
of issues and metrics to include in this report.
For this reason the Global Reporting Initiative (GRI) 2002
Sustainability Reporting Guidelines have been one of a number of
resources used to inform the development of this report. The GRI
core indicators covered are those believed to be most relevant to GE
and its stakeholders. The GRI Reporting Principles (at right) were used
to help decide what issues to include in this report.
A full GRI Index for the report can be found on the web site at
www.ge.com/citizenship/gri.
Scope of the report
This report was published in May 2006 and covers all of GE’s worldwide operations for the 2005 fiscal year except where otherwise
stated. This is GE’s second corporate citizenship report—the
report for the previous year is available on the web site at www.ge.
com/citizenship/2005.
GE’s (internal) Audit Staff verified all the metrics and claims in this
report and it was reviewed and approved by GE senior management.
GE also consulted with Business for Social Responsibility (BSR) on the
relevance, completeness and responsiveness of the report.
A complete statement about GE’s approach to reporting can be
found on the web site at www.ge.com/citizenship/scope.
10 ge 2006 citizenship report
Sustainability
context
Global social
& environmental
challenges
Completeness
GE’s worldwide
operations and six
businesses
Inclusiveness
Issues raised by
stakeholders
Relevance
Most important issues for
stakeholders and for GE
Report content
GE Company profile
and financial highlights
GE is an integrated company organized into six businesses:
Infrastructure, Industrial, Commercial Finance, Consumer
Finance, Healthcare and NBC Universal. The reorganization of
the Company into six businesses in 2005 presents a simplified
structure to key stakeholders and makes it easier for customers
to do business with GE.
GE’s 2005 financial results:
CONSOLIDATED REVENUES (In $ billions)
DILUTED EARNINGS PER SHARE
FROM CONTINUING OPERATIONS
BEFORE ACCOUNTING CHANGES (In dollars)
150
108
114
01
02
113
03
05
01
.88
1.56
1.37
1.29
04
1.72
1.58
134
DIVIDENDS PAID PER SHARE (In dollars)
.76
.80
.72
02
03
04
.64
02
03
04
05
01
05
“GE is in tremendous shape. With our portfolio changes substantially completed,
including the repositioning of our insurance portfolio, we have reorganized our
businesses to more closely focus on our customers (especially in the emerging
markets), further simplify our operations, and sustain our momentum.”
Jeff Immelt
GE Infrastructure
GE Infrastructure is one of the world’s leading providers of essential technologies to
developed, developing and emerging countries, including aviation, energy, oil and gas,
rail, and water process technologies and services. GE Infrastructure also provides
aviation and energy leasing and financing services.
At-a-glance
2005 revenues $41.8 billion
2005 profit ⁽v%⁾ 14%
products
types of customers
Power generation and energy delivery systems; water and process filtration
and purification; jet engines; turbines, compressors and ancillary products
and services for the oil and gas industry; freight and passenger locomotives,
diesel engines for marine and stationary power applications, motorized systems for mining trucks, and signaling and communications systems for the
rail industry; broad-based commercial financial solutions including structured
equity, leveraged leasing, partnerships and project finance
Aviation and GECAS Airframe
manufacturers, commercial airlines,
U.S. and international governments
ecomagination products
GEnx engine, GE90-115B engine, Evolution Series locomotive, LM2500+
marine engine, Cleaner Coal (IGCC), Water Scarcity Solutions, H System Gas
Turbine, wind turbines, Solar, LMS 100 Aero turbine and the Jenbacher Coal
Mine Methane, Landfill and Biogas applications
12 ge 2006 citizenship report
Energy and GE Energy Financial
Services Independent power
producers, utilities, oil and gas
producers, oilfield services, pipeline
and coal companies
number of employees ~85,000
Transportation Railroads, transit,
marine and mining companies
Oil & Gas Exploration/production
companies, transportation and
processing
Water & Process Technologies
Industry, agriculture, local and
international governments
key citizenship priorities
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Renewable energy and more energy and fuel efficient products and services
(please see pages 24–25, 74)
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Infrastructure development in emerging markets (please see pages 28–35)
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Product use concerns related to nuclear and military products
(please see page 71)
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Project financing (please see page 73)
GE Industrial
GE Industrial provides a broad range of products and services throughout the world,
including appliances, lighting and industrial products; factory automation systems;
plastics, silicones and quartz products; security and sensors technology, non-destructive
testing and equipment financing, management and asset intelligence services.
At-a-glance
2005 revenues $32.6 billion
products
Appliances, lighting and electrical equipment products; engineered thermoplastics; sealants, rubber, oils, coatings, quartz and ceramics; commercial
and industrial protection technology; full-service transportation equipment
leasing, and rental and asset intelligence; sensors and nondestructive testing; technology-driven inspection solutions and products; and automation
systems and devices
ecomagination products
Silwet SuperSpreader, ENERGY STAR® qualified products, X$D Ultra motor,
Flexible Noryl wire coating, NXT silane family, Lexan paint replacement
2005 profit ⁽v%⁾ 40%
number of employees ~85,500
types of customers
for more information
Retailers, home improvement stores, electrical distributors, utility companies,
lighting manufacturers, homebuilders; original equipment manufacturers
(OEMs), machine builders, municipal water/wastewater treatment OEMs
suppliers and inspection companies—direct and via distributors; global
manufacturers/molders; transporters of goods and materials
key citizenship priorities
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Consumer product energy and water efficiency (please see pages 24–25)
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Lighting product take back/recycling (www.geconsumerandindustrial.com)
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Animal testing (please see page 75)
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Product content, such as mercury in lighting products (please see page 71)
ge 2006 citizenship report 13
GE Healthcare
GE Healthcare is a leader in the development of a new paradigm of patient care.
GE Healthcare’s expertise in medical imaging and information technologies, medical
diagnostics, patient monitoring systems, disease research, drug discovery and
biopharmaceutical manufacturing technologies is dedicated to detecting disease
earlier and helping physicians tailor treatment for individual patients.
At-a-glance
2005 revenues $15.2 billion
2005 profit ⁽v%⁾ 17%
products
key citizenship priorities
Medical diagnostic imaging equipment (X-ray, CT, MRI, ultrasound,
PET scanners), imaging contrast agents and molecular diagnostics, patient
monitoring and anesthetics systems, drug discovery and biopharmaceutical
manufacturing technologies, and integrated healthcare IT systems
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types of customers
Healthcare professionals and their patients, healthcare providers and administrators, pharmaceutical industry, biomedical research organizations, academia
14 ge 2006 citizenship report
number of employees ~45,000
Early Health initiative—moving global healthcare systems to a model that
detects disease earlier (www.gehealthcare.com)
Clinical research ethics such as genetics, animal testing and stem cells
(please see page 75)
Meeting healthcare needs in emerging markets (please see pages 33, 70)
NBC Universal
NBC Universal is one of the world’s leading media and entertainment companies
in the development, production and marketing of entertainment, news and information
to a global audience.
At-a-glance
2005 revenues $14.7 billion
2005 profit ⁽v%⁾ 21%
number of employees ~15,000
products
key citizenship priorities
A leading content provider of entertainment, news, and sports television
programs; movies; vacation resorts and theme parks; online content
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Broadcast standards (please see page 71)
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Distributing content through digital media (www.nbcuniversal.com)
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Reaching growing global populations (www.nbcuniversal.com)
types of customers
Consumers of television, film, and parks content; advertisers
ge 2006 citizenship report 15
GE Commercial Finance
GE Commercial Finance offers an array of services and products aimed at enabling
businesses worldwide to grow. GE Commercial Finance provides loans, operating leases,
financing programs and other services.
At-a-glance
2005 revenues $20.7 billion
2005 profit ⁽v%⁾ 20%
products
key citizenship priorities
Loans, leases and other financial products and services to help businesses
finance facilities, equipment, real estate and other capital assets
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types of customers
Businesses of all sizes; in dozens of industries, including manufacturing,
real estate, healthcare, construction and telecommunications;
located across 35 countries
16 ge 2006 citizenship report
number of employees ~22,000
Compliance and governance in challenging operating environments
(please see pages 36, 40)
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Data privacy (please see page 41)
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Anti-money laundering (please see page 41)
GE Consumer Finance
GE Consumer Finance is a leading provider, under the GE Money brand, of credit services
to consumers, retailers and auto dealers in countries around the world, offering financial
products such as private label credit cards, personal loans, bank cards, auto loans and
leases, mortgages, corporate travel and purchasing cards, debt consolidation and home
equity loans and credit insurance.
At-a-glance
2005 revenues $19.4 billion
2005 profit ⁽v%⁾ 21%
products
key citizenship priorities
An array of financial services including home loans, credit cards,
personal loans, insurance, auto loans and savings
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types of customers
Individual consumers and retail clients such as auto dealers
and department stores
number of employees ~50,000
Responsible lending issues, such as predatory and sub-prime lending
(please see pages 72, 73)
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Anti-money laundering (please see page 41)
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Consumer financial literacy and access (please see page 73)
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Data privacy (please see page 41)
Micro-lending and credit in emerging markets
(www.geconsumerfinance.com)
ge 2006 citizenship report 17
Stakeholder
engagement
GE is working to create a more formal process
for soliciting the views of stakeholders through
active engagement. These discussions
provide valuable input that GE uses in developing and evolving its citizenship strategy,
performance and reporting. GE is committed
to ongoing dialogues with diverse, global
stakeholders, and has conducted several
recent engagement sessions with the
following goals:
1. Listen to stakeholders and learn about
their concerns and issues
Focus area
Overall
4. Develop lines of communication to
facilitate ongoing relationships with
stakeholders
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Compliance and
Governance
Globalization/
Human Rights
2. Understand stakeholder perceptions
relating to GE’s citizenship performance
and reporting
3. Identify emerging trends that may
impact GE
Stakeholder feedback
R
R
R
Environment,
Health & Safety
R
Public Policy
R
Non-Governmental Organizations—
Transparency International, International
Corporate Governance Network, World
Resources Institute (WRI), World Business
Council for Sustainable Development,
Amnesty International, American Rights
at Work, People for the Ethical Treatment
of Animals (PETA), Ceres, ORSE
(Observatoire sur la Responsabilité
Sociétale des Entreprises)
Communities
R
Employees
R
Shareowners—Smith Barney-Citigroup,
Generation Investment Management,
Sustainable Asset Management (SAM),
Interfaith Center on Corporate Responsibility
(ICCR), State of Connecticut Treasury
Suppliers
R
Shareowners
R
Participants included:
R
R
R
SRI Ratings Agencies—Innovest, KLD
R
Community Organizations—China Youth
Development Foundation, Abu Dhabi
Government—Mubadala, Rotary Society of
India, Youth Reach India
GE also engaged employees through a variety
of mechanisms, including anonymous allemployee surveys, town hall-type meetings
with the Chairman and other Senior Officers
and roundtable discussions with various
segments of GE’s diverse employee population.
18 ge 2006 citizenship report
Customers,
Products and
Services
R
Assume a visible leadership role
in citizenship
R
Conduct issue and businessspecific engagement
Continue to increase reporting
transparency and value-add
metrics
GE considered a leader in consistently applying high standards of
compliance and governance
wherever in the world we operate
GE human rights-related elements
are dispersed across various
policies and codes of conduct
R
R
Develop a single human
rights policy
Continue to provide transparent
communications regarding
remediation efforts, especially
the Hudson River
Decide which issues GE seeks to
lead on, and convene coalitions
in those areas
R
R
Acknowledge the challenge
of operating in locations with
poor governance
Provide more detail on GE’s global
approach, especially human rights
and economic impact in the
developing world
Continue to demonstrate
progress made through data/
metrics; report waste and
water use metrics
Take a leadership role on
climate change
Take a global approach to
community investment programs
GE’s ecomagination leadership is
appreciated; opportunity to make
a similar impact in other areas
(e.g., healthcare)
Continue to provide world-class
job opportunities and benefits
R
R
Enhance reporting on financial
services sustainability priorities
Apply U.S. diversity programs
globally
Provide more detail on
corrective actions, investigations
and supplier terminations
Growing mainstream investor
interest in environmental, social
and governance factors
The Company viewed these stakeholder
sessions as a successful dialogue and a
solid foundation for further developing
these relationships. GE has applied feedback
in this year’s report and in its actions and
operations wherever applicable. Future
sessions will include broad-based group
discussions as well as issue-specific topical
meetings. Beyond helping GE to better
address individual stakeholder concerns,
these sessions have also enriched the
Company’s view of its citizenship role and
responsibility. GE is grateful to everyone
who participated.
R ge recently held a stakeholder engagement session in London, U.K. Participants
included (left to right): John Vassallo,
GE International; Delphine Poligné,
ORSE (Observatoire sur la Responsabilité
Sociétale des Entreprises); and Nick Robins,
Henderson Global Investors.
Solving Big Needs
Spotlight on ecomagination and emerging markets
Today, and for years to come, the world is faced with
some big challenges:
R
Known reserves of oil and gas are being depleted
R
There is global recognition by governments of
the need to take steps to slow the growth of and
then reduce greenhouse gas emissions
R
More than one billion people across the globe
lack clean water
R
Developing countries are growing at an unprecedented rate—placing new demands on natural
resources, infrastructure and access to energy
and healthcare
In concert with customers, governments
and non-governmental organizations,
companies around the world are working
to help solve these challenges to impact
their future growth and the environment.
GE’s size, experience and global capabilities
enable it to take on big challenges and
create visibility around needs in a way that
few other companies can. Ecomagination
is a business strategy to help meet
customers’ demand for more energyefficient, less-emissive products and to
drive growth for GE. Emerging markets
need GE’s broad range of infrastructure,
financing and healthcare, and GE will
integrate its citizenship responsibilities as
it grows to ensure a positive impact.
1
ecomagination
2
Emerging Markets
ecomagination
Ecomagination is GE’s commitment to imagine
and build innovative solutions that benefit
customers and society at large. It is both a
business strategy to drive growth at GE and
a promise to contribute positively to the
environment in the process.
22 ge 2006 citizenship report
In May of 2005 GE launched its ecomagination initiative based on four commitments.
GE pledged to:
1) Double investment in R&D—GE is growing its research in cleaner technologies
from $700 million in 2005 to $1.5 billion
in 2010
2) Increase revenues from ecomagination
products—GE will grow revenues from
products and services that provide significant and measurable environmental
performance advantages to customers—
to at least $20 billion in 2010, with more
aggressive targets thereafter
3) Reduce greenhouse gas (GHG) emissions
and improve the energy efficiency of its
operations—GE is committed to reduce
its GHG emissions 1% by 2012, reduce
the intensity of its GHG emissions 30% by
2008, and improve energy efficiency 30%
by the end of 2012 (all compared to 2004).
Without this action, GHG emissions were
predicted to rise substantially by 2012,
based on GE’s projected growth.
4) Keep the public informed—GE’s annual
citizenship report, ecomagination web
site and advertising are just some of the
ways that the Company will keep the
public informed
These commitments pose real challenges
for GE and reflect the broader challenges
faced by its customers and society.
GE’s strength as a global leader in energy,
technology, water, manufacturing and
infrastructure enable the Company to be
well-positioned to meet these challenges.
At the same time, just one year into its
commitment, GE is at the very beginning
of a long-term plan to meet its goals.
This section details GE’s progress in
meeting its own big challenges—and those
of its customers and the environment. GE
measures its performance against each of
the four commitments over the course of
the past year.
ge’s evolution series locomotive
uses less fuel and generates 40% fewer
emissions compared to prior models. In
2005, GE delivered nearly 700 Evolution
Series locomotives to North American
Class 1 Railroads.
Q
ge 2006 citizenship report 23
Commitment #1:
Double our investment in R&D
GE’s commitment to double its investment
in R&D for cleaner technologies is on track,
and is spread among each business as
shown below.
R&D is well funded across all businesses,
enabling GE to explore continuous improvement of existing products while searching for
the next big breakthrough. Funding is shared
between GE’s four Global Research Centers
(located in Shanghai, China; Munich, Germany;
Bangalore, India; and Niskayuna, New York)
and across each of GE’s six businesses.
Across the breadth of GE there are more
than 25,000 technologists and 2,500 dedicated scientists staffing GE’s GRC locations.
The four GRC locations serve as dedicated
labs for long-term R&D commitments and
act as a resource for collaboration with
individual businesses on key projects.
ECO R&D INVESTMENT (In $ billions)
~1.5
~0.7
05
R&D pipeline
While each business pursues R&D specific to its
industry and product portfolios, the Global Research
Center is developing a broad technology portfolio to
help customers and society meet a range of energy and
environmental challenges.
Renewable energy initiatives
GE is exploring a number of research
programs to promote the development
of renewable sources of energy:
Wind Energy
Researchers are exploring more sophisticated
wind turbines with advanced control features,
new blade designs to better maximize wind
capture and better ways to integrate largescale wind parks into the electric grid. GE also
is involved in a $27 million partnership with
the U.S. Department of Energy (DOE) to design
a next-generation offshore wind turbine
that will be between 5 and 7 megawatts—
making it one of the most powerful wind
turbines in the world.
10
Photovoltaics
GE is investigating how to use photovoltaics
to generate power from sunlight more costeffectively. GE already manufactures solar
electric power systems, including building
and roof integrated tile systems, which can
help homeowners and businesses reduce
their monthly energy costs by up to 60%.
The remaining hurdle to opening up this
market even further is to make this technology more affordable to obtain. We are
evaluating ways to improve material use
and incorporate alternative technology
designs to realize this goal.
Biofuels
Recognizing the benefits and availability of
alternative fuels, GE continues to develop
new technologies that enable its power
generation engine and turbine products to
burn a wide variety of biofuels and make
them more fuel flexible.
24 ge 2006 citizenship report
Geothermal and Waste Heat
GE is exploring ways to cost-effectively
generate electricity from lower temperature
heat sources. Such heat sources are widely
available as waste heat in many industrial processes and in the earth’s crust. Geothermal
energy is derived from heat originating
deep inside the earth that is accessible from
within 3–5 km of the earth’s surface.
Cleaner Coal
GE’s research team is working on the next
phase of power generation to convert coal
into a cleaner burning fuel. By incorporating
new technologies to improve the existing
Integrated Gasification Combined Cycle
System (IGCC), researchers can increase
process efficiency while reducing capital
costs and atmospheric emissions. Longerterm, researchers are developing innovative
technologies for the co-production of power,
hydrogen and synthesis gas as a feedstock for
chemicals and liquid fuels from coal. The goal
is to offer a significant increase in energy efficiency relative to conventional gasification and
combustion systems while reducing pollution.
Solid Oxide Fuel Cells
GE’s solid oxide fuel cell program is designing
distributed energy generation systems for
the future. These systems will provide more
cost-effective grid solutions utilizing hybrid
power generation systems. Because solid
oxide fuel cells can provide a continuous flow
of power and operate at high temperatures,
they will be able to greatly enhance energy
efficiency in smaller power plants.
2005
Hydrogen energy
GE researchers are leading the way to
creating technologies that provide the production, distribution and storage solutions
needed to build a hydrogen infrastructure
and utilize this more environmentallyfriendly carbon-free fuel for transportation
and other purposes.
On the production side, GE has a promising electrolyzer program with the U.S.
Department of Energy with the goal of
bringing the cost of hydrogen down to a
level that can compete with gasoline. To get
there, researchers have found a more costeffective way to build the electrolyzer by
replacing most of the metal parts in the
stack with parts made of a GE-invented
plastic called Noryl™ resin. GE also has
research programs in coal gasification and
natural gas reforming to produce hydrogen and to expand capabilities for dealing
with carbon dioxide.
Finding cleaner, more cost-effective
ways to produce hydrogen is challenging,
but the biggest challenge in transitioning
to a hydrogen-based economy is finding
solutions to store hydrogen on a large
scale. GE researchers are working on an
ongoing research program in metal
hydride storage, which has the potential to
help solve scale and storage issues.
Water use and
purification initiatives
Scientists are investigating new membrane
materials and innovative “advanced” separation technologies to further treat and
improve the performance of on-site wastewater reuse and recycling for the industrial,
agriculture and municipal sectors. Benefits
include minimizing the volume of waste
flowing back into our precious water
sources while simultaneously reducing
operational costs. In addition, researchers
are developing new membrane materials
and energy recovery devices, which would
enable brackish and seawater desalination
plants to streamline systems, reduce costs
and cut energy consumption by up to 30%
over the next five years in the near future.
Transportation initiatives
GE researchers are exploring new
technologies to bring the Evolution Series
locomotive platform to set even higher
standards for emissions reductions and
fuel efficiency. These include refining the
fuel injection system, modifying the alternators and optimizing the engine’s pistons
and turbo designs. Enhancements to the
Evolution platform will also enable GE
engineers to develop a heavy-haul hybrid
locomotive to further improve fuel efficiency and reduce emissions.
In aviation, GE researchers are also
working on a slate of new technologies for
the GEnx jet engine, which will deliver 15%
better specific fuel consumption and 57%
fewer NOx emissions than other engines in
its class.
Energy efficiency initiatives
Looking ahead 10 years and beyond, GE
researchers are working to commercialize
organic light emitting diode (OLED) lighting
applications that will provide customers
with an entirely different way to light homes
and businesses. These applications will be
mercury free and deliver dramatically
improved levels of efficiency.
ge 2006 citizenship report 25
Commitment #2:
Increase revenues from ecomagination products
GE products and services form the basis of
its ecomagination commitment—providing
a solution for customers to meet the
increasing challenge of running their businesses in a way that continues to minimize
environmental impact. When ecomagination
launched one year ago, GE had 17 products
certified. Today, the product pipeline has
increased by more than 75% with 30 ecomagination certified products and 10 more
pending.
To ensure that product introduction
commitment is met with the highest degree of
integrity, GE employs a rigorous qualification
process to effectively certify new products
for ecomagination. The process began with
establishing a clear standard for ecomagination products based on two criteria.
Ecomagination offerings are:
the genx engine delivers 15% better
fuel consumption than the engines it
replaces, and its emissions are up to
90% less than 2008 regulatory limits.
GE’s ENERGY STAR qualified refrigerators use 15% less energy than federal
standards require. GE’s Offshore Wind
Turbine provides enough energy to
power 1.5 million U.S. homes.
Products that
1. Improve customers’ operating
performance or value proposition
2. Significantly and measurably improve
customers’ environmental performance
or Services that substantially enable the
improvements mentioned above
These two criteria are not mutually exclusive.
At the heart of this standard is GE’s belief
that “green is green”—that by developing
environmentally advanced products GE
will grow.
Using this standard as a foundation, GE
then created a process to evaluate individual
product performance against the standard.
Each product was qualified by analyzing its
environmental attributes relative to benchmarks including competing products, the
installed base of prior products, regulatory
standards and historical performance. The
26 ge 2006 citizenship report
outcome of this process is the Ecomagination
Product Review (EPR) scorecard that quantifies
the product’s environmental impacts and
benefits relative to other products. To ensure
the accuracy of the scorecard, GE worked
with GreenOrder (www.greenorder.com) to
provide independent, quantitative environmental analysis and verification of GE’s
product claims.
For a full list of GE’s ecomaginationcertified products please go online to
www.ge.com/citizenship/spotlight.
ECOMAGINATION REVENUE GROWTH (In $ billions)
20
10
11
05
06(E)
6
04
10(E)
Commitment #3:
Reduce our greenhouse gas emissions
One of GE’s four pledges under ecomagination is to improve the energy efficiency of its
operations and reduce the Company’s
greenhouse gas (GHG) emissions. GE’s plan
to achieve this is called 1-30-30. The “1”
reflects the percentage by which GE will
reduce its absolute GHG emissions worldwide
by 2012—a big goal given that GHG emissions
would otherwise have grown emissions
substantially based upon current business
growth projections. GE also committed to
reduce the intensity of its GHG emissions
30% by 2008 and improve energy efficiency
30% by the end of 2012.
In 2004 and 2005, the Company worked
synergistically in attacking higher energy
costs from every angle. GE undertook nearly
500 energy conservation projects globally,
resulting in more than 250,000 tons of GHG
emission reductions—or the equivalent of
removing nearly 50,000 cars from the road.
This resulted in $14 million a year in energy
cost savings. For example, businesses
across GE have started a major program to
re-lamp manufacturing facilities with GE’s
latest technologies. Moreover, GE is the largest participant in the U.S. Environmental
Protection Agency’s ENERGY STAR Million
Monitor Drive, to enable power savings features on personal computers.
Regarding the Company’s most recent
performance, please see page 54 for an
in-depth look at GE’s progress in this area.
Commitment #4:
Keep the public informed
GE utilizes several vehicles to engage the
public, including its web site, advertising,
special engagements and conferences,
stakeholder events and “dreaming sessions”
with customers on issues that will affect
specific industries over the next 10 years
(see page 70). In the past year, GE also participated in dozens of global forums to initiate
its commitment to keep the public informed.
Examples include:
R
Clinton Global Initiative—GE Chairman and
CEO Jeffrey R. Immelt spoke about climate
change at the inaugural meeting of the
Clinton Global Initiative.
R
Business for Social Responsibility Annual
Conference—Lorraine Bolsinger, vice
president for ecomagination, participated
in Business for Social Responsibility’s
annual conference and led a breakout
session on ecomagination.
One of the ways that GE hopes to increase
its engagement with the public is through
the creation of an Ecomagination Advisory
Council. The council will be comprised of a
board of 6–8 industry thought leaders with
expertise in energy and the environment.
The council will meet at least once per year
at GE’s Global Research Center in New York
and will focus on giving GE guidance on its
technology research and investments.
Council members will be asked to participate
in quarterly conference calls, provide new
ideas on ecomagination, help generate or
review white papers for distribution to key
stakeholders and participate in GE-sponsored
events and other forums that engage
the public.
GE achieves broad awareness through
its advertising efforts and ecomagination
web site (www.ge.com/ecomagination).
When GE announced its ecomagination
commitment in May of 2005, it launched a
simultaneous advertising campaign in television, print and online media. On the date
of GE’s ecomagination launch, traffic to
www.ge.com increased by 66%. To date,
the dedicated ecomagination web site has
recorded more than 550,000 unique visitors.
More than 50% of site visitors have sent ad
links to their friends. Popular search engines
like Google and Yahoo have received more
than 170,000 requests for information on
the term “ecomagination.”
GE continues to evaluate how to maximize
the range and depth of engagements with
NGOs and governments to learn how to
best deliver products and services that meet
the needs of society and the environment.
“Perhaps the most
encouraging—and
surprising—news for the
environment in the past
12 months has come from
the giant U.S. corporation
GE… There is a limit to what
one company can achieve.
Yet the endorsement
of the environment as
business by the world’s
most formidable industrial
company is worth more
than all the world’s
corporate social
responsibility programmes.”
The Observer (U.K.), January 8, 2006
ge 2006 citizenship report 27
Emerging
Markets
Emerging markets represent a vital part of the
future growth of the world and of GE. A variety
of factors are driving growth in each of these
markets—from unstoppable demographic trends
to the need to diversify regional economies.
Although these markets are growing at an
unprecedented rate, GE’s ability to compete
and win is not a given. The complexities of
different cultures, regulatory environments
and governments represent challenges in doing
business and in maintaining strong citizenship
performance. Linking financial goals with
citizenship initiatives ensures that these efforts
need not be mutually exclusive.
28 ge 2006 citizenship report
Q ge recently signed a $2.5 billion
GE90 deal with Emirates Airlines in Dubai.
The United Arab Emirates and Qatar are
models for how GE is approaching growth
in the Middle East and Africa. Central to
GE’s approach was the development of
partnerships with two key sectors, oil and
gas and aviation—key influencers in the
regions’ economies.
ge 2006 citizenship report 29
Emerging markets
Emerging markets are a vital part of the GE
growth strategy in the years ahead. Nearly
60% of our growth will come from developing countries in the next decade versus 20%
for the past 10 years. Last year GE had $23
billion in revenue from these regions and it
is projected to grow 20% a year.
GE’s approach to emerging markets is
grounded in the belief that the fortunes of
business are interdependent with the health
of society. GE has organized its businesses
to support a “Company to Country”
approach. This approach is founded in GE’s
size and what that size enables—an ability
to bring to bear the full resources of the
Company to help solve big needs.
The breadth of GE’s businesses combined
with depth of experience enable it to partner
Country/region
with countries and governments to help
them navigate the challenges of demographics and rapid growth while helping
them to participate and compete more
effectively in a global economy.
GE’s “company to country” approach
seeks to optimize growth for the Company as
it builds in these markets—while simultaneously contributing positively to them by
providing essential infrastructure and supporting education, investment in job creation,
healthcare and other essential needs. As a
global company, these markets are not
only where GE will derive future growth—
they are the environments in which Company
employees work and live.
EMERGING MARKETS
REVENUE GROWTH (In $ billions)
~28
21.8
24.2
16.0
03
04
05
06(E)
2005 customer wins
China/Asia
India
Middle East
and Africa
Latin America
Other
30 ge 2006 citizenship report
R
Signed $1.75 billion aircraft deal with AirAsia and
Singapore (CFM56 and GE90 engines)
R
Awarded $450 million locomotive contract with the
Chinese Ministry of Railways
R
Announced JV partnership with Shanghai Xin Hua
Control Technology (Group) Co., Ltd.
R
R
Signed Oil & Gas deal with PetroChina for the expansion of China’s landmark West-East Gas Pipeline
Expanded Consumer Finance presence through an
agreement with Shenzhen Development Bank of
China and a majority interest in Keppel Bank
(Philippines)
R
Established local manufacturing capability of value
Healthcare products, including super value RAD
R
Signed $1.8 billion Algerian Hamma Desalination
deal (over 25 years), Africa’s largest seawater
desalination plant
R
Launched Rural Electrification Program
R
Entered India real estate market
through Ascendus fund
R
Signed $2.5 billion GE90 engine deal with
Emirates Airlines
R
Selected by Nigerian government to supply 18 gas
turbines serving five new power stations
R
Signed engine and 15-year service deal with
TAM (Brazil)
R
Acquired 49% stake in BAC Regional Bank
(Central America)
R
Announced the construction of the first Mexico
desalination plant
R
Achieved first major Healthcare order in
Chile public sector
R
Acquired $450 million Mexican real estate portfolio
R
Signed CF6 aircraft engine deal in Russia
R
Acquired 25.5% stake in Garanti Bank AS (Turkey)
R
Sold first six LM6000 turbogenerators in Russia
Unstoppable demographics
These developing markets are growing at a
projected nominal GDP growth rate of 8.1%
over the next 10 years compared to 5.6% in
developed countries.1 Urbanization is driving growth and the infrastructure needs
that growth requires. By 2010, Lagos, Dhaka
and Cairo will likely surpass New York, Osaka
and Paris as three of the world’s largest cities.2
The drivers of need in each emerging
market is different. In the Middle East and
Africa, high oil prices are the driver for those
economies to invest in infrastructure growth
and to diversify their oil-based economies.
In China and India, population and economic
growth are driving basic human needs
including access to energy, cleaner air and
clean water. The statistics of need (see table
below) represent what GE refers to as
“unstoppable demographics.” Regardless of
the key drivers, many of the same issues
exist, whether resulting from demographic
trends or rapidly expanding economies. And
it is against this backdrop that GE frames
both its opportunity and its obligation.
Changes to GE’s portfolio and business
strategy correspond to the biggest needs
facing society over the course of the next
50 years.
Macro trends
GE response
R
Reorganized businesses and
implemented “Company to Country”
approach
R
Launched ecomagination; added
water technologies and alternative
energy businesses including Wind
R
Added biosciences; launched
Healthcare Re-imagined initiative
promoting Early Health
R
Introduced GE Security innovations
R
Invested in “localization” through
training, best practices and establishing
learning and technology centers
around the world
1. Growing population and changing demands
2. Pressure on natural resources
3. Aging population; increased demand and cost of healthcare
4. Escalating security concerns
5. Global competitiveness
1 Source: Global Insight World Industry Service;
McKinsey Analysis
2 Source: UN, 2003
ge 2006 citizenship report 31
“Company to Country”
Global companies are sometimes criticized
for pursuing growth in emerging markets.
The assumption is one of a “net negative”—
suggesting environmental degradation, job
loss and resource depletion. GE’s experience
operating in these countries leads it to
believe that the impact of companies in
emerging markets can be a “net positive.”
For example, through the creation of jobs
and infrastructure and through the spread of
high standards of governance, compliance,
Environment, Health & Safety, GE’s “Company
to Country” approach provides a framework
from which to evaluate these types of
issues, measure the Company’s success
and fill gaps where needed.
32 ge 2006 citizenship report
China
2006 marks 100 years of GE’s presence in
China. Unlike the growth and transformation of cities in the developed world that
occurred over decades, growth in China is
happening at a far more accelerated rate.
As populations simultaneously grow and
Strategy
move toward urban areas, there is immediate
stress put upon those areas, particularly in
the infrastructure requirements needed
to keep cities running. Here is how GE is
applying the “Company to Country” framework in China:
Examples
1. Go to market as “One GE”
Utilize the full breadth of GE’s products and
services to provide “one-stop-shopping”
to governments
R
GE delivered $5.1 billion in revenues in
2005, up 21%, and $6.7 billion in orders,
up almost 50%
2. Perform with integrity
Implement and maintain GE global
standards of integrity and compliance
everywhere GE does business and share
best practices through leadership
training and development
R
GE sponsored a Corporate Compliance and
Governance Forum in Beijing to promote
corporate governance and compliance
best practices that was attended by more
than 100 Chinese corporations, government agencies and universities
R
3. Build local capability
Draw upon local resources to create
jobs, customize product strategies
and work with the government to
implement solutions
4. Contribute to the community
Invest in the long-term by contributing
to the education, health and well-being of
the communities in which GE operates
CONSOLIDATED CHINA REVENUES (In $ billions)
5.1
3.9
2.4
2.6
02
03
1.4
01
04
05
GE is working with the Shanghai Health
Bureau by providing best practices information on occupational health programs
R
GE delivered 23,384 locally customized
Environment, Health & Safety training
hours to its employees in China
R
GE has implemented a system to monitor
and strengthen its global compliance supplier standards (see page 86)
R
GE organized an EHS Forum to exchange
best practices that was attended by more
than 100 China government officials, GE employees and other multi-national companies
R
Trained 160 company CEOs from China
at GE’s learning center in Crotonville
between 1999 and 2005
R
GE has customized healthcare “value
products” for specific markets in China
(see page 70)
R
GE worked with the Ministry of Agriculture
in China to get endorsement for the Silwet
spreader
R
R
Opened a Global Technology Center in
Shanghai to tie technological development
to local talent
GE has trained 30 participants in the
Chinese Commercial Leadership Program
in eight-month rotations at GE businesses
across China
R
The GE Foundation donated $1 million
to support education
R
R
GE has hired 5,000 new employees
in the past 36 months
The GE Foundation is supporting the China
Youth Development Foundation to train
1,500 teachers with 300,000 students
(see page 64)
The results of our “Company to Country” strategy in China are beginning to demonstrate
their effectiveness through measurable
revenue growth.
Over the next four years the Company
sees significant opportunity with key events
including the 2008 Beijing Olympics, Expo
2010 in Shanghai and 2010 Asian Games in
Guangzhou. GE is continuing to enrich its
“Company to Country” strategy by extending
its standard operating mechanisms to China
and localizing them for the market. The China
CEC council, Risk/Growth Council and environmental and compliance reviews (Sessions
D & E) have all been localized for China.
ge 2006 citizenship report 33
“We are achieving
incredible growth around
the world with our
“Company to Country”
strategy. Yet we can
do better. Strengthening
our commitment to
localization will not only
help us in developing
business opportunities,
but will align and deepen
our connection with
communities and
their needs.”
Nani Becalli-Falco
President and CEO of GE International
34 ge 2006 citizenship report
India
India represents a strong growth market with
the need for energy, transportation, water
and healthcare infrastructure. Earlier this
year GE set up a corporate growth team in
India aimed at tripling revenues to $3 billion
by 2008.
In keeping with the “Company to Country”
approach, GE is also looking for ways to
integrate business opportunity with corporate
citizenship. Today, nearly 56% of India’s 700
million rural residents lack adequate or reliable power supplies. In response, the Indian
government has launched the “Power For
All by 2012” initiative. To assist in meeting
this promise, GE Energy and the U.S. Agency
for International Development (USAID) have
launched a public/private partnership to
increase access to modern and affordable
energy services in rural communities. The
partnership’s first project, the India Rural
Electrification Program, will span a two-year
period and cover four communities. Together,
GE and USAID will provide access to cleaner
sources of energy through GE’s power generation technologies that utilize agricultural
waste, wind and solar resources. Providing
access to more reliable power has the potential to serve as a foundation for other
improvements—such as improved healthcare services, enhanced agricultural-based
productivity, increased access to clean
water, job creation, skill enhancement and
economic empowerment.
Middle East
and Africa
The Middle East and Africa represents a highgrowth, emerging market with significant
business opportunity for GE. GE’s orders
in this market have grown eight-fold from
$1 billion in the late nineties to $8 billion in
2005. The United Arab Emirates and Qatar
are models for how GE is approaching
growth in the Middle East and Africa. These
two regions are undergoing rapid transformation as they work to diversify their oilbased economy—driving the immediate
need for power and water and for social
needs like healthcare and education.
Central to GE’s approach was the development of partnerships with two key
sectors, oil and gas and aviation—key
influencers in the regions’ economies. GE
invested in a local approach by partnering
with the government to develop and open
a new corporate office and Center for
Excellence in Qatar. The announcement
outlines an initial five-year investment of
$50 million to open a GE Technology and
Learning Center in Qatar. This center will be
used to train local talent and as a forum to
adapt and optimize our technology-based
products to perform better in a tough
desert environment. GE also conducted Six
Sigma training sessions for key customers,
including Qatar Petroleum.
Latin America
Eastern Europe
Russia
GE’s “Company to Country” strategy is just
beginning in Latin America. Although GE has
been active there for many years, converging
opportunities in key industries, a more open
trade market and a competitive environment
that is heating up make Latin America an
area of renewed focus. As in other emerging
markets, GE’s business opportunities go handin-hand with citizenship efforts in providing
key infrastructure needs such as water,
energy, healthcare and transportation. The
GE Foundation has established key partnerships and made significant investments to
support education programs in some of the
most underprivileged areas of Sao Paulo, Rio
de Janeiro, Mexico City and Buenos Aires.
Last year, the GE Foundation gave a $600,000
grant aimed at improving literacy and math
skills that will reach 14,000 students in 40
Brazilian schools. And to ensure that its standards for Environment, Health & Safety are
met, GE has 32 facilities in either the Mexico
VPP or Global Star programs.
Since the early 1990s Eastern European
economies have been growing steadily,
driven by increasing export and local consumption, and from significant foreign
direct investment and the European Union
enlargement. GE has been active here as an
investor, a customer and as a supplier. As a
supplier, GE has been instrumental in assisting
the development of the region, upgrading
its infrastructure by providing state-of-theart technology in areas such as energy,
transportation, healthcare, water and security.
GE also contributes to the community through
its Foundation Scholar-Leader Program,
the first of its kind in the continent, to assist
young university talent in developing their
human capacity and leadership potential.
By 2006 a total of 135 students had received
the scholarship in three countries.
GE is one of the largest foreign companies
operating in Russia, providing well-paid jobs
to more than 1,600 Russians, sharing Western
business practices with key industrial giants,
and developing partnerships and investments
throughout Russia. While GE is active in the
region across most of its business segments,
the Company is focusing its efforts in helping
Russia to modernize its installed infrastructure
base. Over 70% of the installed base in the
aviation, rail and energy sectors is more than
20 years old. Specifically we see promising
opportunities in the Transportation (rail and
aircraft), Energy (including electric utilities
and oil & gas), Healthcare and Financial
Services sectors.
Moving forward R
Conduct ongoing stakeholder dialogues and
incorporate feedback
Establish more forward-looking targets
ge 2006 citizenship report 35
Compliance and
Governance
GE’s commitment to perform with integrity is
instilled in every employee as a non-negotiable
expectation of behavior. This expectation is
supported by a system of comprehensive
processes, policies, communications and
training that strives to enable transparency and
provides direction on how to make the shared
commitment to integrity actionable. Yet, even
with the best systems in place, compliance is
never easy. The opportunities of a global
marketplace create complexities in the form
of dynamic and variable legal and regulatory
policy requirements.
36 ge 2006 citizenship report
In November 2005, the Financial
Times/PricewaterhouseCoopers’
annual survey of CEOs from
around the world recognized
GE’s commitment to governance
by rating the Company number
one in corporate governance for
the third straight year.
“The Board is fully engaged with
the issues that are most important
to the Company. We are an active
Board, meeting at least eight times
per year. Our insights and oversight are also complemented with
at least two independent business
site visits (without senior management present); in total making
more than 30 visits last year.”
Ralph Larsen
Presiding Director
ge 2006 citizenship report 37
Board/Senior Executive accountability
GE’s Board of Directors and GE’s Risk
Committee play a vital role in the oversight
and management of the Company. From
this senior leadership GE expects involvement, objectivity and accountability.
The Board
The primary role of GE’s Board of Directors
is to oversee how management serves the
interests of shareowners and other stakeholders. To do this, GE’s Directors have
adopted corporate governance principles
aimed at ensuring that the Board is independent and fully informed on the key risks
and strategic issues facing GE. GE has met
its goal to have two-thirds of its Board be
independent under a strict definition of
independence. Today, 11 of GE’s 15 Directors
are independent.
The GE Board held 12 meetings in 2005,
and outside Board members visited two GE
businesses each in 2005 without senior
management present in order to develop
their own feel for the Company. The Board
also meets periodically without management.
The Board and its Committees focus on the
areas that are important to shareowners—
strategy, risk management and people—
and in 2005 received briefings on a variety
of issues including: controllership and risk
management, security and crisis management, global strategy, potential acquisitions
and dispositions, organization changes,
38 ge 2006 citizenship report
environmental trends, organic growth, competitive strategy, compliance trends, impact
of macro-economic trends on the Company
and corporate social responsibility. At the end
of the year, the Board and each of its committees conduct a thorough self-evaluation as
part of its normal governance cycle.
Public Responsibilities Committee
The Public Responsibilities Committee reviews
and oversees GE’s citizenship performance,
including EHS and the GE Foundation,
positions on corporate responsibility and
public issues of significance that affect GE
stakeholders. The committee also reviews GE’s
citizenship reporting strategy. This committee
met three times in 2005.
The Audit Committee
The Audit Committee, composed entirely of
independent directors, held 10 meetings in
2005 to oversee our financial reporting
activities, the activities and independence of
GE’s external auditors, and the organization
and activities of GE’s internal audit staff. It
also reviewed GE’s progress in meeting the
internal control requirements of Section 404 of
the Sarbanes-Oxley Act of 2002 and compliance with key GE policies and applicable laws.
In implementing the requirements of
Section 301 of the Sarbanes-Oxley Act, the
Audit Committee has established procedures
for the receipt, retention and treatment of
complaints regarding accounting and internal accounting controls for auditing matters.
The Management Development and
Compensation Committee
The Management Development and
Compensation Committee is also composed
entirely of independent directors and held
eight meetings in 2005. The objectives of
the meetings were to approve all executive
compensation actions for Executive Officers
and to review all executive compensation
plans, policies and practices, changes in
executive assignments and responsibilities,
and key succession plans.
The Nominating and Corporate
Governance Committee
The Nominating and Corporate Governance
Committee, composed entirely of independent
directors, met two times in 2005 to consider
GE’s response to corporate governance trends
and to nominate directors.
GE Risk Committee
The Corporate Risk Committee includes the
CEO, CFO, General Counsel, Senior VP for
Human Resources, Chief Information Officer
and the Vice Chairs. The Committee meets
quarterly to review environmental, compliance, liquidity, credit, market and event risks.
Operating mechanisms
One way that GE ensures leaders play an
active role in governance is by conducting
regular annual review periods for key operating functions within the Company, including
compliance, environment, health & safety,
and people development. This allows GE to
create a cycle of continuous improvement
at the senior level and incorporate evolving
best practices. These sessions provide a vital
system of accountability and allow topical
focus as needed through the year. They create
a singular point of focus to surface any issues,
review performance and disseminate new
information.
More information on these operating
systems is available on the GE web site at
www.ge.com/citizenship/operate.
Session/council
Timing
Global Leadership Meeting
January
Session D
Compliance review
Ongoing throughout
year—once per
business
CEC
Corporate Executive Council
Quarterly
Session C
Organizational staffing and
succession review
April, May
Growth Playbook
Long-term business strategy
June, July
Operating Plan
Annual strategy, including budget
October, November
Session E
Environment, Health & Safety
Ongoing,
25 sessions per year
Risk Committee
Review environmental,
compliance, liquidity, credit,
market and event risks
Quarterly
Q operating system These regular,
annual reviews create a cycle of
continuous improvement in areas
including compliance, environment,
health & safety, and people development.
ge 2006 citizenship report 39
Ombudsperson process
GE has an extensive ombudsperson process
that serves as a mechanism for individuals
to ask questions and report integrity concerns
without fear of retaliation.
Employees and others with connections
to the Company must have confidence that
they can freely report concerns about legal
or ethical violations, and that their concerns
will be objectively investigated by Finance,
Legal and Human Resources (and outside
specialists if necessary) with appropriate
individual and remedial action and without
fear or favor.
Employees are subject to discipline if they
fail to report a known or suspected concern.
In addition, retaliation against those who
raise integrity concerns is prohibited and is
grounds for disciplinary action. GE has processes in place for objectively investigating
and resolving integrity concerns, and ombudsperson system activity is reported to the
Audit Committee of the Board of Directors.
The system encompasses more than 500
ombudspersons globally, covering every
business and every country in which GE
operates.
All ombudspersons speak the local language and understand the culture and business environment of their location. GE
ombudspersons are trained in procedures for
receiving concerns, initiating investigations,
monitoring case progress and closure.
Twenty-four training sessions were conducted in 2005, assuring newly appointed
ombudspersons receive prompt training.
Employees may raise their concerns
anonymously if they choose. Confidential
investigations are conducted when concerns
about possible violations of GE policy or the
law are raised.
Prompt corrective action and discipline
demonstrate a strong integrity culture at
GE. During 2005, 1,497 integrity concerns
were reported through the ombudsperson
process (40% anonymously) across a variety
of issues. The rising rate of reported concerns
is an indicator of a healthy integrity and
compliance culture and a growing company.
It demonstrates that employees recognize
their responsibilities to raise compliance
questions and concerns that come to their
attention. Increased usage of the ombud-
40 ge 2006 citizenship report
OMBUDSPERSON CONCERNS BY AREA
Policy
2001
2002
2003
2004
2005
Fair Employment Practices
319
363
390
402
421
Conflicts of Interest
227
237
212
240
253
Environment, Health & Safety
63
63
88
83
119
Routines, Documentation,
Internal Measurements 1
30
45
51
93
108
Business Records 1 (Travel & Living,
Time & Attendance)
31
65
45
70
80
Supplier Relationships
73
78
82
71
69
International Trade Controls
20
36
44
39
64
17
58
36
42
55
91
80
75
55
52
Controllership (Accounting,
Fin. Reporting, Billing)
30
56
49
42
43
Privacy
25
26
48
35
42
Intellectual Property
27
51
35
34
41
Improper Payments
29
22
33
28
34
Complying with Competition Laws
18
46
36
23
27
Security & Crisis Management
—
18
2
10
22
124
122
133
71
67
Petty Theft
1
Working with Governments
1
Other Integrity Concerns
INVESTIGATION RESULTS
1,497 concerns reported
R 293 disciplinary actions
R
sperson process also demonstrates that leaders have set the right integrity culture,
creating an environment that encourages
employees to come forward with their
questions and concerns without fear of
retribution.
The results of these investigations led
directly to 293 disciplinary actions being
taken, including 111 employee separations,
20 vendor disqualifications, 135 warnings,
9 job changes and 18 financially impacted
employees. Of the disciplinary actions,
approximately 62% occurred outside of the
U.S. Ombudspersons monitor investigations to
ensure timely closure, with 97% of last year’s
investigations closed-to-date, averaging ~50
days to complete. Nonconformance with
Company policies and procedures results in
R
97% closed to date
average ~50 days to close
corrective actions such as training, strengthening routines and simplifying/updating
processes. Although many nonconformances
result from unintended mistakes, disciplinary
actions are taken in appropriate cases
including intentional wrongdoing. Ombuds
concerns are regularly summarized and
reported to the Audit Committee.
It is critical that all GE employees worldwide understand how to raise their integrity
questions and concerns and trust the system.
Employees come to know their local business
ombudsperson through postings, articles,
various company intranet sites, and by
ombudsperson introductions at business allemployee meetings including integrity events
and training.
1 In GE’s 2005 report, these four categories were consolidated and reported as “controllership”; going forward, GE
will disclose these categories separately to appropriately
reflect the variation of the policy areas.
Data privacy and security
GE is committed to handling personal data
responsibly in order to earn and preserve
the trust of employees and business partners. Accepting privacy as an integral part
of individual autonomy, GE understands
that privacy is a human value, and that privacy norms and expectations may vary
between different countries and cultures.
GE has adopted a global standard that is
sensitive to these differences, but at the
same time allows for equality and uniformity in the treatment of personal information. GE is committed to working with
individuals, privacy organizations, and governmental actors to engage in best practices as they continue to evolve.
Personal data
GE collects and processes personal data
from employees as needed for human
resources, business operations and safety
and security. GE also collects personal data
incident to its business operations, in its
relationships with suppliers, vendors,
clients and customers.
With the wealth and diversity of its
business operations, GE confronts issues
of financial privacy, healthcare privacy,
children’s privacy and online privacy.
used, and stored, and what parties may
access the data. It also provides rights of
access and redress to employees, and
recognizes the jurisdiction of in-country
data protection authorities, as well as GE
independent ombudsperson teams to
address and resolve data privacy concerns.
The GE BCR establishes strong global standards and practices for ensuring protection
and proper usage of employee information.
Significantly, the BCR exceeds the
requirements of law in most jurisdictions.
One recent example of this involved a
request for access to healthcare records of
an employee in a country where such
access was permitted. While normal expectations in the country allowed for such
access, the GE BCR prohibited the access.
Policies that govern personal data
GE has two functional policies that govern privacy of personal, customer and supplier data:
R
The Spirit & The Letter policy establishes
an over-arching standard for the
treatment of personal data of suppliers,
consumers and employees
R
GE’s newly created Employment Data
Protection Standards provides a more
specific, detailed and comprehensive
global policy
GE has in place a “Binding Corporate Rule”
(BCR), an internal document that is disseminated to all employees detailing what information is collected, how it is processed,
Legal processes and systems
GE’s legal organization includes more than
1,000 experienced lawyers located at GE
businesses throughout the world, whose job
it is to help the Company achieve growth
with unyielding integrity and compliance
with the law. GE’s diverse industries and
disparate locations are united by a common
legal culture with robust processes for the
analysis and management of legal risks. The
legal team at each GE business reports
not only to the business CEO but also on a
dotted-line basis to the general counsel of
the Company, ensuring rigor and consistency in acquisitions, employment issues,
dispute resolution and compliance.
Many of GE’s legal professionals are dedicated specifically to compliance. The legal
compliance team includes compliance lead-
Case study: Anti-money laundering
study on Anti-Money Laundering (AML) in
2005 to ensure the implementation of the
most effective mechanism in fighting
the misuse of GE Consumer Finance
investments. The study resulted in new
policies, training, and tools including:
Money laundering poses a real threat to
business and society—particularly given
the rise of complex schemes to support
illegal and terrorist activities. To alleviate
these threats, there must be a system of
strict controls, policies and tools to root
out fraud and other illegal activities.
GE Consumer Finance conducted a
comparative company benchmarking
R
New policy elements that include an
enterprise-wide code of conduct, GE
money commitment to specific AML
program elements and requirements,
ers at each GE business, specialists at corporate headquarters and regional experts
who are familiar with local legal requirements in the countries in which GE does
business. This team supports and monitors
investigations across the globe, and a
Compliance Leaders Council meets several
times a year to review.
and new GE implementation guidelines
including a comprehensive list of minimum suggested requirements.
R
Tools include a variety of more than 20
new and enhanced modules, including
customer due diligence, identity verification, suspicious account changes,
excessive debit/credit card activity,
turnover of loans, unusual payment patterns and others.
ge 2006 citizenship report 41
Financial processes and systems
GE has adopted tougher accounting policies
and devotes its full resources to ensuring that
those policies are applied properly and consistently throughout the world. The Company
maintains a dynamic system of internal controls and procedures designed to ensure
reliable financial record keeping, transparent
reporting and disclosure, and protection of
physical and intellectual property. Controllers
in each GE business and at headquarters
conduct regular balance sheet reviews and
account reconciliations, and discuss issues
and best practices at regular meetings of
the GE Controllership Council.
The senior finance leadership team oversees the application of accounting policies
and regularly discusses current controllership
metrics as well as new and upcoming
accounting policies during their Finance
Council meetings. GE’s internal audit team
of 563 auditors, including the 405 members
of the Corporate Audit Staff, conducts thousands of financial, compliance and process
improvement audits each year, in every
geographic area, at every GE business. A
centralized database is used to track the
audit history, audit schedule and required
controllership process improvements for
each GE business unit. The Corporate Audit
Staff reports directly to the Audit Committee
of the Board as well as to the CEO and CFO.
In addition, 300 partners from KPMG LLP,
GE’s outside auditing firm, work with their
colleagues and the Audit Staff to conduct
the necessary statutory and auditing reviews.
GE reviews the status of controllership
metrics with the Audit Committee including
account reconciliations, the outcomes of
Corporate Audit Staff reviews and SarbanesOxley 404 certification.
42 ge 2006 citizenship report
Case study:
Commercial Finance remote office
One of the more significant management
challenges for GE Commercial Finance,
as for other GE businesses, is to ensure
that practices in remote offices are
robust and reflective of the Company’s
compliance and controllership values. At
Commercial Finance, where there are
over 100 business sites (or locations), GE
has developed compliance and controllership processes designed to track key
infrastructure and risk factors. Those
processes include:
R
Remote office visits by headquarters
personnel to review business operations and reinforce values in large
employee meetings
R
“Skip-level” meetings with employees
at all levels of the office, not just
This work is overseen by senior management of the businesses and the Company,
which conducts regular reviews of operations at each business. The CEOs and CFOs
of GE’s businesses have signed representation letters attesting to financial results for
years, long before the Sarbanes-Oxley Act
made such letters a legal requirement. GE’s
commitment to controllership enabled the
Company to complete the evaluation of
internal controls over financial reporting
that is required by Section 404 of the
Sarbanes-Oxley Act. The Company’s assessment found that its internal controls are
effective as of December 31, 2005.
management—and focus groups with
smaller groups of employees
R
Leadership messages on compliance
and controllership issued at multiple
levels of management
R
Performance standards to ensure
employees identify and address compliance risks specific to the business
processes they control and are most
knowledgeable about, such as installing thorough “Know Your Customer”
due diligence programs to avoid
potential money laundering
Each of these processes is concluded
with clear status reports and action
items to further strengthen compliance.
Follow-up on action items is incorporated into the performance evaluations
and compensation decisions made at
year-end for remote office managers.
Disclosure committees at both the business and corporate levels are composed of
executives with detailed knowledge of GE’s
businesses and the related needs of investors. They evaluate the fairness of financial
and non-financial disclosures and report
their findings to the CEO, the CFO and the
Audit Committee.
The Spirit & The Letter
Compliance is never easy and remains a
challenge in an increasingly complex regulatory environment. In the global marketplace, GE’s relationships with employees,
customers, suppliers, shareowners and governments are subject to a dynamic system
of legal and regulatory requirements—all of
which must be first interpreted and then
applied according to GE’s Company-wide
standards.
The Spirit & The Letter is a guide to help
employees understand the standards of
conduct that the Company sees as fundamental to honoring its commitment to
performance with integrity. The Spirit &
The Letter helps GE achieve compliance by
establishing a common standard of behavior
required of all employees—everyone, everywhere, every day. As the title suggests, GE’s
approach to compliance is founded on a
commitment to perform with integrity
according to both the spirit and the letter
of the law everywhere GE does business.
The booklet contains GE’s core compliance
policies and is made available to employees
globally in 31 languages. The Spirit & The
Letter is also available on the Company’s
internal web site with expanded versions
of each policy, information on how to implement GE’s policies and procedures and
additional resources. In 2005, GE revised
The Spirit & The Letter booklet in an
updated, lively and readable format, and
distributed the new booklet to more than
300,000 employees globally.
Moving forward R
The policies outlined in The Spirit & The
Letter apply to all GE employees, officers
and directors. In addition, GE subsidiaries
and controlled affiliates are required to
adopt and follow GE compliance policies.
Under The Spirit & The Letter, GE employees
working with third parties, such as consultants, agents, sales representatives, distributors and independent contractors, must
require these parties to agree to adhere to
relevant aspects of GE’s compliance policies;
provide these parties with education and
information about policy requirements; and
take action, up to and including terminating
a contract, after learning that a third party
failed to abide by GE’s compliance policies.
At the heart of The Spirit & The Letter is
GE’s Code of Conduct, which starts with a
requirement that all employees obey the
applicable laws and regulations governing
GE business worldwide. Additionally, GE
employees:
R
Are required to be honest, fair and
trustworthy in all of their GE activities
and relationships
R
Avoid conflicts of interest between work
and personal affairs
R
Foster an atmosphere in which fair employment practices extend to every member of
the diverse GE community
R
Strive to create a safe workplace
R
Protect the environment
R
Sustain a culture where ethical conduct
is recognized, valued and exemplified by
all employees
The Spirit & The Letter also articulates the
special responsibilities of Company leaders
to create a culture of compliance within
their businesses and functions, and to personally lead compliance efforts. A separate
publication, Compliance & Integrity: A Guide
for Leaders, was created to provide additional
guidance regarding the specific steps a
leader must take to establish a successful
compliance program and create and nurture
a robust culture of compliance.
Beyond fostering awareness of compliance, GE educates employees on the
application of The Spirit & The Letter policies
through multiple communications including
videos, written messages from senior
leadership, online training programs, and inperson classroom training and discussions.
Progress on delivering appropriate training
to all employees globally is tracked within
each business and Company-wide.
To download The Spirit & The Letter
please visit our web site ge.com/en/
citizenship/govcomp/spirit/index.htm
Focus on acquisition integration processes to
ensure prompt implementation of policies
Focus on compliance in emerging markets
ge 2006 citizenship report 43
Human Rights
GE’s commitment to human rights covers its
employees, its suppliers and its customers as it
operates around the world. This commitment is
embedded in The Spirit & The Letter. GE faces
the same human rights challenges that any good
company faces: setting the highest standards
in our responsibility to and relationships with
employees, enforcing appropriate labor standards
with suppliers and addressing varying challenges
in the countries in which we operate.
44 ge 2006 citizenship report
Human rights
GE’s goal is to treat every employee with respect and dignity.
GE has incorporated the tenets included in the ILO Declaration on
Fundamental Principles and Rights at Work into its Fair Employment
Practices (FEP) policy included in The Spirit & The Letter (www.ge.com/
citizenship/employment). Over 218,000 employees and contractors
have taken GE’s online course called Spirit and Letter—Fair
Employment Practices, since January 2000. The principles reflected
in the FEP and in this training also find expression in numerous
guidelines and practices that address compliance with all laws
pertaining to freedom of association, non-discrimination, privacy,
collective bargaining, compulsory and child labor, immigration and
wages and hours. For example, in Mexico and other countries in
South America, GE has created a Labor Audit protocol to review
compliance with law at facilities, including areas such as child labor
where GE’s standards are higher than what would be technically
allowed under local law. Beyond legal compliance, GE strives to
create an environment considerate of all employees wherever
Company business is being conducted. For example, contractors
performing work at GE sites are required to observe the essential
elements of GE’s Fair Employment Practices as they perform work
on GE worksites. GE’s fair employment practices do more than keep
the Company in compliance with applicable labor and employment
laws—they contribute to a culture of respect.
In addition to requiring compliance with broad human rights
principles, GE’s Fair Employment Practices (FEP) Policy also requires
compliance with local law and, where the policy and local laws or
practices conflict, requires that the conflict be raised to local counsel.
This tends to have the effect of raising the local standards on various
human rights issues. An example of this occurred in Mexico several
years ago where local practice was to test employees for pregnancy.
While many employers engaged in this testing as it was not clearly
illegal under Mexican law, when this practice was tested against the
requirements of GE’s FEP policy, the practice was banned at GE
facilities. Another example of such a conflict with local law and
practice would include jurisdictions in Europe and the Far East
where discrimination based on age is not prohibited. In light of the
prohibition of age discrimination in the FEP, practices that are otherwise legal in given jurisdictions are raised up to Company leaders
and tested against internal standards. GE often applies its higher
internal standards to foster greater respect for human rights, even
though a lower standard is not prohibited as a matter of law.
GE also requires its business partners to maintain high standards.
Through the Company’s Suppliers Policy, GE strives to do business
with suppliers that meet minimum standards of conduct and
compliance in their own operations. GE’s Sourcing Operation conducts regular audits of sourcing partners. In China, for example, GE’s
sourcing audit protocol focuses on various human rights issues
such as child labor, forced labor and legal limitations on, and payment for, overtime. This latter issue can be very difficult in that many
employers have insufficient staff to limit overtime to under the 36hour per month maximum. Detecting and addressing the issue is
difficult because many Chinese workers want to earn the overtime
and are the last to complain of overwork. Nevertheless, the law is
clear and so GE’s audit routine focuses on the amount and payment
of overtime and includes a series of escalation measures to either
cause the supplier to come into compliance, obtain a government
authorization to exceed the monthly maximums, or face the loss of
GE business. The experience of the Consumer & Industrial business
in addressing this issue through this protocol has been to convince
the overwhelming majority of suppliers to hire more employees and
reduce the overtime load for its workforce, thereby promoting
employee health and safety, compliance and the goal of reduced
unemployment. In several cases, the supplier was not prepared to
make staffing adjustments and the sourcing contract was terminated.
This commitment also extends to GE’s dealings with customers.
The Company evaluates where it can conduct business in accordance
with its standards of excellence and citizenship, where GE is confident
that it can serve customers effectively and enact systems of safety
and security for employees. GE recognizes the responsibility to
function as a positive influence in shaping business conduct and the
local environment. The goal is to ensure that a business opportunity
never compromises GE’s integrity, and that involvement in any
country will serve as an example of upholding the highest legal and
ethical standards.
For example, GE conducts a regular review of the human rights
situation in countries with a focus on minimizing commercial and
reputational risks. GE considers a number of factors, including
whether a country (a) has been listed as supporting terrorists by the
U.S. State Department; (b) is on the U.S. Government’s Weapons of
Mass Destruction (WMD) list as either collecting or disseminating
WMD such as biological, chemical or nuclear weapons, as reported
by the State Department and CIA; or (c) has a poor human rights
record, as reported by the U.S. State Department.
This global review process provides information to senior management for their evaluation of whether the risks in a certain country could have an adverse impact on GE’s reputation and business.
GE may either choose to forego doing business in that country or do
so in a limited way. For example, since 1996, GE has not accepted
business in Myanmar (Burma), a country with a significant history of
human rights violations. Last year, GE decided not to accept new
business in Iran (the Company’s non-U.S. subsidiaries decided to fulfill their commitments to existing customers) because of uncertain
conditions related to that country.
Moving forward R
Iraq is one example where GE has chosen to conduct business—
believing the Company can provide long-term value. GE is working
in Iraq to restore much-needed power generation and contribute to
the reconstruction effort.
In other countries with challenging environments, GE seeks to
become informed, understand how it can be a positive influence,
and then improve the environment where possible through engagement with the government and civil society. GE partners with key
organizations, such as Partners for Democratic Change, around
the world to support human rights and rule of law issues in specific
communities.
Partners for Democratic Change
Partners for Democratic Change (PDC) is an NGO that aims to build
institutions that facilitate change and conflict management to
strengthen civil society and democracy worldwide. PDC builds the
capacity of local institutions to promote democratic, participatory
change and develops locally staffed and managed centers worldwide. Specific PDC programs include:
R
Centers in Albania, Argentina, Bulgaria, Czech Republic, Georgia,
Hungary, Jordan, Kosovo, Lithuania, Mexico, Poland, Romania
and Slovakia
R
Training of local leaders and practitioners from all sectors in
change and conflict management skills
R
The application of mediation, cooperative planning and other
techniques to resolve disputes and build consensus on local issues
R
The promotion of public policies that recognize and legitimize the
use of mediation and citizen participation processes
R
Development of a curriculum on change and conflict management
in universities and schools
GE has been active in helping PDC focus its strategies and raise
funds from governments, foundations and businesses, and has also
helped increase efficiencies within the NGO to develop better internal
management style and processes.
For a senior GE perspective on human rights, please read a letter
from Bob Corcoran, GE Vice President of Corporate Citizenship, on
our web site at www.ge.com/citizenship/letter.
Develop a human rights “statement of principles”
and identify areas where GE can most effectively
serve as a positive influence and further the
adherence to human rights
ge 2006 citizenship report 47
Environment,
Health & Safety
EHS is a vital part of Company operations and
GE continuously improves its existing programs.
For instance, in recent years GE launched its
Environmental Framework, started a Greenhouse
Gas Inventory, added many new modules to the
EHS web-tool, PowerSuite, and audited the EHS
practices of thousands of GE suppliers. In 2006
GE will begin Company-wide collection of waste
and water use data, and businesses will be further
executing on plans to meet the Company’s
greenhouse gas and energy goals.
2005 ehs highlights:
R
Achieved best performance
ever on injuries and illnesses
and lost-time cases
R
Received Health & Safety
excellence recognition for
100 th U.S. VPP site and 200 th
VPP/Global Star site
R
Helped Ireland create a program modeled on OSHA VPP
and certified the first site
under this new program
R
Achieved best performance
ever on air exceedances
R
Conducted ~25 Session Es
which is GE’s process for driving
operational ownership of
Environment, Health & Safety
48 ge 2006 citizenship report
R
Announced greenhouse gas
and energy use goals
R
Received more than 170 external awards and recognitions
for EHS performance
R
Held second GE EHS Forum in
China aimed at capacity building
and exchanging best practices
which was attended by more
than 100 China government
officials, GE employees and
other multinational companies
R
Announced a comprehensive
agreement with the U.S.
Environmental Protection Agency
for the implementation of the
EPA’s 2002 decision to dredge
PCB-containing sediments in
the Upper Hudson River
Policy
GE expectations for EHS performance—
including provision of tools and expectations
of results—are the same for all operations
around the world.
GE’s EHS policy contains clear and
simple aspirational goals:
R
100% EHS compliance everywhere
GE operates or sells products
R
Eliminate hazards and provide a safe
working place
R
Minimize the use and release of
hazardous materials
R
Assess all new activities and products
for EHS impacts
R
Implement the GE EHS management
system in all locations
To make these aspiration goals a reality the
EHS management system focuses on four
key building blocks:
1. Operation responsibility and
accountability for EHS performance
2. EHS programs applicable to
GE’s global operations
3. Effective training and tools for
GE operations
4. Metrics
Operating systems
GE’s EHS Council is led by the Vice President
for EHS, Stephen Ramsey, and meets three
times a year with the EHS leaders from each
business to discuss programs and priorities,
and to exchange best practices.
GE operates 10 task forces—on topics
such as industrial hygiene, air, water and
ergonomics—with cross-business participation. GE also operates 16 geographically
focused, cross-business EHS Councils in
many parts of the world, including Mexico,
Southeast Asia, China and Europe.
Ultimate responsibility for EHS performance resides with business leaders,
including plant managers and service operations leaders who are supported by more
than 1,000 GE EHS professionals.
50 ge 2006 citizenship report
One of the ways in which GE differentiates its EHS compliance is by training operations leaders on their responsibilities
through Plant Manager Training. Training is
given about 25 times each year in locations
around the world and attended by 800 to
900 GE employees annually. During a two-day
interactive course, attendees learn about
the Company’s EHS expectations, how to
demonstrate leadership, and how to create
top-level EHS performance. Most importantly,
employees interact with their peers and
come away with action plans to implement
when they return to their operations. Each
quarter, a GE EHS Scorecard goes to the CEO
and other top leaders showing individual
business performance on 22 metrics, including injuries, lost time rates, wastewater
exceedances and penalties.
Tools and training
GE has one set of goals and expectations
that applies globally to every facility. These
goals are implemented and measured using
a common set of metrics. Compliance with
tens of thousands of EHS laws and regulations
is the building block for GE’s EHS operating
system. To make this a reality, the Company
developed regularly updated online, webbased modules containing EHS legal
requirements—in 17 languages as well as
English—for more than 20 countries.
To ensure consistent global standards, GE
has developed “EHS Frameworks” containing
27 elements, 700 questions, and guide notes
to act as a web-based multi-language tool
that combines “how-to” information with
methods of evaluation.
GE also has both subject and geographyspecific EHS training. GE invests in multilanguage translation of key training courses
and has developed more than 100 online
multi-lingual training courses available to
its businesses. Last year, GE operations conducted more than 2 million units of EHS
training, an increase of 400,000 from 2004
(a unit is one course for one person). Much
of this was attributable to training for new
GE employees from recent acquisitions.
Assurance
mechanisms
GE uses several assurance mechanisms to
confirm compliance in meeting GE global
expectations. GE does this through a robust
EHS management system and several other
practices including:
R
Frequent self-inspection audits at each
facility that identifies issues as they arise
and gets them fixed fast
R
Self-assessments using a corporate audit
template from which all findings are
reviewed by business and corporate EHS
leaders and operational leadership
R
Regular business level audits on a bi-annual
cycle to provide oversight and confirmation
of compliance with law and implementation
of GE best practices and programs
R
Ongoing tracking of compliance findings
identified by GE locations
R
A requirement that 90% of compliance
findings be closed within 30 days and
100% within 180 days. During 2005, 95%
were closed within 30 days, and 99.9%
were closed within 180 days
R
Review of audit findings and process in
annual Session E
R
Annual operating reviews on selected
topics ranging from audits of all GE
facilities in a particular country to specific
compliance topics
R
More than 500 visits by GE’s corporate
EHS team to over 200 GE facilities around
the world every year
R
Third-party audits each year to qualify
specific environmental management systems for certification by the International
Standards Organization, and for safety
excellence certification in the U.S., Mexico
and Province of Alberta health and safety
excellence programs
R
Nearly 1,500 EHS-related inspections by
government authorities around the world
in 2005
R
Monitoring of results to operations and
EHS leadership through digital cockpits
R workers at ge Aviation plant in
Evendale, Ohio, receive safety training.
Metrics
GE has built a number of systems and processes to measure EHS
performance. The base year for most of its EHS metrics is 1996,
the first year of GE’s global EHS scorecard. Since then, the number
of manufacturing and assembly facilities at GE has increased by
40% to more than 500 along with hundreds more services shops,
warehouses and small sites, and thousands of office locations.
Workplace injury and illness
GE has achieved a 73% reduction in workplace
injuries and illnesses and a 72% reduction in
lost-time cases since 1996. This translates into
thousands fewer injuries and more employees
working safely. In 2005 injuries and illnesses
were reduced by 5% and lost-time cases by
8% compared to 2004. In last year’s report
GE anticipated it would not achieve its historic rate of reductions in 2005 due to high
injury and illness rates at its new acquisition,
Universal. However, Universal has made
excellent progress on safety that has allowed
GE to continue to improve overall Company
safety performance.
In 2005, GE’s injury and illness rate
(excluding recent acquisitions) was below one
(rates are based on 100 employees working
200,000 hours annually) for the first time.
This could only have been achieved by the
direct involvement of leadership and employees on a daily and global basis.
The Company’s past safety performance
metrics look different than last year’s. This is
because GE updates performance to include
metrics for acquired businesses.
This year GE achieved three landmark
accomplishments for its health and safety
excellence programs:
R
R
R
INJURY & ILLNESS RATES1
2.07
1.71
1.57
1.60
1.54
100 th
In the U.S., GE’s
site was admitted
into OSHA’s VPP program—the first company in the U.S. to reach this mark.
Globally, the Company reached 200 sites
with government (U.S., Mexico, Alberta) or
Global Star recognition.
.5
.46
Recordable rate2
.42
.41
.38
Lost-time rate3
01
02
03
04
05
GE worked with the Irish government
on development of its VPP program and
one of GE’s sites became the first in
Ireland to achieve recognition.
GE was saddened to have three workrelated employee fatalities in 2005. Two
were in vehicle accidents and the third
occurred as a result of an explosion at a
customer’s petrochemical facility (GE’s
activities at that facility were completely
unrelated to the events leading to the
explosion).
1 Rates are based on 100 employees working 200,000 hours
annually.
2 Recordable injuries and illnesses. Please see the web site for
a full listing of recordable work-related injuries and illnesses.
52 ge 2006 citizenship report
3 Lost-time rate. Hours absent as a percent of hours usually
worked.
Air and wastewater exceedances
Because of its 100% compliance goal and
continuous efforts to improve operations,
GE requires internal reporting for each
instance that a facility:
1) Exceeds any wastewater parameter or
applicable effluent standard
2) Exceeds any limit on the quantity of air
pollutants emitted
3) Is found to be operating without any
required air or wastewater permit
All such exceedances are reported and
counted in our metrics no matter how small
an increment above permitted levels it may
be. GE has several hundred facilities with
applicable limits and permits; each permit
has multiple parameters to track, resulting
in more than one million measuring events
each year.
Between 2004 and 2005 GE experienced
a slight increase in wastewater exceedances
and spills to water from 96 to 101. Twentyeight of these 101 events were from facilities
acquired in 2004 and 2005. As part of the
EHS integration process GE has been identifying issues at newly acquired facilities,
improving operational controls and making
capital investments when needed.
In 2005 GE had 11 air exceedances, its
lowest total ever.
AIR & WASTE WATER EXCEEDANCES
118
102
101
96
82
Waste
Water
01
25
25
20
15
11
02
03
04
Air
05
Environmental releases
Since 1987, GE has reported chemical
releases in the U.S. to the Environmental
Protection Agency (EPA) and has achieved
reductions of these releases of more than
80% despite the growth in facilities and
production during that time period.
Company release totals for calendar year
2004 remained relatively flat with 2003.
Six of the seven reporting businesses
achieved double-digit reductions in releases
that were offset primarily by several
Plastics and Advanced Materials facilities
which experienced several market-driven
product and energy changes, and shortterm changes in operating conditions.
GE Plastics and GE Advanced Materials
units constitute the bulk of GE emissions
globally (approximately 70% in the U.S.).
Since 1988, these businesses have achieved
consistent reductions (more than 80% as a
result of voluntary actions). Unlike the TRI
chart, the GEP and GEAM chart is adjusted
to account for acquisitions and divestments.
GE COMPANY TOXIC RELEASE INVENTORY (TRI)1
(in millions of pounds)
6.25
5.07
5.07
5.00
TRI Releases
1.19
1.00
1.10
1.57
1.34
33/50 Chemicals
00
01
02
03
04
GE PLASTICS AND ADVANCED MATERIALS
EMISSIONS1 (in millions of pounds)
6.1
5.3
5.1
4.9
5.2
International
VOC Emissions
U.S TRI Emissions
00
1 This data will always lag by a year since U.S. TRI data for the
prior year is not submitted until July 1 (as a matter of law).
4.58
01
02
03
04
ge 2006 citizenship report 53
Greenhouse gas emissions
GE has set three GHG and energy use goals
(all from a 2004 baseline):
R
1% absolute GHG reduction by 2012
R
30% GHG intensity reduction (GHG/
revenue) by 2008
R
30% energy use intensity reduction
(Mbtu/revenue) by 2012
Because 2004 will serve as GE’s baseline
year, the Company retained an independent
consultant, Cameron-Cole, to review its
inventory and provide verification. CameronCole issued a verification statement in
March 2006, indicating that it found nothing
to indicate any material errors or omissions
or anything that would indicate that GE’s
inventory was not complete. Cameron-Cole
GE’s worldwide GHG emissions from
operations remained relatively flat in 2005
compared to 2004, increasing by 0.1%,
while GHG intensity was reduced by 10%
and energy intensity was reduced by 11%.
The 2005 data should be considered preliminary and includes 586 individual GE sites
as well as the air fleet GE operates for its
own use. The final 2005 data will be published to GE’s website by July, 2006.
In 2004 and 2005, the Company worked
on reductions from every angle. GE undertook nearly 500 energy conservation projects globally resulting in more than 250,000
tons of GHG emissions reductions—or the
equivalent of removing nearly 50,000 cars
from the road. This resulted in $14 million
a year in energy cost savings. For example,
businesses across GE have started a major
program to re-lamp manufacturing facilities
with GE energy efficient lighting products.
Moreover, GE is the largest participant in
U.S. Environmental Protection Agency’s
ENERGY STAR Million Monitor Drive, to
enable power savings features on personal
computers.
GE also has two power plants that
qualify for GHG accounting under the
WRI/WBSCD protocols (World Resources
Institute/World Business Council for
Sustainable Development). Baglan Bay in
54 ge 2006 citizenship report
also found that GE’s inventory generally
conforms to the accounting principles
in the GHG Protocol (www.ge.com/
citizenship/greenhouse).
In light of the substantial growth that
GE anticipates between 2004 and 2012, the
Company recognizes that its absolute reduction goal presents a challenge. To ensure
GE meets its goals, a number of actions have
been taken including:
R
R
Setting clear expectations for individual
GE businesses to prepare reduction plans
R
Regularly scheduled top management
involvement in review of business plans
for meeting, and progress toward reduction targets
R
Launching a Company-wide communication campaign to engage all employees
and locations in this effort
Forming an internal cross-business, crossfunctional team to develop program details
and requirements and to identify and
drive implementation of best practices and
deployment of GE technology
ENERGY INTENSITY1
GE GHG EMISSIONS1
(MMBtu per $ million revenue)
(Million metric tons of CO2 equivalent emissions)
743
11.11
11.12
04
05
660
04
05
GE ENERGY USE1
GHG INTENSITY1
(MIllion MMBtu)
(Metric tons per $ million revenue)
99.89
98.77
82.64
74.26
04
05
the UK is a demonstration site for GE’s
H System Turbine, the most efficient gas
turbine in the world. At Stanford University
GE operates Cardinal Cogen which utilizes
cogeneration to efficiently provide the
University and Medical Center with all of
their energy needs for electricity, heating
04
05
and cooling. GHG emissions from these two
plants were 1.307 MMT in 2005 compared
to 1.218 in 2004.
Information on GE’s GHG inventory can
be found on the GE web site at www.ge.
com/citizenship/greenhouse.
1 GE is still reviewing data on its smaller site locations as well as
vehicle use which are about 8–9% of GE GHG emissions. For
comparison purposes, GE has removed small site and vehicle
data from the 2004 data. Also, this data excludes power plants.
Additional metrics
In 2005, for the first time, GE conducted
more than 2 million units of EHS training,
including initial EHS training at new
acquisitions. GE’s paid penalties and agency
inspections remained relatively flat.
TRAINING UNITS COMPLETED (In millions)
PAID PENALTIES (In $ thousands)
AGENCY INSPECTIONS
2.02
713
732
669
1.56
660
567
329
324
1.01
319
111
01
02
.29
03
04
05
01
1.12
.36
02
1.24
.34
03
U.S.
.45
692
606
766 739
727
532
U.S.
.59
Non-U.S.
Non-U.S.
04
05
01
02
03
04
05
New metrics
In 2006, GE will begin collecting Companywide data on waste and water use (from all
global sites that exceed defined thresholds).
The data for 2006 will be collected in the
first quarter of 2007. Many GE sites and
businesses already collect data on these topics. Along with becoming part of GE’s public
reporting process these data are expected to
identify additional areas for operational
improvements.
In setting these internal reporting
requirements, GE sought to balance the
usefulness of the information collected with
the resource effort needed to gather and
report on the data. Based on the analytical
work performed in the development phase,
the reported data will represent approximately 95% of global GE waste generation
and water use.
Waste
Data will be included for GE sites generating
more than 100 metric tons of hazardous
waste and/or more than 500 metric tons of
nonhazardous waste. Data will be collected on:
R
Total hazardous waste generated and
shipped off-site or managed on-site pursuant to a waste management permit or
authorization
R
Total non-hazardous waste generated and
shipped off-site or managed on-site pursuant to a waste management permit or
authorization
R
Waste management methods
Regardless of whether an individual site’s
data are collected as part of the new metric,
GE takes great care to ensure that the waste
it generates goes to recycling, treatment and
disposal facilities that meet the Company’s
standards, a standard significantly more
protective of the environment and worker
safety than local legal minimums.
To ensure that GE facilities use the best
waste management vendors available the
Company operates a Waste Site Qualification
Program in 28 countries that requires the
auditing and pre-approval of locally permitted
facilities before operations can use them.
Each year GE expands this program into
more countries and plans on adding six more
countries to the program during 2006. GE’s
standards frequently require waste management sites to upgrade and improve their
operations beyond local law requirements if
they want to be approved for GE use. GE sites
must use GE-approved facilities regardless
of the amount of waste they generate.
Water
Data will be included for sites on GE’s GHG
inventory that had more than 15 million gallons of water intake in the previous calendar
year. Data will be collected on:
R
Amount of water by intake
R
Amount of water used for non-contact
cooling purposes
ge 2006 citizenship report 55
Remedial responsibilities
GE is a 127-year-old company with facilities
across the globe. Many of those facilities
began operating at a time when scientific
understanding and regulatory requirements
were far different from today. Changing
standards and knowledge require that these
“legacy” issues involving environmental
contamination must be addressed. GE is
currently involved in 87 sites on the U.S.
EPA’s Superfund National Priorities List.
At almost all of these sites, GE’s involvement
is very small—with sole responsibility at just
eight. GE has reached agreements with federal and/or state regulators at almost every
site about the right way to proceed.
GE has instituted a due diligence and
transaction review process to ensure that
the risk of remedial and other Environment,
Health & Safety liabilities is carefully reviewed
and factored into the value of any transaction
or disposition. There is a review process in
each business which is coordinated and overseen by Corporate Environmental Programs.
It is GE’s approach to work cooperatively
with government agencies to address remedial issues at sites where GE has responsibility.
The Company has a record of successfully
meeting the commitments it makes.
GE’s most significant polychlorinated
biphenyl (PCB) sites are the Hudson River in
New York, the Housatonic River in Pittsfield,
Massachusetts, and the former transformer
facility in Rome, Georgia. These three sites
represent approximately 81% of GE’s PCBrelated expenditures during the 1990–2005
period. GE’s PCB remedial expenditures
during this period were more than $799
million. For more information, visit www.ge.
com/citizenship/pcb.
permits when required. After a two-decadelong reassessment of what to do about the
PCBs, the U.S. EPA decided in 2002 to
dredge portions of the river. Since then GE
has been working constructively with the
EPA on the dredging project including with
sediment sampling and design work.
In 2005, GE and the EPA reached an
agreement on how to implement the EPA
dredging project. This comprehensive
agreement underscores GE’s commitment
to cooperate with the EPA, the State of
New York and other stakeholders to implement the EPA’s 2002 decision to dredge
PCB-containing sediments from the Upper
Hudson River. Specific provisions include
the following:
R
R
R
Hudson River
GE has reached a comprehensive agreement
to implement the EPA’s 2002 Record of
Decision requiring that PCBs be dredged from
a 40-mile area of the Upper Hudson River.
GE used PCBs at two plants on the Upper
Hudson River in New York State many
decades ago, before concerns were raised
about the human health and environmental
impacts. GE did not manufacture PCBs,
rather they were purchased from Monsanto.
GE’s use of PCBs as a fire retardant was at
all times legal. GE discontinued their use in
1977. These industrial operations discharged
PCBs into the Hudson River under New York
56 ge 2006 citizenship report
R
In the first phase, GE will hire contractors
to conduct the dredging, to construct and
operate a sediment processing and dewatering facility and to transport the dried
sediment for final disposal in properly permitted facilities.
At the sediment processing and dewatering facility, GE will construct a 1,450-footlong terminal where barges will unload
sediments; construct a water treatment
system to separate water from sediments
and treat more than one billion gallons of
water over the life of the project; install
equipment to process more than 4,000
cubic yards of sediment each day; and
build a rail yard with more than 38,000
feet of track to transport sediments to
final disposal. Each week, up to 250 rail
cars will transport sediment from the
processing facility to a disposal facility
outside New York.
Dredging is scheduled to take place 24
hours a day, six days a week. The seventh
day will be reserved for maintenance and
catch-up dredging. Up to 45 vessels will
be in the river to perform the work. During
Phase One, 265,000 cubic yards of sediments are targeted for removal.
After Phase One, an independent peer
review will be conducted to evaluate the
project. After peer review, modifications
the EPA believes are appropriate for the
second phase of dredging will be made.
GE’s decision to perform the second
phase of the dredging project will be
made after peer review of the first phase
is completed.
R
While the peer review is being conducted,
GE will prepare for the second phase of
the dredging project, develop work plans
and mobilize contractors.
R
GE has committed $111 million to the EPA
for their past costs and future oversight.
R
GE will submit at least nine technical
reports to the EPA for its review and
approval that detail Phase 1 operations,
including three comprehensive work
plans; quality assurance plans for monitoring and dredging construction; a performance standards compliance plan; a
transportation and disposal plan; a facility
operation and maintenance plan; and a
long-term monitoring plan.
R
During dredging, GE will conduct extensive air, water, sediment, noise, light and
odor monitoring. GE will continue to perform an annual fish-monitoring program
in the Upper and Lower Hudson.
R
After dredging activities are completed, GE
will conduct an extensive long-term monitoring program to evaluate the river’s
recovery and ensure the effectiveness of
the habitat restoration program.
This agreement was lodged in Federal Court
for comment and will become effective when
approved by the court. In the meantime,
planning of the dredging project, including
completing the final design, continues.
Further examples of remediation efforts
in Rome, Georgia, and Housatonic River,
Connecticut, are available on the GE web
site at www.ge.com/citizenship/remedial.
Excellence programs and external recognition
In 2005, GE operations received more than
170 external awards and recognitions for
EHS performance.
Safety excellence programs are one of
the key ways GE ensures management
leadership, engages employees and creates
safe workplaces. GE is the #1 participant in
the U.S. Occupational Safety and Health
Administration’s VPP and GE participates in
similar government programs outside the U.S.
Based on the success of these
government-sponsored initiatives, GE initiated its own Global Star program for those
countries where VPP programs don’t exist.
Global Star is only for the “best of the best”
and requires sites to go through a lengthy
preparation, pre-audits and a final audit by
GE safety experts. The success of this program can be seen in the increase from one
Global Star site in 1999 to 73 today.
At of the end of 2005, GE had 200 locations
in recognized excellence programs in 26
countries around the world, including 32 in
Latin America, seven in China and six in India.
Today, almost 100,000 GE employees work
at sites recognized for safety excellence.
Although ISO 14001 certification (the
International Environmental Management
Systems Standard) for environmental
performance is not a requirement for GE
facilities, many Company operations have
been asked to obtain certification by their
customers. Today, GE has 95 ISO 14001
sites. GE EHS management system provides
most of the elements of ISO, so our operations are well prepared if customers ask for
certification.
In Mexico, GE has 18 locations participating in the Clean Industries Program run by
the Federal Environmental Agency.
GE safety programs—by the numbers
GE SAFETY EXCELLENCE PROGRAMS (Number of sites)
VS INJURIES AND ILLNESS (Incidence rate per 100 employees)
102 U.S. VPP sites (#1 participant in program)
3.91
200
175
21 Mexico VPP sites (except for recent acquisitions in last two
years—and they will be applying for VPP)
151
2.78
2.44
Total VPP/Star Sites
122
2.07
5 Alberta VPP
1.71
1 Ireland VPP
71 Global Star [including Hungary (8), Brazil (7), Canada (7),
India (6), China (7), U.K. (4), Singapore (3), Spain (4) and Japan (4)]
31
98
72
98
00
01
1.57
1.60
1.54
GE Recordable Injury
and Illness Rate
43
99
02
03
04
05
Further implement GHG emissions and
energy efficiency program
Moving forward R
Report on new waste and water metrics
(data being collected in 2006 for first time)
Continue to expand “Waste Site Qualification Program”
beyond current 28 countries
Continue support for EHS programs
in emerging markets
ge 2006 citizenship report 57
Public Policy
GE works with governments around the world
to encourage the adoption of policies that will
create a commercial environment that best
allows the private sector to address big problems
that confront governments and their citizens.
In addressing these big issues, GE helps to
develop new public policy options; works to
help governments choose wisely among those
options; and finally, through its commercial
activities and through public-private partnerships,
helps to implement the chosen policies.
58 ge 2006 citizenship report
Creating policy choices
GE participates in the public policy process in a number of ways.
The Company speaks out publicly on the vital issues of the day,
such as the need for a coherent and consistent energy policy that
encourages investment in new and cleaner technologies. GE also
takes leadership positions in various organizations that are active in
the development and promotion of public policies.
There are many other examples of GE’s participation in and
leadership of organizations that devote time and resources to the
study of public policy and the generation of new ideas. Among
others, these include single-sector organizations such as the
United States Energy Association and broad-based organizations,
such as the International Chamber of Commerce and local chambers
of commerce in many countries, the World Business Council for
Sustainable Development. In 2005, GE Healthcare was the founder
sponsor of The Pacific Health Summit, a high-level international
initiative of The Gates Foundation to promote more effective and
efficient healthcare systems in Asia-Pacific and the rest of the world
(www.pacifichealthsummit.org/sponsors/sponsors.aspx).
In addition, through the GE Foundation, the Company supports
several of the think tanks around the world that play an important
role in the public policy debate.
GE also creates policy options by investing in new technologies
to address the big challenges confronting the world today. Two of
these challenges are responsible management of energy resources
and maintaining security against the spread of worldwide terrorism.
GE has invested millions of dollars to develop technologies that
expand the tools available to governments—often in partnership
with the private sector—to address these issues.
In aid of the fight against terrorism, GE Security developed a
container security device that can detect and report unauthorized
intrusions into oceangoing containers in order to help prevent the
introduction of weapons of mass destruction into international
commerce. The resulting product, CommerceGuard, is the first global,
cost-efficient system that deters and detects theft, smuggling and
international terrorism by integrating electronic container security
devices with a global information network. Starbucks recently
became the first commercial purchaser of CommerceGuard and
will install the technology on shipments of coffee beans originating
in Guatemala, bound for the U.S. and Europe.
60 ge 2006 citizenship report
Working with governments
With business operations in more than 100
countries, GE interacts with governments
on at least two levels—as customers or regulatory agencies. Particularly in the developing world, governments often are GE’s
customers with challenges involving vital
questions of infrastructure and finance
needs to fuel growth for cities and countries. At the same time, in advancing their
legitimate regulatory interests, governments affect the commercial environment
in which GE operates—sometimes determining the extent to which GE and its peer
companies are able to bring to bear all of
their talents and experience to solve problems of governments and individuals.
GE strives to advance balanced, long-term
public policy positions that, while in GE’s
interest, are based on sound facts, principled
analysis and a weighing of important competing values that lie at the core of any complex
public policy issue. While differences on policy issues are a hallmark of free societies, GE
seeks to advance positions that are responsibly developed and responsibly presented.
For example, GE has taken the following
public policy positions:
Energy policy
Governments around the world, collectively
and individually, have recognized the need
to reduce emissions of greenhouse gases as
part of the efforts to combat climate change.
To help accomplish this goal, GE supports
energy policies that encourage investments
in, and the deployment of, new, more efficient
and renewable technologies.
Corruption
GE has taken a leadership role in advocating
against public corruption, which saps economic growth, undercuts the effectiveness
of economic development aid, and all too
often victimizes the world’s neediest populations. Last year’s citizenship report highlighted GE’s support for and participation in
Transparency International and its U.S.
Moving forward R
Chapter, which have been leaders in the
international struggle against corruption.
GE also has been instrumental in supporting
development of an anti-bribery convention
by the Organization for Economic
Cooperation and Development, and supporting invigorated anti-bribery measures
by international financial institutions. GE is
committed to working with governments,
international financial institutions, and
NGOs to combat official corruption.
Asbestos litigation reform—U.S.
GE, along with a broad range of large and
small U.S. companies, supports efforts to
enact legislation to provide timely and fair
compensation for victims of illness caused
by asbestos. The current asbestos litigation
system is badly broken, which deprives victims and punishes U.S. companies, workers,
retirees and the U.S. economy. Recent
state-based tort reforms aimed at fixing the
current asbestos litigation system are positive developments, but do not substitute for
the critical need for a comprehensive solution to the problem that can only be achieved
through the enactment of a national victims
compensation fund (“trust fund”). Indeed,
the U.S. Supreme Court, on three separate
occasions, has called for a national solution
to the asbestos litigation crisis. The trust
fund solution, provided for in legislation currently under consideration by the United
States Congress, the Fairness in Asbestos
Injury Resolution Act (FAIR Act), would effectively bring an end to all asbestos civil actions
in all state and federal courts, while providing fair compensation to victims of asbestos
exposure and certainty to U.S. businesses,
workers, and the nation’s economy.
Free trade
GE is a consistent advocate of open markets
and free trade. International trade is a powerful engine of global economic growth, and
economic growth fosters improved living
conditions and opportunities around the
world. Thus, GE supports multilateral trade
liberalization through the WTO and in particular an ambitious result from the current
Doha Round of trade negotiations; regional
trade liberalization through the negotiation
of comprehensive free trade agreements in
all regions of the world; and the fair and rigorous application of these agreements to
ensure that trade is free and fair. At the
same time, GE recognizes that the full benefits
of open trade can be realized only if traders
are responsible citizens of the countries in
which they do business. That is why GE
actively monitors its suppliers in emerging
markets to ensure that these companies
treat their workers fairly and respect local
environmental quality (see page 82).
GE’s reputation and business expertise, its
role as an employer and its contributions
to communities through employee activities
all contribute to its relationships with key
decision makers. Where appropriate and
permitted, GE’s Political Action Committee
(GEPAC), a group that raises voluntary contributions from eligible GE employees, supports candidates for US federal and state
elective offices whose views are consistent
with the values and goals of the Company.
In 2005, GEPAC raised over $900,000 from
more than 2,500 employees, and contributed $976,450 to federal and $202,275 to
state candidates in the United States. The
Federal Election Commission regulates
GEPAC’s activities, and reports detailing its
activities are available at www.fec.gov.
The Public Responsibilities Committee of
the GE Board of Directors annually reviews
GE’s major public policy issues around the
globe. In addition, GE seeks to ensure that, at
all times, GE complies carefully with campaign
finance and disclosure laws and such other
rules as may apply to participation by corporations and their employees in the public
policy process.
Continue to address needs for increasingly
complex global regulatory environment
Play key role in energy policy and early health
ge 2006 citizenship report 61
Communities
62 ge 2006 citizenship report
©2005 UNICEF Pakistan / Asad Zaidi
GE’s ability to positively impact the communities
in which employees work and live is the ultimate
measure of its “good and great” aspiration.
GE can deliver the scale of a great company to
solve big needs around the world and can act
as a good citizen by making sure that its impact
transcends the bottom line. In 2005, total giving
exceeded $215 million in contributions from the
GE Foundation, GE businesses, employees and
retirees, plus more than one million volunteer
hours for key community initiatives.
R in response to the South Asia
earthquake, GE donated $6 million in
cash and products, including $1 million
to UNICEF to provide victims with food,
water and medicine.
Philanthropy
In 2005 the GE Foundation made contributions totaling more than $71 million, with a
key goal of strengthening education.
College Bound District Program: U.S.
The GE Foundation created the College
Bound program in 1989, to increase collegegoing rates at more than 20 high schools.
In 2005, the GE Foundation expanded this
initiative and launched the College Bound
District Program, a $100 million investment
that aims to strengthen the college-readiness
skills of students across five targeted U.S.
school districts. The program is a comprehensive effort aimed at strengthening school
systems, and improving math and science
skills so that students can compete effectively
in a global economy.
The College Bound District Program was
launched in Louisville, Kentucky, where the
GE Foundation presented Jefferson County
Public Schools (JCPS) with a $25 million
grant—the largest non-governmental grant
ever received by the district.
For more information on the College
Bound District Program, please go to
www.ge.foundation.com/collegebound.
China Youth Development Foundation
As a continuation of its support of the China
Youth Development Foundation (CYDF), the
GE Foundation awarded the program with
an $800,000 three-year grant in support of
the Project Hope Rural Teacher Training
Program. This will provide 15 rigorous training
sessions in Shanghai and Beijing for 1,500
administrators and teachers from Yunnan,
Guangxi, Jiangxi, Sichuan and Inner Mongolia
provinces. Their training will cover four key
areas: (1) educational theories, (2) disciplinary reform, (3) school administration and (4)
hands-on skill training. The program will ultimately benefit more than 300,000 students.
Web site: www.ge.com/foundation/cydf.html
International Medical Services for Health
(INMED): Brazil
With a $600,000 grant from the GE
Foundation, INMED in Brazil is developing
the skills and competencies of principals,
teachers, parents and the broader community,
to support students’ academic performance
through increased school readiness and
school attendance; improved basic literacy,
math and life skills; and increased primary
school graduation rates.
Pratham: India
The GE Foundation awarded Pratham with
a $1 million, three-year grant to improve
students’ reading, writing and math skills,
and to maximize primary school retention
in the targeted slum communities in
Bangalore, Hyderabad and Pune. Within these
communities, the population served resides
in extremely deprived neighborhoods and
the majority of children cannot read, write
or solve simple math problems.
“In the past 16 years,
Project Hope has brought
life-changing opportunities
to many children and
teachers in the rural areas
of China by bringing
together all those who care
for China. The work that
we do today is going to
have a great impact on our
future. It is very encouraging
for us to be able to have
such support from GE for
our efforts to educate the
rural teachers of China.”
Xiaojin Gu
Secretary General of CYDF
“In this global economy,
the U.S. falls behind other
industrialized countries
in math and science.
This grant will support
our district, schools and
community to prepare
our students for
academic success.”
Dr. Stephen Daeschner
Superintendent
Jefferson County Public Schools, Kentucky
64 ge 2006 citizenship report
Volunteerism
In 2005, GE employees and retirees contributed more than one million
hours of service to local community initiatives. Today, there are 200
GE Volunteer councils located in 36 countries around the world. Each
is responsible for mobilizing volunteers to address the serious social
issues facing their communities, including mentoring students, protecting the environment, community development and applying their
professional capacity to help school systems and nonprofits.
Here are a few examples of key volunteer initiatives that took
place in 2005:
Junior Achievement
The GE Foundation provided a two-year, $2.4 million grant in 2005
to support and expand Junior Achievement (JA) in 100 GE communities around the world. GE Volunteers play a critical role in the
overall success of this program by helping JA students learn and
demonstrate economic business concepts and skills. Since 2004,
more than 3,500 GE Volunteers and 82,000 students took part in the
GE/JA initiative.
top GE Chairman and CEO Jeff
Immelt talks with GE Foundation
College Bound students.
left Young students in
India benefit from $1 million
GE Foundation grant.
bottom GE Volunteer mentors high
school students in Cincinnati, Ohio.
Global Community Days
Every year, thousands of GE Volunteers around the world participate
in Global Community Days, a GE-wide, signature event. In 2005,
more than 20,000 GE people participated in more than 300 service
projects in 50 countries around the world.
Highlights include:
R
Renovating a shelter in Lisbon, Portugal, for babies born with AIDS
R
Partnering with Boulder County Parks in Colorado on restoration
efforts
R
Working with a local daycare center in Neuss, Germany, that looks
after children from disadvantaged social backgrounds
R
Establishing a drug education and counseling facility in Cape
Town, South Africa
R
Organizing the GE Welsh 3 Peaks Challenge in Wales to raise
money for the Ty Hafan children’s hospice
Ecomagination Service Projects
More than 1,400 GE Volunteers in China, India, Indonesia, Japan,
Taiwan, Singapore, Hong Kong, Korea and Thailand drove environmentally focused community service projects to embrace and support ecomagination—GE’s commitment to develop and drive
technologies that will protect and clean the environment.
Projects ranged from environmental awareness sessions to park
and river cleanups to reforestation activities. Besides engaging GE
people and building awareness around ecomagination, ecomagination community projects helped to establish relationships between
GE and external organizations, such as the Ministries of Environment
and Forestry.
ge 2006 citizenship report 65
Product and service donations
One of the most immediate ways GE can
contribute to solving big needs is through
product and service donations. Communities
in the developing world or areas suffering
the impact of natural disasters have more
than financial need—they need products
and services that can help secure basics such
as clean water, power, shelter and healthcare.
GE pursues contributions in this area from
both a proactive and a responsive standpoint.
In places like Ghana, GE is proactive in trying
to promote access to better healthcare by
working directly with the community. In
Pakistan, South Asia and the U.S., GE has
been responsive in mobilizing product and
service donations to provide immediate relief
to people in need.
South Asia earthquake
GE donated $6 million to assist the earthquake
relief effort in Pakistan and committed to
recovery efforts through Chairman and CEO
Jeff Immelt’s appointment by U.S. President
George W. Bush to a private-sector relief
panel. GE’s contribution included $1 million
to UNICEF to meet basic food, water and
medicine needs; $1 million to the Red Cross
to provide 2,000 insulated and winterized
tents; $2 million to the South Asia Earthquake
Relief fund; and $2 million in GE equipment
including ultrasounds, X-ray machines,
patient monitors and power generators.
66 ge 2006 citizenship report
bottom left GE employees and
local workers install a 45-cubic meter
storage tank for drinking water
in Banda Aceh, Indonesia.
bottom right Children displaced
by earthquake in Pakistan’s Kashmir
region, where GE provided 2,000
winterized tents.
©2005 UNICEF Pakistan / Asad Zaidi
Disaster relief
Perhaps nowhere is the benefit of size more
keenly felt than in the face of a natural
disaster. GE’s scale and scope allow it to
mobilize products and services quickly to
communities in need of immediate relief.
Over the past year, GE’s global community
has been struck by three particularly devastating disasters: the earthquake in South
Asia, Hurricane Katrina that hit the United
States, and the Indian Ocean tsunami. In
addition to significant financial contributions, GE contributed products and services
to help meet big needs in each of these
areas. GE further leveraged its NBC
Universal broadcast and cable platforms to
raise millions of additional dollars for the
Gulf Coast and South Asia.
top left GE Volunteers help
victims of Hurricane Katrina
at the Houston Astrodome.
Indian Ocean tsunami
The GE family contributed more than $20
million in cash, products and services, and
manpower to assist in relief efforts for the
Indian Ocean tsunami that affected 12
countries and hundreds of thousands of lives.
Contributions included water purification
systems capable of providing clean, drinkable
water for tens of thousands of people in
Banda Aceh; power generators to provide
power and run the water filtration system;
and a range of portable medical equipment
including X-ray and ultrasound machines.
U.S. Gulf Coast hurricanes
The GE family’s contributions toward hurricane
relief totaled $24 million in cash and product
and service donations. Product donations
were provided in the form of power generation equipment, water purification and
medical devices, and other goods and ser-
vices. The donation of a mobile power plant
helped restore capacity of a Louisiana fuel
transfer station, which provides 13% of
crude oil in the U.S. and supplies 40% of U.S.
refineries, at a time when energy supplies
were needed greatly.
Visit www.ge.com/disasterrelief for more
information on disaster relief efforts.
Africa project expansion: Ghana
In 2005, GE extended its $20 million humanitarian project in Africa to three additional
sites in Ghana. Seeking to bring improved
healthcare and infrastructure to African
hospitals and clinics, GE is donating products
and services that can address multiple
critical needs simultaneously with the goal
of reducing mortality rates. Contributions
range from healthcare and power generation equipment to water filtration systems,
appliances and lighting.
In addition to equipment donations, GE
provides the necessary training and support
to ensure maximum product efficiency.
To ensure project sustainability, GE’s African
American Forum establishes relationships
at each site, engages senior managers in site
visits, initiates benchmarking studies and
tracks community health progress. By
combining GE’s technology with its training
and management skills, GE hopes to ensure
a complete and sustainable service in these
communities.
“The commissioning at
Kintampo will affect more
Ghanaians than any other
single healthcare facility in
the country. The Rural
Health Training School, the
District Hospital and the
Health Research Centre
provide training for Ghana’s
entire paramedical staff.
Our collaboration with GE
will enable a better future
and impact many lives.”
Professor Agyeman Badu Akosa
Ghana Health Service Director General
Contributions break-out
ALL CONTRIBUTIONS
FOCUS AREAS (Excluding employee giving)
TOTAL U.S. AND NON-U.S. CONTRIBUTIONS
Education $47M
GE Foundation $71M
Products/services $61M
Employee giving $49M
Company cash $36M
Community support $40M
Disaster relief $38M
Public service
announcements $38M
U.S. $173M
Non-U.S. $44M
Africa $5M
Increase GE Volunteers participation
Moving forward R
Continue focus on research-based education
initiatives that increase sustainable impact
ge 2006 citizenship report 67
Customers,
Products and
Services
Customers represent a key stakeholder group for
GE. In a more dynamic and interdependent global
marketplace, GE recognizes that its success is
predicated on the success of its customers. To
develop and sustain mutual competitive advantage,
GE is collaborating with customers more closely
than ever before. This collaboration takes the form
of “dreaming sessions”—attended by industry CEOs
and experts—to better understand customer needs
across specific industries and the development of
stronger partnerships to drive innovative solutions to those needs. GE has also adopted
a new metric called the “Net Promoter Score”
that enables it to track customer perceptions of
performance strengths and weaknesses.
The Net Promoter Score is based on asking
customers one simple question: would they
recommend or do business with us again on
a scale from zero to ten. Customer ratings of a
nine or ten are promoters, and those with a
zero to six are detractors. The rest are neutral or
passively satisfied. Subtracting the detractors
from the promoters produces the Net Promoter
Score—a baseline of customer loyalty. What’s
critical is not the actual score, but GE’s ability to
improve the score over time.
68 ge 2006 citizenship report
ge´s global research center in
munich, germany GE has more
than 2,500 researchers and 25,000 technologists staffing GE’s Global Research
Centers. GE also has facilities in
Bangalore, India; Shanghai, China; and
Niskayuna, New York.
R
Customers, products and services
GE’s approach to working with customers in new ways began with a
series of “dreaming sessions” held last year as a more formal way
to involve customers in helping to shape the Company’s strategy.
Two examples are listed below.
Healthcare 2015
Goal: Assemble a cross-functional group of industry leaders,
government officials, NGOs and members of academia to
enable an industry-wide look at critical factors shaping
healthcare in the next 10 years.
Outcome: Adoption of EMR One of the key outcomes from
this session was progress in GE’s efforts to create advocacy
and adoption of Electronic Medical Records (EMRs). The use
of EMRs can help guide physicians based on a comprehensive
suite of information on a specific patient—including drug
allergies and prior treatments.
Outcome: Healthcare in developing nations GE has
developed a set of Value Products customized for specific
markets in the developing world to help bridge the gap in
access to healthcare technology.
70 ge 2006 citizenship report
Energy 2015
Goal: Conduct individual customer listening sessions with
20 utility CEOs to address how GE can operate effectively and
more responsibly in an increasingly carbon-constrained world.
Outcome: Cleaner Coal technologies GE’s Cleaner Coal
technologies have the potential to reduce key air pollutants
by as much as 50% through systems that convert coal into
gas that can be used in a power turbine. Last year, GE partnered
with the Center for Energy and Economic Development
(CEED) to increase visibility for this technology and help road
test its application.
Industrial product use issues
GE is committed to producing products that
help solve customer problems and improve
their quality of life. However, there are products that remain controversial due to their
associated application, misuse or potential
for negative environmental impact. While
these issues must always be evaluated and
monitored, GE hopes that by illuminating its
approach to some of these products, it can
increase transparency and diffuse concern
around these issues.
Ultrasound
In instances where GE products might be
applied for purposes other than their specified intent (such as the use of ultrasounds
for gender discrimination), the Company
evaluates sales on a case-by-case basis to
screen for potential misuse. On GE’s range
of ultrasounds, the Company has applied
strict warning labels against this misuse and
provided training and support for their
proper medical use.
Nuclear power
Nuclear power is a critical part of the energy
mix, contributing 20% to the power generation in the U.S. and 16% globally. GE does not
own nuclear plants; however, as a reactor
designer the Company does offer a wide variety of high-quality nuclear grade equipment
and services. There are 443 1 operating
nuclear reactors globally, with a total net
installed capacity of 369.585 GW(e). Seventyseven of the reactors are GE designed/built
boiling water reactors (BWRs) operating in
seven countries.
GE’s next-generation ESBWR reactor is
currently undergoing the steps needed to
join the ecomagination product portfolio. If
one ESBWR were used to replace the same
amount of electricity generated in the U.S.
through traditional sources, greenhouse gas
emissions could be reduced annually by an
amount equal to taking nearly 1.5 million
cars off the road in the U.S.
Lighting and appliances
GE Industrial produces lighting products
including fluorescent and high-intensity
discharge (HID) lamps. All such lamps,
regardless of manufacturer, contain small
amounts of mercury. Fluorescent and HID
lamps are up to 75% more energy-efficient
than incandescent lamps and have been
recognized as ENERGY STAR qualified products
as a result. Their increased efficiency reduces
the need for power generation and thereby
reduces power plant emissions, including
mercury emissions. Today, the average fourfoot fluorescent lamp contains approximately
85% less mercury than the same lamp
produced in 1985. GE is actively engaged in
research to further reduce mercury content
and to develop next-generation, energyefficient, mercury-free lighting technology.
Military aircraft engines and weaponry
GE works with the U.S. government to provide engines for military aircraft, including
fighters, tankers, helicopters, surveillance
aircraft, and naval ships, which perform
important national security, search-andrescue and humanitarian missions. GE sells
and supports engines for military uses with
certain foreign governments in strict accordance with U.S. government policy, including
U.S. export control law. GE does not manufacture or supply any weapons or weapons
systems. 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.
1 As of Dec. 31, 2005, IAEA Power Reactor database
Network entertainment programs that
appear at the top and in the body of these
programs, and determines whether a
particular program should also receive a
program advisory.
The department also ensures that entertainment programming on NBC Universal
broadcast and cable networks complies
with FCC rules and policies, relevant federal
statutory provisions, and GE and NBC
Universal corporate policies. The department
requires the integrity, fairness, safety and
security of programs and their participants.
Universal Studios, the division of NBC
Universal that produces feature films, is a
member of the Motion Picture Association
of America, whose film rating system helps
families make informed decisions about the
content of motion pictures.
NBC Universal broadcast standards
NBC Universal is committed to providing
innovative, entertaining, quality television
programming that respects and reflects the
sensibilities of its diverse viewing audiences
while complying with government and corporate regulations and policies.
NBC Universal’s Program Standards and
Compliance Department collaborates with
writers, producers and network and studio
executives to meet this goal. The department
reviews broadcast network entertainment
programming to provide guidance and
judgment on content issues such as the
depiction of sexual material, nudity, violence,
language/dialogue, use of drugs and alcohol
and potentially negative stereotypes.
To help families make informed viewing
choices, the department assigns an ageappropriateness rating to all NBC Television
ge 2006 citizenship report 71
Financial services
product use issues
ge money employees, in partnership with Kenan Institute Asia,
teach financial education to
community college students in
Thailand.
GE Consumer Finance Responsible Lending Standards
GE Consumer Finance has grown exponentially during the last five
years, becoming a presence in financial services and banking globally. During this same period of growth in the business, consumer
advocates, the media and government entities have become more
interested in the products and services of the financial services
sector and how they impact society.
With growing concerns about the rate of personal indebtedness
in developed countries, and with a burgeoning population of previously unbanked individuals entering the credit market in developed
and developing countries, concerns about transparency and
responsible lending in these markets have grown.
GE Consumer Finance challenged itself to look inwardly through
a “responsible lending” lens at its products, processes and people.
The business launched an initiative in 2004, piloted originally in
Europe and now running in the Americas and Asia, to address and
apply pricing fairly, to reduce and prevent mistakes, and to be sure
that standards could be applied appropriately in each country while
enabling the business to remain competitive.
Based on extensive stakeholder and customer reviews in 21
countries across Europe, the initial phase of the project culminated
in the development of the Responsible Lending Standards, which are
a set of 30 guiding principles around key areas:
R
Product and product development—including a “cooling off
period” for all new and existing products; a range of contractual
APR for each product and no interest on fees.
R
Disclosure Standards—including summary boxes disclosing key
product financials provided to customers prior to the decision to
purchase.
R
Sales Standards—including policies and process to monitor pricing
in intermediaries and follow up on any outliers.
R
Underwriting Standards—including appropriate measures to
ensure a clear understanding of indebtedness levels and repayment ability for each customer.
R
Customer Service Standards—including billing dates that allow
customers time to pay bills and avoid unnecessary late fees and
interest; mandatory advisory of rate changes on variable rate
products.
R
Collections Standards—including a definition of customers in
financial difficulty; a policy for dealing with customers in financial
difficulty including an escalation policy; collection staff/third-party
collectors that are trained in line with the policy and demonstrate
competence in applying it.
R
Training and communications standards—including “voice of the
employee” workshops on an annual basis; training on all responsible lending standards, good customer service practices, key
product features, and legislative requirements for each product;
and more advanced handling of customers in financial difficulty.
Using these guiding principles, each of GE Consumer Finance’s 21
European businesses developed a localized set of Responsible
Lending Standards, which were subject to approval, and will in the
future be independently audited. The localization of the standards
recognizes the varied business models and product set that exist,
across the 21 businesses. Leveraging the European experience, the
intent is to implement standards in all of the countries where GE
Consumer Finance operates.
Global initiative: Financial literacy and access
In response to stakeholder concerns about lending practices and
consumer credit crisis, GE has taken a proactive stance to increase
financial literacy. The main objective is to help people understand
the key industry products and services, the basics of how banking
works, budgeting, how to use credit responsibly and what it takes to
get mortgage and home financing.
Project financing
In 1988, GE Commercial Financing businesses began incorporating
environmental considerations in financing decisions when it was
recognized that such issues pose a meaningful economic risk to
lenders. Principal among these risks is the loss of investment should
unanticipated and insurmountable environmental concerns arise
after construction begins.
As the mix of GE’s financial assets has changed over the years,
the nature and extent of environmental review has evolved to meet
new challenges. The range of considerations has expanded beyond
environmental concerns to a broader array of social issues having
the potential to impose risk—whether in the form of economic loss
or damage to GE’s reputation.
GE Commercial Financing entities follow the Equator Principles as
a matter of practice when undertaking project-financing transactions
in developing countries, although GE businesses have not formally
endorsed the principles. The principles are voluntary guidelines to
ensure that projects in developing countries are undertaken with
an understanding of environmental and social impacts, and that
stakeholders are provided an opportunity to participate in the consideration of major projects before construction begins.
Today, a team of more than 40 professionals, with an average of
more than 15 years of experience, review environmental and social
issues in connection with commercial debt and equity financings,
including:
R
Project financing transactions
R
Term loans
R
Equity investments
R
Loans secured by real estate
R
Large equipment lease financing transactions
GE’s wealth of Environment, Health & Safety experience in managing
issues at the manufacturing businesses is frequently tapped
to review the magnitude and significance of environmental and
social issues.
The GE business leaders, the investment committee and/or the
GE Capital Board of Directors examine any potentially significant
environmental and social considerations when investments are
presented for decision. This process, while flexible to meet a wide
range of transactions and other business needs, is committed to the
following goals:
R
Provide rigorous assessment, untempered by desired outcomes
R
Promote open discussion about risk across all relevant functions
R
Elevate issues to the appropriate level and make risks explicit for
the decision maker
R
Reduce otherwise unacceptable risk when possible through
creative solutions
ge 2006 citizenship report 73
R&D
GE’s ability to produce impactful and highly
valued products is dependent on its ability
to explore, develop and leverage emerging
sciences and technologies. GE research and
development work is carried out by thousands
of technologists across the businesses.
At the heart of this effort is the Company’s
centralized advanced research organization,
GE Global Research. Consisting of 2,500
scientists, located in four research centers—
Niskayuna, New York; Bangalore, India;
Shanghai, China; and Munich, Germany—
this global brain trust develops the
key technologies that will enable the next
generation of breakthrough GE products
and services.
Molecular medicine
GE is combining its leadership in diagnostic imaging with
biological expertise to transform the way medicine is practiced,
providing a more holistic approach to disease management.
The Company is moving from a “see and treat” paradigm to a
“predict and prevent” one. Specifically, GE is exploring:
R
Molecular diagnostics to develop the ability to analyze tiny
amounts of biochemical changes in the body’s cells and
tissues to help physicians identify diseases early and help
choose the right therapy.
R
Molecular imaging, i.e., advanced diagnostic imaging
technology, combined with specific diagnostic pharmaceuticals,
to help identify a disease and its specific location in the
body. This will enable pharmaceutical companies to develop
targeted therapies.
Nanotechnology
When scientists study materials at the nano scale, they can
sometimes see different material properties than they do at
the macro or even the micro level. They can see enhanced
mechanical, electrical, thermal or optical structural properties
that would improve a material’s performance and enable GE
to create better products. The entire focus of GE’s nanotechnology program is to identify those novel properties at the
nano scale and develop methods to build materials from the
nano scale up to the macro world for truly innovative product
performance, such as lighter aircraft engines, cleaner turbines,
more efficient solar and wind energy, better diagnostic imaging,
and smarter security devices.
74 ge 2006 citizenship report
Energy
In addition to investing in new businesses and creating new
products, GE is directing significant R&D efforts focused on
fuel cells, hydrogen, solar energy, high-efficiency gas turbines
and Cleaner Coal technologies to drive energy efficiency and
lower emissions.
Continued investment
GE continues to increase its capacity for research and invest in
technology development, and spent $3.4 billion on R&D in
2005, compared with $3.1 billion and $2.7 billion in 2004 and
2003, respectively. GE has also increased its capacity to carry
out R&D efforts through capital investments in its research facilities. Since 2001, GE has invested $100 million in its New York
research and development headquarters, opened a $64 million
research facility in Shanghai, China, and made a $52 million
investment in a new center near Munich, Germany. These new
centers allow GE to be closer to its customers and communities
to solve their unique challenges.
R&D issues
Scientific discovery needs to be balanced with
societal needs and opinions. Today, this is
true more than ever, as the pace of scientific
discovery is faster and new discoveries such
as the human genome and nanotechnology
have opened up entirely new fields of study
and possibilities. In the context of GE’s current
research, there are three issues that the
Company has deliberated upon and crafted
a position that balances the need for knowledge with the need for responsible action.
Stem cells
GE develops and provides technology that
enables pharmaceutical companies to
develop new therapeutic medicines. Part of
the research GE conducts utilizes stem cells
as a resource for discovery. GE has ongoing
research, using only adult-derived stem
cells or established embryonic stem cell
lines to investigate the practicality of developing innovative methods of producing
human cells that could be used in predictive
drug screening applications. GE recognizes
the sensitivities associated with the use of
stem cells and has adopted a clear public
position on its approach to the value and
responsible use of stem cells. GE’s full position statement is available on its web site
www.ge.com/citizenship/stemcell.
Animal testing
GE conducts animal studies only when
required by government regulatory agencies
for registration of materials in worldwide
markets, to provide needed information
used to protect the health and safety of
workers, customers and the environment,
or in the discovery and development of new
diagnostic products used in the identification
and detection of disease. GE is committed
to using the fewest number of animals that
will provide scientifically sound data for
product development, regulatory, worker
and customer safety requirements. As well
as considering the use of enrichment
measures in both company and outside laboratory testing programs. GE also participates
in industry consortia that collaborate on
testing, thus reducing animal use by avoiding
duplication. In medical applications, GE
Healthcare adheres to the “Three R’s” through
which the use of animals is Reduced, Refined
and Replaced. This forms part of the strict
regulatory regime controlling the use of
animal testing in medicine. GE Healthcare’s
position statement on animal testing is
available on its web site www.ge.com/
citizenship/animals
Use of nanotechnology
As GE explores new possibilities for the
application of nanotechnology to solve some
of the world’s most pressing challenges, it
recognizes the need to understand and
address any possible impact of this technology
on people and the environment. To that end,
GE has engaged in the following practices:
R
Continuous risk assessment of nanostructured materials, from manufacturing
through product use
R
Ongoing internal education on the EHS
aspects of nanotechnology and development of common approaches across the
Company
R
Active participation in industry consortia
and forums dedicated to general education about nanotechnology issues and
to the establishment of nomenclature,
standards and EHS practices relative to
nanotechnology research
R
Supporting increased government funding
in research on EHS aspects of nanomaterials as part of overall government initiatives
on nanotechnology
R
Supporting efforts to clarify applicability of
existing laws and regulations to nanotechnology as well as evaluations to determine
whether modification of existing laws and
regulations is needed
Continue progress on ecomagination
commitments, including doubling GE’s R&D
expenditures on eco-related technologies
Moving forward R
Execute “Healthcare Re-imagined” initiative
Implement “Responsible Lending Standards” and
expand financial literacy programs in countries
where GE Consumer Finance does business
ge 2006 citizenship report 75
Employees
GE’s size and multi-business structure provide
a unique place in which employees can thrive
and fulfill their potential. The combination of
GE’s breadth of businesses and global scale
give employees the opportunity to challenge
themselves and make a positive impact in their
industry and community. GE’s commitment
to employees takes several forms: a dedication
to two-way communication; an emphasis on
integrity; a commitment to providing competitive
benefits and meeting pension obligations; a
focus on increasing diversity and inclusiveness;
and broad support for ongoing training and
leadership development.
ge chairman and ceo Jeffrey Immelt
meets with employees at Crotonville,
New York, GE’s education and
development center.
R
76 ge 2006 citizenship report
Workforce information
GE’s workforce is dynamic, with over 50% of
salaried employees having fewer than five
years of service. Whether through organic
growth, acquisitions or divestitures, GE’s total
workforce expands and contracts frequently,
but has remained over 300,000 for the past
five years, with nearly half of all employees
located outside of the U.S.
TOTAL GE EMPLOYEES
2001
2002
2003
2004
2005
U.S.
158,000
161,000
155,000
165,000
161,000
Other countries
152,000
154,000
150,000
142,000
155,000
Total
310,000
315,000
305,000
307,000
316,000
Employee relations
During the past several decades, the
relationship between employees and their
employers has changed dramatically.
Employees change employers and careers
more frequently than in past generations,
and technology has enabled a new way of
working—more mobile, faster and more
technologically dependent. Within this new
era, GE strives to provide comprehensive
systems for immersing recruits in the GE
culture from day one—and then providing
them with multiple sources of two-way communications to encourage an open dialog.
Employee opinion survey
Employee feedback is a critical part of the
way GE operates. GE’s heritage of formally
tracking employee opinions about the
Company dates back to the 1940s, and within
the last decade, GE has refined that process
to what is now known as the GE Opinion
Survey. This is an annual global, anonymous,
web-based employee attitude survey comprised of 69 questions on topics including
hiring practices, compensation, management
practices, fairness, training and development,
diversity and complaint resolution.
In 2006, GE had a record survey response
rate of 95% (out of approximately 127,000
professional employees) and improvements in
most categories. A survey question with a
greater than 60% favorable rating is considered good, greater than 70% favorable rating
is excellent and greater than 80% favorable is
considered outstanding.
One of GE’s lower scores is in the “Tools
and Resources” category, which was scored
favorably by 61% of the respondents (improving one point from 2005). In today’s fast-paced,
global world, employees desire the tools and
78 ge 2006 citizenship report
GE EMPLOYEE OPINION SURVEY HIGHLIGHTS
Favorable
Question
Neutral
Unfavorable
2004
2005
2004
2005
2004
2005
In my current position, I am given
the opportunity for challenging
assignments.
76%
79%
14%
12%
10%
9%
There are no compromises around
here when it comes to conducting
business in an ethical way.
84%
85%
10%
10%
6%
5%
I am confident that the top corporate
leadership of GE will keep the
company competing successfully.
78%
75%
15%
16%
7%
9%
My immediate manager/supervisor
supports me when I need some time
off to take care of personal needs.
88%
88%
8%
9%
4%
3%
I like the kind of work I do.
75%
87%
15%
9%
10%
4%
In my business people go beyond
the minimum requirements of their
job to do really excellent work.
78%
79%
16%
15%
6%
6%
The people I work with treat me
with respect.
88%
89%
9%
8%
3%
3%
resources necessary to keep them efficient
and enable them to do their jobs even better.
GE continues its commitment to retaining
an inclusive workforce and to furthering
its efforts to be an “Employer of Choice.”
Incorporated in the 2006 survey is an
“Engagement Index.” The index has provided
data that allow GE to understand the
experience and needs of its employees.
This year’s results for the Engagement
Index indicate a 74% favorable rating for
the professional and managerial employee
population. The ongoing use of the index
will provide a road map for additional 2006
actions and allow GE to remain proactive in
its retention efforts.
Labor relations and employee benefits
GE maintains constructive statutory and
contractual relationships with hundreds of
employee representatives throughout its
global operations. The employee representative arrangements take various forms, but
can be generally described as trade unions
or works councils. Relationships with these
employee representatives are structured
based on applicable laws in the countries
where GE operates. In all cases, GE respects
employees’ right to freedom of association
and to bargain collectively within the
requirements of local law.
For example, in the EU GE has employee
representation agreements at the local,
national and transnational levels. It has over
300 works council arrangements, including
five European Works Councils (EWC) that are
aligned with the following business platforms:
Consumer & Industrial, Healthcare, Advanced
Materials, Energy and Infrastructure.
In 2003, members of GE’s two largest
unions in the U.S. (which currently represent
approximately 15,000 employees) approved
new four-year national labor contracts with
GE. The larger of the two, the IUE-CWA,
represents over 11,000 GE employees at
more than 50 Company locations. The UE
represents over 4,000 employees at 15 locations. The terms of these two new contracts
were also extended to 11 other U.S. unions
that have local contracts with GE, representing an additional 4,000 employees.
Other U.S. unions represent approximately
5,000 employees.
GE employee benefits
The provision of a well-conceived benefits
package that is responsive to employee
needs while maintaining the Company’s ability
to remain competitive is a fundamental
obligation to our employees. GE strives to
provide competitive packages that meet or
exceed government mandates for specific
regions and industries.
In the U.S., there is a recent trend for
companies to eliminate defined benefit
plans and radically cut back on healthcare
offerings for both active employees and
retirees. GE has tried to resist this trend and,
especially with respect to elimination of its
defined benefit plan, will continue to make
that effort. Within the U.S., most GE employees are eligible for both a defined benefit
plan and a defined contribution plan. GE
views it as a competitive advantage to continue to offer these programs with broad
eligibility as a vital element in attracting and
retaining top talent.
No company can ignore, however, the
trends relating to these legacy costs. When
GE makes changes—as it has done over the
years—they’ll be done intelligently and
incrementally. The Company will also continue to maintain open lines of communication to help employees understand any
changes and how those changes may affect
them. And we’ll keep on reminding everyone that, even as our benefits evolve, we
always want to be the employer of choice.
GE and employee health (relating to
HIV/AIDS and other infectious diseases)
GE is committed to the health and wellbeing of its employees. GE recognizes that
with global operations, it must be prepared
to face the particular challenge of employing members of communities that are
affected by chronic infectious diseases such
as HIV/AIDS. To that end, GE will:
R
Maintain safe and healthy work
environments
R
Not discriminate in hiring and employment
practices based on health status
R
Respect the privacy of GE employees
related to their health, consistent with
GE’s privacy policy
R
Be in compliance with all laws that pertain
to the employment and care of employees
with HIV/AIDS or other infectious diseases
R
Conduct employee education and/or
outreach about HIV/AIDS as needed
Pension management
The GE Pension Plan, which covers most U.S.
employees, dates back to the beginning of the
20th century. GE’s management of the Pension
Plan and the assets in the pension trust has
resulted in a surplus, allowing the Company
to meet current and future retirement
obligations to more than 520,000 people.
GE pension trust (U.S. only)
GE’s effective management of its pension
plans and assets is founded in a careful
management system. GE’s Benefit Plans
Investment Committee, which reviews the
investment performance of the assets of
GE’s pension plans, is comprised of GE’s
CFO and four senior leaders and meets twice
a year. GE’s citizenship principles are also
applicable to its pension plans. During initial
research of a potential investment, among
the factors GE evaluates are a company’s
practices in labor relations, shareholder
treatment and environmental policies to
determine its commitment and practice of
social responsibility. For public equities,
GE utilizes an online “Stockwatch” report,
which lists a governance rating for each
company in the portfolio.
ge 2006 citizenship report 79
Training and development
Key elements to GE’s learning culture include energy, curiosity
and candor, as the talented people it attracts and recruits apply
themselves to unravel the most challenging problems of the future.
GE leaders are evaluated on how well they guide the professional
growth of their people, providing counsel and goal setting. Leaders
are responsible for ensuring functional competence and overall
business excellence of their teams, in an operating climate that
emphasizes integrity without the least exception.
GE invests more than $1 billion in training and development
initiatives each year. GE’s dedication to training is most visible at
the John F. Welch Learning Center in Crotonville, N.Y. This first-ofits-kind corporate center celebrates its 50th anniversary in 2006 with
the ongoing mission to train and share best practices on leadership.
GE Corporate leaders are frequent guest speakers during classes to
promote learning based on real-world and timely experience. GE
also provides a global network of online learning, available to every
GE employee. GE employees completed 2.9 million online courses in
2005, a 26% increase from the year before.
80 ge 2006 citizenship report
Diversity and inclusiveness
While GE has made progress, the Company is committed to continuing to improve the representation of women, U.S. minorities,
and non-U.S. citizens in leadership roles in the Company. In 2005,
34% of Company Officers and 40% of Senior Executives were
diverse (women, U.S. minorities, and non-U.S. citizens) versus 22%
of Company Officers and 29% of Senior Executives in 2000. Nearly
one quarter of GE’s leadership comes from outside the U.S.
COMPARATIVE U.S. RACE AND ETHNICITY REPRESENTATION
American Indian/
Alaskan Native
2004
Executive
2005
0.1% 0.2%
Asian-Pacific
Islander
2004
2005
Black
2004
2005
Hispanic
2004
2005
Total Diverse
Representation
2004
2005
COMPARATIVE GLOBAL FEMALE REPRESENTATION
5.2% 6.2%
4.1% 4.3%
2.4% 2.9%
12%
14%
Executive
4.7% 4.8%
4.8% 5.4%
2004
2005
20%
20%
Professional
0.2% 0.2%
7.5% 8.0%
17%
18%
Professional
27%
28%
All other
0.4% 0.4%
3.4% 3.5% 13.2% 13.3% 7.6% 10.5% 25%
28%
All other
38%
39%
Grand total
0.3% 0.3%
5.2% 5.5%
23%
Grand total
33%
34%
Case study:
GE affinity networks
GE’s Women’s Network continues to
grow around the world, particularly in
Asia. Over the last five years the Women’s
Network has grown from one location in
Tokyo, Japan, to over 23 locations across
China, India, Indonesia and Australia. The
9.3% 9.4%
6.2% 8.2%
21%
Shanghai chapter is a great example.
From 2004 to 2005 the chapter hosted
18 events attended by more than 1,000
people—20% higher than the year prior.
Events cover topics such as financial
planning, self-defense, technology training,
performance, networking and image and
exposure. The Shanghai chapter of the
Women’s Network helps to differentiate
GE from other companies by participating
heavily in recruiting events on campus,
sharing experiences and inviting potential
recruits to GE’s Technology Center. The
chapter also focuses heavily on career
development to increase retention in China’s
dynamic marketplace.
Continue to provide a stable base of development,
opportunities, jobs and benefits
Moving forward R
Implement best practices from U.S.-based pension
plans to strengthen governance procedures globally
Focus on managing global diversity—in a range
of different cultural settings
Continue to focus on individual competitiveness
by improving employee tools and resources
ge 2006 citizenship report 81
Suppliers
GE expects its suppliers to obey the laws that
require them to treat workers fairly, provide a
safe and healthy work environment and protect
environmental quality. The obligation to ensure
that GE suppliers live up to these standards is
set out in a detailed process that establishes the
responsibilities of GE’s businesses and sourcing
personnel, the level of due diligence they need
to perform on suppliers in various categories
and the data they must keep to document
the progress achieved under the Company’s
supplier review program.
ge provides environmental, health
and safety training for suppliers in
Shanghai, China.
R
82 ge 2006 citizenship report
Supply chain standards
Since 2002, GE has required most of its suppliers 1 to certify their
compliance with core EHS and labor standards. Suppliers are
required to certify that they:
TOTAL FINDINGS BY REGION
China 56%
Do not employ workers below the applicable minimum
age requirement
India 13.9%
R
Do not utilize forced, prison or indentured labor, or workers
subject to any form of compulsion or coercion
Rest of Asia 8.5%
R
Comply with laws and regulations governing minimum wages,
hours of service and overtime wages for employees
Latin America 5.5%
R
Comply with laws and regulations protecting the environment
and do not adversely affect the local community
R
Provide their workers a safe and healthy workplace
R
For suppliers in the developing world—GE inspects many suppliers
prior to placing orders and periodically thereafter. The program is
executed by the sourcing organization, more than 2,150 of whom
have been trained on the program, its goals and expectations.
There are 575 GE sourcing personnel trained in conducting supplier
assessments.
Between 2002 and the end of 2005, GE assessed more than
4,475 suppliers. GE revisits suppliers on a rolling one- to three-year
review schedule, based on the result of their prior assessments.
In 2005, GE reassessed 1,480 of these suppliers who had their initial
assessment in a prior year. The reassessments are an important
ongoing aspect of the program as they help ensure that improvements
made by the suppliers are sustained.
Last year, assessments of these new and existing suppliers
generated 12,045 findings at approved suppliers.2 GE requires
suppliers to address all findings in a reasonable period of time and
tracks supplier performance in an automated database. To date,
the suppliers have closed more than 93% of these findings. GE will
track the remaining open findings to closure.
GE has terminated about 272 suppliers in 2004 and 2005 for
poor performance in this program. However, most suppliers seek to
meet GE’s expectations, and the focus of the program has been on
corrective action.
North America 10.5%
Europe, Middle East and Africa 5.6%
TOTAL FINDINGS BY CATEGORY
Health & Safety 33%
Environment 30%
Emergency Preparedness 26.5%
Labor 8%
Dormitory 2.5%
1 Not all suppliers are required to certify. Purchases from utilities, relationships with professional
service providers (such as law or accounting firms) or financial institutions, and situations
where GE has only a casual relationship with suppliers (such as airlines or hotels) are
excluded from the certification requirement.
2 If GE decides it will not do business with a supplier (for business or other reasons), then the
supplier’s findings are no longer tracked to closure, although the findings are retained in the
system in the event the supplier is reactivated at a later date.
ge 2006 citizenship report 85
references to local laws and regulations
helped them accept the importance of
making the requested improvements.
Case study:
Helping suppliers correct their findings
A perspective by Helen Mei
EHS Manager, GE China
When we first began our supplier review
program in 2002, we found some Chinese
suppliers would object to our findings,
claiming that GE’s requirements went
beyond Chinese law, and would make
them uncompetitive. Because we
believed that our findings revealed critical
issues for labor law compliance,
employee safety or environmental protection, we searched for ways to help our
Chinese suppliers comply:
R
GE developed guide-notes for each
question on our checklist with references
to equivalent Chinese law requirements.
Chinese EHS and labor laws are very
comprehensive, but not well enforced,
so many of the suppliers were unaware
of the requirements. Providing clear
R
Many suppliers asked us for specific
assistance in fixing their issues. GE
worked with the State Environmental
Protection Agency, Ministry of Health,
State Administration of Work Safety and
Public Security Bureau—Fire Safety
Division to develop a CD listing qualified
design institutes at national and provincial levels, after screening each of the
design institutes to ensure they had the
relevant capability to assist the suppliers.
The CD also contains hazard recognition
training materials, with examples of
common EHS hazards in manufacturing
settings, that can be used to teach
improved hazard recognition capability.
To date, we’ve distributed more than
800 of these kits.
As this program evolves, GE is placing more emphasis
on identification of repeat findings at the same
supplier, which can best be corrected by changes in
management procedures. As in other parts of the
world, GE’s long-term goal is for the suppliers to
manage these issues themselves. By providing training
and assistance, GE hopes this can be achieved in the
foreseeable future.
86 ge 2006 citizenship report
R
In many cases, GE invited Chinese suppliers to our facilities in the region, so
they can see how GE handles the same
compliance challenges. For a specific
example of how GE Plastics worked
with a supplier, see the Farbtex example
on the GE web site at www.ge.com/
citizenship/farbtex.
R
In 2004 and 2005, GE conducted training for more than 110 of its suppliers,
involving over 180 participants.
R
Overtime findings can be very difficult for
suppliers to correct as Chinese wage and
hour laws permit very limited overtime
unless the supplier has reviewed and
obtained the approval of its overtime plan
with the local labor authorities. GE has
developed specific guidance for suppliers
to help them improve their workforce
management to reduce overtime to
within the allowable limits or to obtain
the required approval of their overtime
plans with the local authorities.
Verification and monitoring of the process
As with any compliance initiative, ensuring
GE’s supplier review program is being executed as designed is critical. This is a particular
challenge for a company as diverse as GE. In
order to verify that GE’s supplier review program is carried out with rigor and consistency,
Corporate Audit Staff (CAS) and Corporate
Environmental Programs (CEP) have teamed
up to do periodic “spot checks” of the program’s implementation.
In the spot checks, a joint CAS/CEP team
reassesses a small sampling of suppliers who
have been qualified by a specific business in
a key country. The team looks at the selection
criteria, conducts a repeat assessment of the
suppliers, and then compiles the results of all
the spot checks to identify execution challenges and opportunities for improvement.
GE has, based on these assessments, identified a number of program improvements
over the years. Some examples:
R
In China, the Company’s initial training
proved insufficient and showed a high
degree of variability of assessment results.
Starting in 2004, GE began requiring that
all auditors in China be certified, which
means they take a three-day training class
and must complete a supplier assessment
in which they identify at least 90% of the
findings identified by a skilled co-auditor.
In 2005, GE extended the certification program to India. As of year-end 2005, 223
auditors have been certified. In subsequent
reviews there has been less variability
of results.
R
Findings can be closed based on repeat
site visits, documentation provided by the
suppliers and photos of corrected issues.
Spot checks identified findings that had
not been adequately closed. Based on the
spot checks, GE improved its training and
guidance on exactly how finding closure
must be confirmed. In subsequent
reviews, GE is seeing better finding closure.
R
In a round of spot checks conducted in
late 2005, GE identified repeat findings at
the same supplier as a key issue. In 2006,
GE will be working on improving its process to encourage suppliers to improve
their overall management of an issue
rather than just correcting the specific
finding.
R
Incorporation of suppliers of newly acquired
companies has not always occurred as
quickly as GE would like. In 2004, GE
added a new metric for suppliers acquired
through business acquisitions and are
currently at 95% of the Company’s internal
expectation.
Find efficient ways to encourage suppliers to improve
overall management of EHS, labor and security
compliance in addition to closing specific findings
Moving forward R
Continue to focus on verifiable finding closure
Go beyond auditing to consider how capacity building
can increase adherence to supplier standards
ge 2006 citizenship report 87
Shareowners
Investors are increasingly interested in evaluating
companies based on a broader set of criteria
than just financial performance. When buying or
selling a stock, a growing number of investors
now look at a Company’s citizenship performance
as well. The strength of reputation, trust in brand
and governance, and the ability to perform as a
good corporate citizen all impact GE’s valuation
and shape the perception of the Company’s
worth. In fact, according to a recent study, 70%
of institutional asset managers believe the
Company’s citizenship factors will be part of
mainstream analysis in the next 3 to 10 years.
As one of the most broadly held retail stocks in
the world, GE takes its responsibility to investors
and their needs seriously. GE’s focus is on
providing transparent communications relating
to the Company’s citizenship performance.
tukman capital holds shares in just 10 to 20 of
the very best companies, including GE. Tukman Capital
has owned GE shares for over 11 years.
R
88 ge 2006 citizenship report
Performance summary
Throughout the economic cycles, GE’s long-term financial goals are:
organic revenue growth of 2–3 times GDP; greater than 10%
annual earnings growth; operating cash flow growth exceeding
earnings growth; and a return on average total capital exceeding
20%. Here is how the company performed in 2005:
11
%
Revenue
12
%
Earnings from
continuing
operations
8
%
Organic
revenue
Earnings from
continuing operations grew 12%
to $18.3 billion.
Shareowner returns
The Board of Directors increased the
dividend 14% for GE’s 30 th consecutive
annual increase. In addition, the Board
increased the share repurchase program to
$25 billion from 2005 through 2008.
At year-end, GE’s dividend yield was 2.9%, a
60% premium to the S&P 500. In all, GE
returned $14 billion to investors in 2005.
While the stock is currently trading at
one of its lowest earnings multiples in a
decade, the Company is earning more
income and generating more cash than it
Continuing revenues increased 11%
to $150 billion. Organic revenue growth
was 8%, 2–3 times GDP.
42
%
Cash flow
from operating
activities
Cash flow from
operating activities
(CFOA) was $21.6
billion, an increase
of 42%. Industrial
cash flow grew 14%.
did when the stock traded at an all-time
high. Its portfolio of businesses has been
strengthened and positioned for superior
earnings, revenue and cash flow growth.
This performance should produce strong
shareowner returns going forward.
GE recognition
GE has been selected for several SRI indices,
including the Dow Jones Sustainability Index
(DJSI), KLD Global Climate 100 Index, and
Innovest Global 100 “Most Sustainable”
Companies. The DJSI has long been a
GE has substantial financial
resources. The Company
remains one of only
six “Triple-A”-rated U.S.
industrial companies.
benchmark for SRIs to identify companies
that have made outstanding contributions
to citizenship efforts, while the KLD and
Innovest ratings were recently designed to
promote investment in companies with the
strongest sustainability performance and
whose activities demonstrate the greatest
potential for mitigating the causes of
climate change.
GE outlook
GE is in great shape. The Company has good visibility into 2006 with solid
orders backlog, strong portfolio quality and organic growth expectation
consistent with 2–3 times GDP. Here are targets for 2006:
Revenues
up 10%
Earnings
up 10–15%
Cash flow from
operating activities
up 10–15%
Earnings
per share (EPS)
up 13–17%
Please access www.ge.com/investor for more information
about investor communications.
Moving forward R
Continue to provide transparent communications
Maintain listing in Dow Jones Sustainability Index
ge 2006 citizenship report 91
Contact information
Corporate headquarters
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06828
(203) 373–2211
Internet address
Visit GE online at www.ge.com/citizenship for
more information about GE and its citizenship
performance. The 2005 GE Annual Report is
available online at www.ge.com/annual05.
For detailed news and information regarding
GE’s strategy and its businesses, please visit
the Press Room online at www.ge.com/news
and our Investor Communications site at
www.ge.com/investor.
Corporate ombudsperson
To report concerns related to compliance
with the law, GE policies or government
contracting requirements, write to
GE Corporate Ombudsperson, P.O. Box 911,
Fairfield, CT 06825; or call (800) 227–5003
or (203) 373–2603; or send an e-mail to
ombudsperson@corporate.ge.com.
GE Board of Directors
For reporting complaints about GE’s financial
reporting, internal controls and procedures,
auditing matters or other concerns to the
Board of Directors or the Audit Committee,
write to GE Board of Directors, General Electric
Company (W2E), 3135 Easton Turnpike,
Fairfield, CT 06828; or call (800) 417–0575
or (203) 373–2652; or send an e-mail to
directors@corporate.ge.com.
GE feedback
Your feedback on GE’s progress is
appreciated. Please e-mail your
comments to citizenship@ge.com.
For more information on GE’s citizenship strategy or for stakeholder inquiries
please contact one of the following:
Sheri West
Manager
Corporate Citizenship
sheri.west@ge.com
92 ge 2006 citizenship report
Gary Sheffer
Executive Director
Communications & Public Affairs
gary.sheffer@ge.com
Table of contents
Overview
Ecomagination and Emerging Markets
Compliance and Governance
Human Rights
Environment, Health & Safety
Public Policy
Communities
Customers, Products and Services
Employees
Suppliers
Shareowners
Contact Information
GE by the numbers: strong, sustained
performance and stakeholder impact
1
20
36
44
48
58
62
68
76
82
88
92
R
GE is the most widely held stock in the
world with more than 6 million shareholders
R
GE buys ~$55 billion in materials, components, goods and services from suppliers
R
GE has substantial financial resources,
remaining one of only six “Triple-A” rated
U.S. industrial companies with more than
11,000 debt holders
R
GE invests ~$14 billion in its intellectual
foundation, including more than $5 billion
in product, services and information technologies; GE filed 2,561 patents in 2005
R
The total GE family is comprised of more
than one million people, including 316,000
employees and more than 700,000
dependents; the GE family contributed
$215 million and more than one million
volunteer hours on community and relief
initiatives worldwide in 2005
R
GE delivered earnings from continuing
operations of $18.3 billion, up 12%;
GE returned $14 billion to investors in the
form of dividends and share repurchase
R
GE has earned the respect of the business
world; GE was named “America’s and Global
Most Admired Company” by Fortune
Magazine and “World’s Most Respected
Company” by Barron’s Magazine
GE AROUND THE WORLD
(White indicates GE locations, Revenues in $ billions 1)
Europe
$40.2B, +16%
~83,000 employees
U.S.
$71.8B, +6%
~161,000 employees
R
GE’s global pension plans have more than
$54 billion in assets serving more than
520,000 retirees
R
GE serves hundreds of millions of
customers; for example, GE Aviation has
~19.000 engines installed, GE Energy has
3,000 turbines installed providing nearly
700 gigawatts of energy capacity, and
GE Consumer Finance has more than 100
million cardholders or other customers
across the globe
Middle East,
Africa & Others
$7.7B, +7%
~2,000 employees
Americas
$10.6B, +13%
~24,000 employees
Visit GE’s interactive
online citizenship report at
www.ge.com/citizenship
This report is printed on Mohawk Options 100% PCW
manufactured entirely with wind energy and contains
100% post-consumer recycled fiber. This paper is
certified by Green Seal.
1 Includes U.S. exports to
external customers
General Electric Company
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back cover Earthquake survivors walk in a
refugee camp in Pakistan, where GE contributed
2,000 winterized tents in addition to healthcare
and energy equipment. In 2005, GE and its
employees contributed $215 million globally,
including $50 million in cash, products, and
services to support disaster relief efforts in
South Asia, the U.S. Gulf Coast and Pakistan.
Photograph ©2005 UNICEF Pakistan / Asad Zaidi
ge 2006 citizenship report
General Electric Company
Fairfield, Connecticut 06828
www.ge.com/citizenship
Solving
General Electric 2006 Citizenship Report
General Electric Company
GE Citizenship Report BC FC
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Big
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