The Wall Street Journal [subscription required] reports that General Electric Co. (NYSE: GE) is getting some pushback from customers and others on CEO Jeff Immelt's push to profit from environmentally-friendly products -- its "ecomagination" campaign.
GE cites some impressive statistics to bolster its claim of campaign success. GE expects to sell $14 billion of its self-described environmentally friendly products in 2007, anticipating 10% annual growth in the category through 2010. (I'd like to know how it defines 'environmentally friendly' products.) And GE says it reduced its own greenhouse-gas emissions by 4% between 2004 and 2006, even as revenue grew 21%.
GE's effort to make money by cleaning up the environment is an admirable concept, but its sales of turbines to coal-fired power plants help utilities burn coal which produces carbon dioxide emissions totaling tens of millions of metric tons each year. And GE's utility industry customers don't find it amusing to learn about Immelt's efforts to lobby the U.S. to reduce carbon dioxide emissions since such limits could cut their profits.
Has GE accurately weighed the costs and benefits of its ecomagination program? Do the benefits of praise from environmentalists and ecomagination product profits offset the costs -- like lost profits due to reduced sales of carbon-dioxide-enabling GE products such as coal-fired gas turbines and the cost of cleaning up GE's own pollution?
As a shareholder, I hope GE knows that ecomagination's benefits will outweigh its costs.
Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns GE shares.
Entrepreneur's Journal: Putting together a solid sales contract
The week in preview: Earnings from Walmart, Macy's, and other retailers
Six top trades for the rest of 2009
Reader Comments (Page 1 of 1)
9-16-2007 @ 12:30PM
Tom Borelli said...
Don't count on GE doing a cost-benefit analysis in regard to its global warming effort. For the past two years we filed a shareholder proposal asking GE to inform its shareholders about the impact of global warming regulations on the company and they have ignored our request.
Today's article is confirmation that Immelt and GE's board of directors have not exercised their fiduciary responsibilities.
GE is not alone. Caterpillar CEO admitted at this years shareholder meeting they the company did not conduct a cost-benefit analysis before joining the global warming lobbying group led by GE.
Too many CEOs only care about image and their shareholders.
Here are some links:
http://freeenterpriseactionfund.com/release050206.htm
http://www.freeenterpriseactionfund.com/release040507.htm
Tom Borelli