GE’s reporting remains ahead of the game
By Heather Rankin
A corporate responsibility report titled Resetting Responsibilities raises expectations. Will there be a candid discussion of the transformation needed in big business – especially the financial sector – following the economic crisis? Will we see commitments to making these changes?
GE doesn’t disappoint. Chief executive Jeff Immelt begins with powerful, honest but succinct rhetoric about the scale of the challenge. His letter uses strikingly frank language such as “meltdown” and “corporate social detachment”, and the rest of the report maintains this level of candour. The Resetting Responsibilities chapter includes bold statements about how industries and governments need to change. A diagram on p8 depicts GE’s vision for moving into “tomorrow’s economy”, calling for a greater government role and increased regulation of corporate governance – unusual from a US company, to say the least.
There are three pages dedicated to the “radical restructure” required in financial markets, including a description of how GE is shrinking its own financial services business and the reduction in its debt-to-equity ratio. However, there is no detail of GE Capital’s policies and processes for responsible investment, and the paragraph on executive pay lacks substance.
This is not a performance report, more of a manifesto. It is a discussion of the impacts of the economic crisis, the action needed to create a more sustainable future, and why recession is no excuse to renege on commitments. People looking for inspiration will be largely satisfied, while those seeking a typical progress report can find this in spades on GE’s citizenship website.
The approach has its drawbacks. Even those looking to GE for vision will expect to see an update on its flagship ecomagination programme, yet it is p34 before GE gives limited information on it. Explanations of the “reset” become a little repetitive; the report needs more balance between wider policy and the company’s own approach and progress.
Dividing content between print and web is always tricky. It is appropriate for the report to focus on global trends, strategy and big issues, with detailed performance available online. However, too often the report is tantalisingly brief and directs readers to the web for more. GE’s use of external perspectives is an example. There is an impressive variety of quotes from suitable experts online, but in the report these are edited so heavily they are too short to be meaningful. It would be better to select fewer, longer perspectives for the printed document.
The report is generally clear and well written, although the constant reference to GE in the third person makes for stilted reading, especially when used two or three times in a sentence. The citizenship priorities listed for each business are vague, and some, such as government and military sales, are not in themselves citizenship issues at all. The ethical issues raised by these sales aren’t explained here.
The table showing progress against the commitments made in 2008 is welcome, but would be clearer if progress in each area followed on directly from the relevant commitment. Some of the 2009 commitments are surprisingly vague, although there are more detailed targets listed.
The report structure is sometimes unusual. The advisory panel letter on pages 12 and 13 would be better at the end, so readers could judge whether it is a fair assessment based on what they have read. The operational excellence chapter covers everything from corporate governance and employee training to water use and community capacity building, without pausing for breath.
More climate detail
Some might think it odd for energy and climate change to be the last chapter in a power generator’s report. The policy described here shows real leadership, but charts would be useful for assessing progress. Descriptions of GE’s plans for tackling climate change need more detail – when will innovations such as smart electricity grids and hybrid fuel-cell buses generate significant revenues?
The data tables at the back of the report are useful, although some metrics are odd. There are almost as many for philanthropy as for environment, health and safety combined, while the employee data focuses entirely on diversity, with nothing on training, turnover, or engagement.
These are details, though. All in all, this is an exceptional effort. It provides the vision, context, policy, commitment and honesty missing from most corporate responsibility reports. While there are areas for improvement, GE’s reporting is already streets ahead of most and sets an example for others to follow.
Snapshot
Follows GRI? Yes, to application level A
Assured? No, but there is a letter from an external advisory panel
Materiality analysis? Yes
Goals? Yes
Targets? Some
Stakeholder input? Yes – too many voices with too little space
Seeks feedback? Yes
Key strengths? Vision and candour
Chief weakness? Report doesn’t quite stand up on its own – it relies too heavily on readers visiting the web for more
Pleasant surprise? Straightforward, frank language
Heather Rankin is a senior consultant at Context.
heatherr@econtext.co.uk
www.econtext.co.uk