Peter Knight says that the economic crisis should have been the chance to really change US corporate behaviour, but the reset never came
Remember the Reset World? This was the creation of Jeff Immelt, the CEO of GE.
It was November 6 2008, and the world was in the firestorm of an economic crisis. Immelt was addressing the Business for Social Responsibility conference in the Hyatt hotel in New York.
He argued that the crisis was not part of the economic cycle, but a “reset”. By this he implied that the world would never be the same again. Business was changing fundamentally. Total Reset.
Immelt has repeated the idea often, to many different forums around the world. But at the Hyatt he played to his audience and addressed social responsibility too. He said transparency and accountability would become even more important. Corporate social responsibility was strategic, not something done at the end of the day “when we have 15 minutes to kill”.
Business had to engage more with government and also work to solve social problems. Those companies that understood this fundamental change – and grasped the opportunities – would prosper.
The audience felt very happy. Their jobs and world view had been validated. The world would change but only for the better. Business would become ever-more responsible and accountable. This was a big vote for positive, responsible change, echoed that same week with the election of Barack Obama.
Ever since then I have been looking forward to the reset world. I’ve been searching for indicators, signs that the old ways of doing business were changing. But like the first cuckoo in spring, I’m finding it really difficult to hear the tweets.
The good news is that business has realised that it needs to be seen to be responsible. Some companies I know have not backtracked on their earlier commitments. That’s good news because they had a perfect excuse to dump sustainability. But it is difficult to detect much evidence of strategic corporate social responsibility – really embedding the principles into every aspect of daily business.
Unfortunately it is far easier to find dispiriting evidence that business has learned no lessons from the firestorm. Everyone seems to be waiting for things to return to the way they were before the crisis.
You have to look no further than GE for evidence of the same-old-same-old.
The company polluted the upper reaches of the Hudson river with PCBs in the bad old days when industry knew no better. These carcinogens are sitting in the mud at the bottom of the river and for decades GE resisted a clean-up, arguing it would be safer (and cheaper) to leave the gunk undisturbed. But it finally agreed to dredge the river bottom last year. Working with the US Environmental Protection Agency (EPA), it started a six-month pilot project.
After the test, both sides produced reports on the experience. The EPA’s report concludes that despite problems, the dredging was successful and consequential pollution downstream was less than expected. GE’s report is quite different, saying the dredging released nearly 25 times more PCBs than expected.
Clearly, there are complex scientific issues at play here. But the dramatic difference between the two reports smacks of corporate wriggling and legal bargaining. This is not a reset: just the same-old-same-old as the company tries to escape its responsibilities.
Travel north to Detroit, to the sad, blighted car capital of the US. There, early enthusiasm for fuel efficiency and smaller, less ridiculous cars has ebbed. The myopic General Motors, which drove itself into bankruptcy by its inability to read the warning signs, has reversed its earlier stance on fuel efficiency.
Instead of abandoning the further development of passenger cars disguised as agricultural vehicles, the company says it will plough more money into its range of light trucks. Same-old-same-old vroom-vroom.
The groundhog day of the economic cycle is being mirrored in Washington, where Obama’s attempts to get political cooperation is failing horribly. And Wall Street has not changed its expectations an iota: everyone is furiously hunting for the big pot of moolah they mislaid in the firestorm.
While Immelt’s hopes were high, the reality is that pushing the economic reset button has produced the same outcome as rebooting Microsoft’s disastrous Vista operating system. No matter how many times you press the reset button, the same old, irresponsible programming just comes back to haunt you.