Backlash at GE
Immelt and his company have become the unlikely darlings of the environmental movement, attracting jeers from conservatives.
NEW YORK (FORTUNE) - If you run a big, highly-visible company in America, you can't please everyone, no matter what you do.
In the last year or so, Immelt and GE have become the unlikely darlings of the environmental movement. GE promotes solar and wind power and it agreed, at long last, to clean up toxic chemicals that it dumped into the Hudson River years ago. The company has also pledged to curb its emissions of greenhouse gases, aligning itself with those who argue that the problem of global warming is real, important and caused by man-made emissions.
Immelt's new mantra? Green is green.
So now, along with cheers from the tree-huggers, Immelt is attracting jeers from conservatives who say he has gone too far. A political activist named Steven Milloy, who runs a small mutual fund called the Free Enterprise Action Fund (FEAF), has filed a shareholder resolution asking GE to justify its policy on global warming.
Milloy says the $150-billion-a-year industrial giant is paving the way for government regulation of greenhouse gases that will slow growth and damage the economy: "They are going to harm their business, and other businesses."
If you're Immelt, you can't win this argument.
For a time, GE had hoped to avoid it entirely. The company's lawyers asked the Securities and Exchange Commission to throw out FEAF's shareholder resolution. But the SEC has decided that shareholders will get to vote on it this spring.
The backlash against GE comes from a controversial source. Milloy is a lawyer, a columnist for FoxNews.com and former adjunct scholar at the libertarian Cato Institution who has battled environmentalists for years. He has run nonprofit groups that attack environmentalists and have received funding from Altria (Research), parent company of Philip Morris, and Exxon Mobil (Research), according to The New Republic magazine. Without disclosing his support from business, Milloy has written about smoking research and global warming on his Web site, www.junkscience.com.
Last March, Milloy formed the Free Action Enterprise Fund, in part as a counterweight to liberal activist groups and socially-responsible investors who lobby big companies on behalf of such causes as global warming, AIDS and gay rights. Milloy argues that environmentalists in particular, frustrated by their inability to effect change in Washington, target big companies, often attacking their brands—and that the companies frequently cave under pressure from the greens.
"I think companies should concentrate on making money, and not on changing public policy," he says. FEAF has criticized Microsoft (Research) and Goldman Sachs, among others, for their environmental practices. But the fund has collected only about $5 million in assets to date, perhaps because it appears to be more of a platform for advocacy than a vehicle for investors to make money.
FEAF's shareholder resolution at GE asks the company to "report to shareholders on the scientific and economic analyses relevant to GE's climate change policy." It also asks GE to provide "estimates of costs and benefits to GE of its climate change policy."
Milloy says he's worried about GE's relationship with environmental groups like the World Resources Insitute, Environmental Defense and the Pew Center on Climate Change that support government regulation of greenhouse gases.
GE told the SEC that it doesn't have a climate change policy per se. But Immelt has asked GE's business units to curb their emissions of carbon dioxide, the main greenhouse gas. GE's corporate goal is to cut its emissions by 2012 to 1 percent below their level in 2004—an ambitious target given the company's growth plans. Without being specific, GE has also stuck its neck out and said that the government needs to do something about global warming—a stance that puts it in opposition to the Bush administration.
There's no doubt that GE's new approach carries risks. The company sells lots of product to old-line industrial customers who oppose government regulation and are suspicious of environmentalists. The company has launched and promoted an initiative called Ecomagination, to research clean technologies, but some analysts say GE's labs don't have a very good track record at creating the kinds of breakthrough innovations that may be needed to address global warming.
But the accusation that GE has become too cozy with the greens must stun some of the company's oldtimers. During the Jack Welch years, GE was excoriated by environmentalists for pushing nuclear power and refusing to clean up PCBs in the Hudson and Housatonic Rivers.
Milloy's challenge is a reminder of how much has changed since then—which is not to say that GE has gone soft in any way. Immelt and his people will tell you that the greening of GE is all about business. GE wants to reposition nuclear energy as a clean solution to the global warming problem. And the company wants to grow in China and India, huge markets with environmental problems that demand creative solutions. Says Immelt: "Ecomagination is a growth strategy."
The new GE also reflects of another kind of climate change. In today's business climate, big companies face rising expectations. Their employees, their customers and even some of their shareholders expect them to help them solve big social problems, ranging from obesity to AIDS. Immelt has said that "to be a great company, you also have to be a good company."