(FORTUNE Magazine) – A few weeks ago, Jeffrey R. Immelt, the chairman and chief executive officer of the world's most valuable and most admired company, stood before General Electric's 200 corporate officers and said it would take four things to keep the company on top. Three of those were predictable: execution, growth, and great people. The fourth was not: virtue. And it was at the top of his list.

Virtue is not the first thing that comes to mind when people think about GE. An industrial and financial services giant that is on track to generate $150 billion in revenues this year, GE under Jack Welch was known for hard-driving management and for delivering market-beating shareholder returns. Immelt wants GE to stand for all that, and more. To be a great company today, he likes to say, you also have to be good company. "The reason people come to work for GE," he tells FORTUNE, "is that they want to be about something that is bigger than themselves. People want to work hard, they want to get promoted, they want stock options. But they also want to work for a company that makes a difference, a company that's doing great things in the world."

Immelt's emphasis on values is one way he is putting his own stamp on the company, and it's having an impact throughout GE. It affects how the company runs itself and treats its employees; the kinds of companies and countries it chooses to do business with; and the technologies it invests in. Immelt takes it as a given that companies have an obligation not just to make money and obey the law but also to help solve the world's problems. "Good leaders give back," he says. "The era we live in belongs to people who believe in themselves but are focused on the needs of others."

Of course, GE isn't the first big company to wrestle with questions of corporate social responsibility. In fact, it has been slow to join the debate. But when GE talks, people listen. As GE perpetually reinvents itself--by embracing Six Sigma quality, globalization, buying and selling on the Internet--it often sets the standard for how global companies should be run.

To be sure, no one's going to confuse GE with Ben & Jerry's as long as Immelt's in charge. A 6-foot-4 bear of a man who played football at Dartmouth and routinely works 14-hour days, he is every bit as tough as the legendary Welch. GE may well aspire to be virtuous, but only when it makes business sense. The company has been slow to clean up PCBs it discharged into the Hudson River, for example, and it fought off a shareholder group that wants GE to stop operating in the rogue state of Iran.

But there's no doubt a new attitude has taken hold at GE, one that reflects new realities. Immelt became CEO on Sept. 7, 2001--four days before the terrorist attacks in New York City and Washington, shortly after the stock market bubble burst, and just as Enron's collapse began what, even today, feels like a unending parade of corporate wrongdoing.

"The world's changed," Immelt says. "Businesses today aren't admired. Size is not respected. There's a bigger gulf today between haves and have-nots than ever before. It's up to us to use our platform to be a good citizen. Because not only is it a nice thing to do, it's a business imperative."

GE has changed too. In 2002, Immelt appointed GE's first vice president for corporate citizenship. Bob Corcoran, 48, a trusted ally who worked for Immelt when he ran the health-care business, now holds the job. Corcoran has spread the gospel to the company's far-flung business units. Today GE audits its suppliers in the developing world to make sure they comply with labor, environmental, health, and safety standards. It has performed 3,100 audits since the program began in 2002. The company has opened up discussions with so-called socially responsible investment funds. This fall GE was admitted to the Dow Jones sustainability index, a collection of 300 best-of-class firms that meet detailed criteria for environmental, social, and financial sustainability. Although Welch got GE going on diversity, Immelt moved the ball forward. The company this year won high-profile awards for promoting women and African Americans into its executive ranks. It granted domestic-partner benefits to its gay and lesbian employees. Meanwhile, GE has set out to globalize its philanthropy, notably by launching an ambitious health-care project in rural Ghana. And next spring GE will publish its first corporate citizenship report.

"It is a not a radical approach," says Noel Tichy, a former GE executive who works with GE, Procter & Gamble, and 3M through his Global Corporate Citizenship Initiative at the University of Michigan. "But Jeff has moved the needle considerably."

As an old-line manufacturer, GE tended to view environmental rules as a cost or burden. Now Immelt sees growth opportunities in cleaning up the planet. He wants GE to be known as one of the few companies with the scale and know-how to tackle the world's toughest problems. Since 2001, GE has purchased a water-purification company, a maker of solar-energy equipment, and a wind-energy business. Last month GE Energy signed an agreement with the Shanghai Power Industrial & Commercial Co. to supply wind turbines to the first two utility-scale wind-energy projects in China.

"Wind, water, lowering emissions, having an environmental service business ... The economics of scarcity are going to drive lots of technological innovation over the next ten, 20, 30 years," Immelt says. "This is an approach to growing the company faster."

Like most new ideas at GE, the company's thinking about corporate citizenship took shape at Crotonville, N.Y., its famed corporate learning center. Every fall several dozen high-potential executives, most in their 30s and 40s, spend three weeks studying a big subject--China, say, or digitization--before reporting back to the senior executives. It's GE's highest-level class, and the students function as in-house consultants. Two years ago they studied corporate social responsibility at Immelt's request.

What the executives learned surprised them. They visited investors, regulators, activists, and 65 companies in the U.S. and Europe, including Johnson & Johnson, IBM, BP, Eli Lilly, Nike, and Chiquita, all of which had confronted a range of social and environmental issues. GE, the executives found, was perceived as a laggard. "That was at some level disturbing to me, because I didn't see that kind of conversation happening within GE," says class member Srini Seshadri, a marketing executive at GE Healthcare. In their presentation to GE's top brass, they cited a survey that ranked GE in the top five U.S. companies for its management quality, talent, and investment value. It was ranked No. 72 for social responsibility.

The executives told Immelt what he had already sensed. Corporate social responsibility, they said, matters to employees, to a small but growing number of investors, to customers--especially in Europe--and to governments and activist groups, whose power to influence business is growing. Top executives at GE, like Benjamin W. Heineman Jr., senior vice president for law and public affairs, argued that the company needed to invest more in its reputation. "Just as there's goodwill on balance sheets," he says, "and just as brand has value, reputation, broadly defined, has enormous value for companies."

Immelt was ready to embrace this idea in a way Welch had not been. While Welch was relentless on the issues of integrity and compliance, he had scant interest in debating the finer points of corporate social responsibility. Welch thought it was enough that GE stood for productivity, growth, rising profits and shareholder returns. He succeeded so spectacularly--GE's market value rose from $14 billion in 1981 to more than $400 billion when he retired 20 years later--FORTUNE called him the manager of the century in 1999.

But that was last century. In a post-Enron era, Immelt feels GE needs to be more conscious of how it relates to the world around it. In part because of his roots in sales and marketing, he has more of an external focus than Welch did. "There's no doubt that I have always looked at this company from the outside in," Immelt says. His perspective is also shaped by his father, Joseph Immelt, who worked for GE's aircraft engines division in Cincinnati for 38 years. "I sat around the table every night with a GE man," Immelt says. "I have a very good sense of what people in the ranks of GE expect from their leaders."

So when big companies were challenged around the issues of corporate governance and earnings manipulation in 2002, Immelt acted quickly. He pushed to add independent directors to GE's board and encouraged directors to dig into GE operations and meet without management present. The company began accounting for the cost of stock options, and split GE Capital into four separate businesses, in part to provide investors with a clearer look at its operations. The board also gave Immelt, who has no contract, a performance-based pay package that was applauded by shareholder advocates.

It takes three hours to travel about 100 miles of rutted, dusty roads between Accra, Ghana's capital, and the city of Asesewa in a rural eastern region where nearly half the people live on less than $85 a year. I'm in the back seat of a Toyota SUV with Bob Corcoran on the way to the dedication of new hospital, made possible by donations from GE. I ask him, politely, what the hell we are doing here, and why is GE spending $20 million of its shareholders' money on health care in Ghana, a country where it does almost no business?

At the simplest level, he says, it is because GE wants to be known as a good company, not just in the U.S. but around the world. And expectations of what big business should do are rising.

"Think about your neighbors," he says. "If they obey the law, if they pay their taxes, if they don't park their Winnebago on the street, are they just compliant? Now what about the neighbor who organizes the block party? Or the one who picks the kids up after school? That's a good neighbor. And that's what we mean when we say we want to be a good company. The question of how much better we have to be to be recognized as a good company, we don't know. It is more today than it was five years ago."

The Ghana project has a strategic component too. Immelt had been asked by people in GE's African-American Forum whether GE could do more in Africa. He couldn't see a way to locate a business there, and so instead looked for other ways to help. GE decided to form a broad partnership with Ghana's public health service, committing $20 million over five years. The company donated ultrasound equipment, X-rays, patient monitors, incubators, refrigerators, and freezers to the hospital. It also provided a power-generator and water-treatment system to Asesewa, a place where most people do without electricity or running water. GE executives also agreed to train health workers in leadership, Six Sigma, and project management skills.

Hundreds of schoolchildren from miles around turned out to greet us when we got to Asesewa. The dedication ceremony was long and hot, the sound system malfunctioned, and speeches had to be translated into Dangme, the local language. Still, there was literally dancing in the streets by the time it was over.

Immelt later told me that he could justify the project in several ways. "For young African-American leaders, there's an incredible fascination with Africa," he says. "They view this as being an extreme positive." The knowledge and good will generated in Ghana also could eventually pay off for GE. "If you look over the long term, there is a decent chance that the continent of Africa becomes a market that we want to understand," Immelt says.

The more you listen to Immelt and his people, the more it becomes clear that GE's practice of corporate citizenship is guided by this kind of business calculus. Immelt says as much: "If this wasn't good for business, we probably wouldn't do it."

In that context, it's a no-brainer for GE to sell more wind power or energy-efficient locomotives. When it comes to philanthropy, or supply-chain audits designed to keep GE from being linked to sweatshops, or decisions about granting domestic-partner benefits, the business case usually comes down to GE's reputation, and in particular its desire to attract and engage great people. GE decided some years back, for example, not to sell low-end ultrasound machines in China (and to put warning labels on the high-end machines it did sell), because it did not want the machines to be used for sex screening that could lead to abortions. The potential harm to GE's image was too great to take the risk.

But applying that kind of cost-benefit analysis to decisions with moral dimensions is a tricky business. GE operates in more than 100 countries. It has decided not to do business in Myanmar. Why? Because the government is a notorious human-rights violator, spotlighted by human-rights groups, and because the business upside is limited. GE has judged that it has more to lose than to gain by being there.

By contrast, GE, through its wholly owned foreign subsidiaries in Italy, France, and Canada, sells oil-and-gas equipment, hydropower, and medical equipment to Iran, a country that the U.S. government has identified as a state sponsor of terrorism. The Iranians are said to be developing nuclear weapons, financing the Hezbollah terrorist group, and quite possibly supporting people who are trying to kill U.S. soldiers in Iraq. Frank Gaffney, a former Reagan administration Defense Department official who now runs the Center for Security Policy, wants pension funds to divest companies like GE that do business in rogue states. "One doesn't do business in a country like Iran without the acquiescence of the regime," he says. "Typically, that means doing business with the regime, its cronies, or others who enrich the powers that be."

While American firms are barred by law from doing business in Iran, GE notes that their foreign-owned subsidiaries are permitted to do so. What's more, unlike Myanmar, Iran is a big and potentially wealthy country where GE would like to expand someday, and where its European competitors generate substantial sales. A 2003 shareholder proposal from the pension funds of New York City police officers and firefighters asked GE to review its operations in Iran with respect to the reputational and financial risks. The proposal was defeated, at GE's urging. Immelt told FORTUNE, "This is an issue that is under constant review by the company and the board." GE executives note that some foreign-policy experts believe that "constructive engagement" in places like Iran is the best way to bring about reform.

In the old GE, that would have been a sufficient response. But Immelt wants today's GE to be held to higher standards of goodness and virtue. Ordinarily such pursuits are not subject to cost-benefit analysis. How GE goes about untangling knotty questions like these will be fascinating. You can be sure that much of corporate America will be watching.

FEEDBACK mgunther@fortunemail.com