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New Metrics
#SustyGoals 3:
GE's Gretchen Hancock on Context-Based Goal-Setting (Part 1)

At SB's third annual #NewMetrics Conference at the University of Pennsylvania in September, the need for next-generation sustainability goals — which measure progress toward real-world goal-lines such as carbon budgets, water tables, and living wages — emerged as a key theme.

At SB's third annual #NewMetrics Conference at the University of Pennsylvania in September, the need for next-generation sustainability goals — which measure progress toward real-world goal-lines such as carbon budgets, water tables, and living wages — emerged as a key theme. To dig deeper, #NewMetrics channel co-curator Bill Baue discussed this question of “endzone” goals with prominent voices in the field, including Andrew Winston, author of the forthcoming book, The Big Pivot*; SustainAbility CEO Mark Lee, and Bob Willard and GISR's Allen White, in the first and second installments of the #SustyGoals series.*

As with many companies, General Electric is nearing the end-date for many of its sustainability goals — such as its goal to reduce absolute greenhouse gas (GHG) emissions 25% by 2015 (from a 2004 baseline) — and so is actively gearing up for a new round of goal-setting. This process got Gretchen Hancock, GE's Resource Optimization Manager in charge of company-wide energy and GHG emissions inventory and reduction programs, to ask herself, “How do we know what's good enough?”

Echoing in her ears were the words of the GE Citizenship Advisory Panel delivered in the 2012 Sustainable Growth Report issued earlier this year:

GE's current “approach is one of incremental change, improving the social and environmental performance of existing business models year on year [which] is important, but it is not disruptive... GE must continue to set and update global goals that are truly stretching. Moreover, both GE as a company and the sectors, value chains and national economies it is involved in need to find ways of measuring themselves routinely against a benchmark of “what is needed” to deliver sustainable prosperity for all. Governments are continuing negotiations to narrow the gap between the current targets for reducing greenhouse gas emissions and the levels that scientists tell us are needed to limit climate change to a rise of 2ºC.”

One answer to this question came when Climate Counts, a non-profit that rates corporate climate performance, announced preliminary results of its Context-Based Carbon Metric that ranked GE seventh of 100 companies. Importantly, it found that GE's carbon emissions reductions are well in line with science-based targets — in other words, that GE's performance when it comes to carbon is sustainable. This context-based method piqued Hancock's interest as a potential means for setting the next generation of GE's goals.

In this third installation in the #SustyGoals Dialogue Series, #NewMetrics channel co-curator Bill Baue is joined by Judy Sandford, Senior Strategist for Sustainability Communications at Addison, where she works on GE's Citizenship reporting (along with Baue). This is the first of two parts of their wide-ranging dialogue with Hancock.

Judy Sandford: As one of the largest companies in the world, what is GE’s philosophy on accountability for its environmental footprint?

Gretchen Hancock: The reason we feel strongly accountable for our environmental footprint is one of example-setting in the marketplace, and a signal to both peer companies and our partners in the regulatory arena that you can be a good company and a great company (to quote Jeff Immelt) by doing the right thing for the environment and for business at the same time. And in fact, so many of the actions that reduce our environmental footprint are great business decisions, and our great business decisions also end up reducing our environmental footprint in many situations. We find this interesting synergy between the two. So it’s very important for us to be focused on our environmental footprint, not only in our own operations, but also in our value chain, including our customers and our suppliers, to share this notion that business and the environment can live together in a mutually beneficial place.

Bill Baue: That aligns with the preliminary results of the Climate Counts Context-Based Carbon Metric, where GE ranks in the top 10 for carbon emissions reductions in line with science-based targets. And that study finds evidence of decoupling carbon contraction from business growth. So, what’s your reaction to your standing on this rating?

Hancock: First of all, results like this in the marketplace are always fantastic to hear. We shared the information internally and were all excited about the findings. This kind of external validation echoes so strongly these folks' internal passion that has driven this progress. It’s a testament to the hard work of literally thousands of people in our operations around the globe. Its humbling for me to interact with them, and to hear their stories about the decisions that they’ve made, the collaborations that they’ve formed both internally and with partners in their communities that makes GE a really great place to work.

Hancock: Like any good GE project, we start out by taking a deep look into our data set, which we’ve been doing since 2004. We have carbon emissions that are driven through fuel-use and combustion, and we have carbon emissions that result from process activities in our manufacturing operations.

We’ve done a number of projects on the non-carbon side of the house associated with changes in our manufacturing operations, resulting both in material substitution in our processes, and reclaim of chemicals that have a reasonably high global warming potential, so we now reuse those instead of emitting them to the atmosphere. On the combustion side, we’ve driven projects in our largest operations, getting out of coal and going to natural gas. At some of our plants, we’ve found it more efficient and better for all involved to go from generating our own electricity to powering off the grid.

GE has changed so dramatically since we launched our goals in 2004, when we thought a couple of really big projects would get us to our goals. We've divested and acquired businesses, so energy use in particular is broadly diffused across the organization. In response, we’ve had to enlist the support of thousands of people around the globe to make those incremental changes that we find really add up — minimizing and optimizing energy use in operations by shutting off the lights and turning off the compressors, for example.

Sandford: What role did your branded programs, such as energy treasure hunts or Ecomagination, play in this culture change?

Hancock: Our whole initiative on enhancing the environment and business simultaneously sprung from the Ecomagination strategy that GE launched in 2005. That strategy has been a real catapult for employee activity and engagement, as well as the great gains we’ve seen on the commercial side.

The other thing that we’ve done is to apply lean manufacturing processes we leveraged from Toyota Motor Manufacturing North America. We owe them a great debt of gratitude; they’re a terrific partner on our lean transformation journey that taught us how to engage employees to think differently about our energy use in our operations, for example through the energy treasure hunt process.

We’ve now done over 300 energy treasure hunts at GE facilities, suppliers, partners, and customers around the world. This lean process improvement tool set gives those folks a voice who know the right answer for our operation, and it aggregates projects so that the leadership team can take a look and see both the environmental and cost-saving benefits. The projects that we’ve driven through treasure hunting normally have a payback period of about a year when you aggregate them across the portfolio. So it’s been a real win for us and they continue to happen now out in the businesses.

Sandford: Is there any particular guidance you would offer to other companies that are similarly looking to reduce their carbon footprints?

Hancock: This notion of driving energy treasure hunting throughout our organizations — and a similar process that we also learned from Toyota on the water side — is facilitated by GE’s corporate culture. There are some corporate cultures that are going to be amenable to publishing a cookbook from a central organization sending it out so that everybody follows the same approach. Part of the beauty of GE is this notion of innovation in each of the operations, so the energy treasure hunt process really opens that up and gets folks' creative juices flowing. It’s exciting and it really leverages who we are, so when I think about other companies, it may not work the same way other places. There are probably other tools and strategies that are going to work more effectively for companies that have a different corporate culture, but this continues to be a great fit for us.

Part 2 ...


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