New Metrics
#SustyGoals 3:
GE's Gretchen Hancock on Context-Based Goal-Setting (Part 2)

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.*

In part one of this interview, Baue and Judy Sandford, Senior Strategist for Sustainability Communications at Addison, discussed GE's approach to accountability for, and reporting on, its worldwide carbon footprint with GE's Resource Optimization Manager, Gretchen Hancock. Here, Hancock reveals the company's plan for continued improvement.

---

Bill Baue: Many of your environmental targets and goals are sunsetting in the near future. So you’re starting a new round of target setting — how do you go about determining them, and in particular weighing in such factors as climate science?

Gretchen Hancock: It’s interesting you bring that up, because forums like those Sustainable Brands hosts — as well as other external NGO partners like WWF and CDP — that’s where we look to see what’s going on in the marketplace, what sort of expectations are out there, what else folks have been learning — since we’ve all been working in this space for the past decade.

Embedding climate science and context into our targets also makes a ton of sense, while also being mindful of the fact that GE is going to continue to grow. We face an interesting conundrum in that our net absolute greenhouse gas emissions have gone down dramatically, but we also set an energy intensity target which is baselined on millions of dollars of revenue. We’ve got some head wind to our final target and we’re figuring out what we can reasonably contribute to making progress at achieving a safe level of CO2 in the atmosphere according to the science.

We're mindful that climate science and the grid are changing over time, and that our products are a big part of contributing to solutions, helping our customers achieve their own targets. Of course, GE operates across a bunch of different sectors, so we need to explore targets that are sector specific or business unit specific to motivate the right behavior internally. It's critical that targets make economic sense to the company, so we can make good business decisions.

Hancock: This notion of context-based metrics that integrate market share makes a ton of sense, asking if we're really reducing our emissions faster than we’re growing the business. For example, when we set our first absolute target, we thought it was going to be hard to achieve that 1 percent emissions reduction. Now, we’re at 32 percent absolute emissions reductions. The fact that we completely blew that initial target out of the water signals to me that we’ve got the power and the creativity and the innovation to decouple emissions reductions from economic growth.

Judy Sandford: Once you have this information, how do you tackle the challenge of accurately reporting and graphically depicting — in easily understandable ways — your performance in areas as complex as GHG emissions?

Hancock: This is really hard! My background is as a geologist — I’ve spent my life as a scientist working for manufacturing companies, and translating complex science into a business context is something you learn over time. But one of the things we haven’t yet harnessed is the power of data visualization to help folks wrap their heads around what we’re doing. There’s huge opportunity here to blend big data with graphical representation that depicts the science accurately. In terms of communication, simple is better, but when you think about context-based, science-based metrics, they’re not necessarily simple — that's something we’re wrestling with, along with other companies. We don’t have an answer yet — it's a work in progress.

Baue: Our last question brings us full circle — what is GE doing to encourage and incentivize aggressive GHG reductions across its entire value chain, both upstream to suppliers and downstream to customers and consumers?

Hancock: This is a really exciting area for us to be dealing with right now. There are a lot of models out in the marketplace for how to do this. Many companies send questionnaires to survey suppliers on their numbers, and we answer those when we receive them from our customers. What we really want to do is compel action across the value chain.

First, we approached our sourcing community that interfaces directly with our supply base and asked how they've encouraged projects with collateral benefit, for us and for the suppliers. We wanted to identify co-benefit projects where we’ve worked together to redesign packaging, where have we done something different in terms of logistics, where have we helped our supply base reduce their value chain emissions.

I get a lot of questions around what’s GE’s Scope 3 emission base; I don’t have a single answer for that, but what I can tell you is that the reductions we’ve driven in our own operations are dwarfed by the progress we make when we partner with our suppliers. That really opened my eyes, on the water front, on the GHG front, on waste reduction generally and on packaging waste reduction more specifically. The opportunity throughout the value chain, if you motivate people properly, is remarkable. I believe it was seven times the benefit of the reduction projects we saw in the supply chain versus our own reductions, which aren’t inconsequential either, so it’s been exciting.

The other thing we do is look out the value chain towards our customers. We’re starting to think now about how we should articulate the aggregated benefit of our installed base more effectively. A lot of that intersects with our service platforms, which have a carbon reduction and an eco angle that we are exploring. We know transparency and accounting around our own operations is important, but we really want to turn our eyes outside of our own fence line in a way that compels action and behavior change.