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Joseph Garrity

MGMT 451 W
Section 003

General Electric
How do we know what makes a company ethical; and how does a company define

its social responsibilities? These are difficult questions. Is it how much money they give

to charity, how much they care about the environment, or how they treat their employees,

shareholders and stakeholders. I don’t believe it is any one thing but more so how a

company is run while taking many other factors into account. In the following pages we

will be looking at one company in particular, and determining General Electric’s stance

on ethical and social issues and deciding whether General Electric would be a good

company to work for.

On their website there is a lot of talk about accountability and transparency with

environmental and social issues, and also engaging with stakeholders. A stakeholder is

easily defined as a group or individual who can affect or is affected by the an

organization. Therefore, stakeholders of General Electric are the employees, suppliers,

customers, and the general public that is affected by General Electric. The question is

with all their talk about accountability and transparency, is this case? As with any

company there are pros and cons with what they do. For example on their website they

mention setting up a meeting in Brazil in 2008 where they discussed scaling sustainable

solutions to delivering clean water and energy from biomass. It is also exploring ways to

connect GE technology with small businesses, and making these products and services

affordable to consumers with very low incomes. Also it helped found the United States

Climate Action Partnership which helps address climate change and reduce greenhouse

gas emissions. GE is also attempting to enact a program that is environmentally effective

and economically sustainable; which GE hopes will reduce emissions by 80 percent by

the year 2050. Not to mention all the green products they have been producing.
However, General Electric was not always so environmentally conscious. The

New York Times article Dredging of pollutants begins in Hudson General Electric was

accused of dumping an estimated 1.3 million pounds of polychlorinated biphenyls

(PCBs) into the Hudson River between the years of 1947 and 1977. These PCB’s have

infected the ecosystem of the Hudson River; and have been found as far south as New

York Harbor. In May 2009 GE will begin their first phase of cleaning up the River. This

will take about six months of dredging and only remove ten percent of the contaminants.

The second phase which GE has not yet committed to doing will take several years and

clean up the remaining contaminants. This was the not the only time General Electric

was accused of dumping PCBs in rivers. They were accused of doing the same thing in

the Housatonic River that they did in the Hudson. General Electrics resistance to commit

and be held accountable for this contamination is the problem. Although in their defense

PCBs were not banned by the EPA till 1979. But now that it is known doesn’t GE have a

social responsibility to clean up the contaminants their company dumped. This dumping

affects not only the ecosystem, but the fishing community, and all the residents that live

along the river.

General Electric has also had problems with the Security and Exchange

Commission. In a New York Times entitled GE fined $50 million over accounting

charges, the company was accused of misleading investors with fraudulent accounting in

the years of 2002 and 2003. On August 5, 2009 they agreed to pay a civil penalty

settlement of $50 million dollars; without confirming or denying the charges. The S.E.C

said they had court papers that showed that top accountants had signed off on improper
decisions to make the company’s numbers appear better. GE has since said that it has

changes, and internal control enhancements to avoid such errors from happening again.

There are not just accounting problems. In a report from Policy Matters Ohio

they discuss a major supplier of compact fluorescent bulbs to General Electric reportedly

makes its workers work 64- hours a week, violating Chinese Labor Law. The workers

also have no idea they are dealing with toxic and potentially dangerous material since the

light bulbs contain mercury. The employees are given no proper training on how to deal

with this toxin and experienced workers complain of aches and numbness. This factory

also discriminates on what workers they hire, and often scam many workers out of pay;

since there are no pay stubs workers cannot tell if they are being paid correctly. This

company is a supplier to General Electric, therefore, they are a stakeholder and should be

in compliance with General Electrics code of conduct.

Currently it seems General Electric is really trying to become more ecofriendly.

In an article I found by the Boston Globe entitled GE buys renewable energy technology

firms, it states that GE has completed its purchase of Scan Wind; which is a company that

develops control wind turbine technologies. Another article from Forbes says that GE’s

stock climbed recently but its stock still remains overvalued. Also it mentions how

General Electric has spent 50 billion dollars on research and development since 2000, in

an attempt to produce greener products; and plans to spend an additional 22 billion

dollars on research and development between 2010 and 2012.

A major question is how does General Electric stakeholders respond to these

ethical and social responsibility issues facing the company? There is no question that GE

is a profitable business with substantial financial strength and growth, and therefore
economically they are a sound company. Therefore, General Electric has met the first

level of the CSR pyramid by being economically responsible to its shareholders. With

the exception of some fraudulent accounting General Electric has followed the law

meeting the legal level of the CSR pyramid. Internally they have employee integrity

policy which is shown through what they call The Spirit and the Letter. The policy

basically relates to issues of financial integrity and attempting to avoid conflicts of

interest. It also goes on to say they want good communication amongst employees so

they do not feel threatened to come forward with compliance issues. Therefore, this

shows how they met the ethical standard of the CSR pyramid by wanting their employees

to be ethical. Environmentally they seem to have many projects in the works to make

more efficient and sustainable products thus helping with waste and the environment.

The company is also attempting to help low income family afford products, and also is

attempting to get clean water and energy to countless people in other countries. Thus

making the company philanthropic by helping the environment and people in need.

Comparing other companies to General Electric is difficult because General

Electric is such a large company that stretches into multiple fields. Therefore, I decided

to focus on another large company that had similar overlapping fields as GE; that

company is Disney. Both GE and Disney are in the entertainment industry, with GE

owning NBC and Disney owning ABC. I found that CEO of Disney Michael Eisner tried

pushing out other competitors, and that Disney has sweat shops in Haiti and in China.

There also seems to be few plans in order to reform these sweat shops. Not to mention

along with many other companies Disney has had fraudulent accounting practices in its

past. Disney seems to have less concern for its employees and overall General Electric
seems to do more philanthropic work. And although the environment is not on the CSR

pyramid I find it to be important and General Electric is doing much more for the

environment than Disney.

Overall I feel General Electric does fit in with my own personal values. I would

work for this company because as I previously stated, concern for the environment is

important to me and General Electric seems to be doing a lot to help that. Also I like the

fact that they try and help lower income families, and also get clean water and energy to

not just people in our own country, but other countries as well. Granted General Electric

did have unethical behavior in its past and present. But after all my research it seems as

if in the past General Electric was more unethical, but as time goes on GE seems to

becoming more and more ethical and making it a good company to work for.

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