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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
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
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
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
(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
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 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
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
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.
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
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.