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On 9 May of this year, General Electric chairman and CEO Jeff Immelt announced the commencement of the US$ 150 billion company's spanking new environmentally-friendly business initiative "ecomagination." The plan might prove to be not only the most dramatic effort by a multi-national to truly embrace green technology, but also a completely new, aggressive means of instantly and authentically building green into the brand.
GE's small e ecomagination comes not a minute too soon. As Kyoto becomes international law and concerns about the environment dominate discussions at G8 and World Trade Organization summits as well as popular culture in general, businesses are being scrutinized for their approach to this issue. Brand managers eager to go green could learn from how ecomagination works and how it differs from similar initiatives.
GE director of public relations Peter O'Toole explains ecomagination by drawing on the past of the company. "GE has always been a growth company and has thrived for 127 years thanks to a strong focus on good growth prospects. Ecomagination is an extension of that." He continues, "Jeff Immelt, our CEO, said that ‘green can be green'—that we can do the right thing environmentally and make money while we do it. And based on the positive reaction we have heard from customers, consumers and stakeholders, he's right."
Herein lies the most attractive element of ecomagination. It is, at heart, a money-making initiative. Environmentalists ranging from Greenpeace to the Sierra Club have long argued that green technologies are not just "feel good" projects; they represent the business of the future.
The Environmental Kuznets curve, named for the late Harvard economist and Nobel Prize winner Simon Kuznets, dictates that as poor countries become richer, the demand for greener technologies becomes greater because nobody wants to live in a mire of pollution. Thus, as China and Eastern Europe engage in larger slices of global trade, they too will start looking for ways to clean up their backyards. By extension they will look to companies like GE for the technology to do it. GE plans to be ready.
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Amity Shlaes wrote in the Financial Times that these goals have enabled GE to "inscribe its name below all the country names on the Kyoto treaty," and she's right (9 May 2005). Ecomagination is a company-wide, deep effort to reinvent the way GE does business and to prepare for a swiftly globalizing world where climate change and ozone depletions are not just the concerns of the next generation but of you and me, now.
Nonetheless, it does make one wonder, despite the funky ecomagination website and massive marketing campaign, whether or not the average consumer will see the staid GE brand any differently following the initiative.
In fact, says GE's O'Toole, ecomagination is not meant to revamp the brand at all; it's about good business sense. It's "not an advertising ploy or marketing gimmick," he says. "GE wants to do this because it is right, but also we plan to make money while we do so." Ecomagination is "never going to be a lecture by GE about ‘what's right.' It had to be a viable business prospect."
When asked what GE hopes to achieve through ecomagination, O'Toole answers simply, "Strong growth." He adds that, "in what Jeff (Immelt) calls a ‘carbon constrained world'—where it is also more of a challenge to find the kind of growth GE demands, companies need to strive for developing technologies and business prospects where perhaps they haven't in the past."
The efforts of a huge diversified company to go green have been echoed in the past by other large energy companies. One such project was the sustainable development project initiated by Shell in 1996 and launched at the Earth Summit in 2002. Shell is a massive, worldwide energy brand that has not traditionally been associated with a green focus. In fact, Shell's reputation at the beginning of its sustainable development project was in tatters. The Anglo-Dutch brand began to think seriously about building green into its image shortly after the 1995 Brent Spar disaster in the North Sea. During that situation, Greenpeace activists grabbed world headlines by occupying a derelict oil platform owned by Shell and refusing to let it be tipped into the ocean as a means of disposal.
At the end of that same year, Shell's brand suffered another blow when environmental activist and Nobel Prize nominee Ken Saro Wiwa and eight of his fellow Ogoni environmentalists were executed by the Nigerian government for obstructing Shell's pollution of their tribal lands. Critics charged the brutal move was backed by Shell, who did nothing to intercede during their show trial. "After these two debacles," Claudia Mpeta, Shell's communication manager for External Affairs at Shell's Cape Town offices reports, "over a hundred Shell service stations across Europe were vandalized in some way, and employees were scared to come to work. Our brand value was below zero."
At the start of 1996, Mpeta says, the company went into a "massive introspect" when Shell began a systematic review of its entire operations. The result was a sustainable development program meant to "restore Shell's integrity" to the world. Heads of departments of various countries were asked to sign a "letter of assurance" that their operations were doing the right thing from an "economic, social and environmental" standpoint. Now Shell launches yearly independent audits to make sure that its officers are toeing the line in all three areas.
According to Mpeta the rebuilding of Shell's brand required a long-term, three-phase process. The first phase lasted from 1996 to 1997, when the company went through an introspective period and planned what it would do to re-establish the brand worldwide. The second phase, Mpeta says, saw the creation of the Statement of General Business Principles and the yearly publication of the Shell Report, which is a detailed appraisal of the company's yearly effort to abide by its sustainable development goals. The Shell Reports are slick catalogues that break down the company's activities into highlights and lowlights. The third phase began in 2001 and continues today; the project launched at the 2002 Johannesburg World Summit on Sustainable Development in what Mpeta describes as a "coming out party."
Shell divides the way it manages the brand into two sectors. Traditional brand managers cover products and lubricants. They work in tandem with colleagues involved with corporate identity. Shell's External Affairs department is involved in all corporate decisions and uses what the company calls an "issues management system" which "ensures we do not repeat the same mistakes." To do this they use a global brand tracker and a methodical "reputation tracker" as measurements of the efficacy of the system.
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The company learned that becoming an environmentally sensitive brand requires a great deal of organization and time. (Shell removed itself from Ogoni land—although its rusting oil drilling infrastructure remains—and addressed other sensitive issues such as the use of pesticides in Brazil and the spread of HIV among its African employees.) There is no better place to find out about Shell's problems than through the Shell Report itself; the company embraces a policy of transparency that is almost disarming.
So what has Shell learned that General Electric might want to emulate? The implementation of a sustainable development program that has a meaningful effect on people's perception of the brand requires three elements.
- Complete buy-in from the head of the company. Each Shell Report begins with a message from chairman Jeroen van der Veer, who has been instrumental in pushing the program forward. (Predecessor Sir Philip Watts was knighted for his efforts in regard to sustainable development before being fired for corporate dishonesty. This embarrassing and recent episode receives upfront treatment from Shell in its report.)
- The program must have equal buy-in from employees. Mpeta tells us that the only way to grow a sustainable development program is to train employees at the ground level, informing them about the program and how it affects the way the company does business. This is a time-consuming process—more so even than the planning of the project itself.
- The company requires time to reap the benefits of its actions. This year represents the ten-year anniversary of the Brent Spar disaster and the hanging of Ken Saro Wiwa. Despite the passage of time and all the work it has done, Shell is still not immediately associated with green branding. Joel Makower's August 2004 column in GreenBiz.Com listed Shell as one of the many companies that simply gush the "green gospel" with a page or two of slick ad copy in selected magazines. It's worth noting that Shell has a lot of past to overcome and that cynics are not easily satisfied.
Mpeta points out, however, that despite the difficulty in turning around the public's perception of the brand, the sustainable development program has a spin off that is simply crucial for the future of the company: it gives Shell a "license to operate" in developing countries. "If we want to do business with China and the rest of Asia we need a good reputation. What government would want to do business with a company that is environmentally insensitive?"
This finding is in line with GE's belief that ecomagination is absolutely necessary for staying in business.
The key, Mpeta says, is to be able to "put yourself forward as a company that is acting on everyone's best interest. Shareholders want to make sure the company makes them proud…. They want returns from a company that is acting responsibly."
Both Shell and GE know that their actions today will ultimately give them that crucial license to do business in Asia, as well as Europe and the Middle East where there are increasing markets for water purification and desalination. These markets want to work with the cleanest and greenest brands.
While, it remains to be seen how either brand will manage going forward, a long look at Shell's experiences can only help GE achieve its mission.
Disclosure: Several partners were involved in GE's ecomagination launch. These include the brand consultancy Interbrand Corporation, brandchannel's parent company.
[11-Jul-2005]
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American writer Ron Irwin lectures on Brand Management at the University of Cape Town, South Africa. He researched this article with the help of the University of Cape Town Business in Context postgraduate student research team comprising Zarif Kahn, Melody Johnson, Nikki Emerton and Shelley Levin, to whom he is gratefully indebted.
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Oct 24, 2005
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Branding, a Job Well Done -- Dale Buss
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How do major brands like Costco and Ritz-Carlton become household names without relying on traditional advertising? By tapping into their greatest resource: Employees.
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Aug 8, 2005
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Hotel Brands Break the Chain -- Rob Mitchell
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After decades of perfecting the known experience at chains around the world, hotel brands are now trying to create boutique hotels as guests go on a quest for the one-off experience.
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Jul 25, 2005
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Best Global Brands: Focus on UBS -- Robin Rusch
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Among the top five fastest growing brands on the list of 100 Best Global Brands 2005, Swiss financial services company UBS reflects the work in progress of growing and sustaining a global brand.
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Jun 20, 2005
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Growing Pains Small Brands -- Alicia Clegg
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How can a brand remain true while broadening its reach? Popular but small brands like Innocent Drinks, Tyrrells and Hill Station risk losing their original fans in their quest to grow bigger.
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Apr 18, 2005
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Dove Gets Real -- Alicia Clegg
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Unilever’s Dove is the latest beauty brand to use "real" women to sell product. But can this campaign turn ugly?
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Mar 7, 2005
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Should Global Brands Trash Local Favorites? -- Randall Frost
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When P&G, Unilever and Nestlé clean house, they risk losing local markets for beloved brands. Companies like Henkel, on the other hand, retain a portfolio of national and international brands to satisfy both global and local tastes.
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