General Electric will on Thursday reveal that it has doubled sales from environmentally friendly products to $12bn over the past two years, in the strongest sign yet that corporate America’s drive to respond to climate change is beginning to pay off.
At an event with Arnold Schwarzenegger, California’s governor, in Los Angeles, Jeffrey Immelt, GE’s chief executive, will say the company has $50bn of projects in the pipeline and is on track to meet its target of $20bn in “green” sales by 2010.
According to GE, sales of environmentally friendly products, such as wind turbines, water-purification systems and energy-efficient appliances rose from $6bn in 2004 to $10bn in 2005 and $12bn last year. Over the same period, overall sales at GE grew just over 20 per cent to $163bn.
News of the sharp rise in revenues from “ecoimagination” - the marketing campaign launched in 2005 to highlight GE’s focus on green issues - come as US companies are scrambling to take advantage of opportunities presented by climate change.
In recent weeks, NewsCorp, IBM and Citigroup announced plans to invest billions of dollars on environmental projects to gain a leading position in areas such as alternative energy, carbon emission trading and energy efficiency.
Executives at GE, which has lobbied government and the business community for action on the environment, say its “ecoimagination” sales show that, far from being a drag on earnings, such strategies can benefit the bottom line.
“I think the idea has traction now. As a business, you have got to be willing to have your own strategy [on the climate change],” Mr Immelt told the Financial Times this week.
The focus on driving revenues from greener products is a priority in Mr Immelt’s plan to reduce GE’s exposure to low-growth industries and reshape its portfolio towards more profitable sectors.
GE will also reveal that last year it invested $900m of its $3.7bn annual research and development budget on green projects. Mr Immelt has pledged to raise R&D spending on eco-projects to $1.5bn by the end of the decade. It also reduced greenhouse gas emissions by 4 per cent in 2006, ahead of its target of lowering them by 1 per cent before 2012.
The company is expected to use the LA event to showcase forthcoming products including a protoype for the world’s first diesel-electric hybrid locomotive. The locomotive saves fuel by storing up energy when it brakes.
The choice of product is significant because GE, which dominates the US market for locomotives, has been attacked by environmental groups for opposing plans by the Environmental Protection Agency to slash smog emissions in locomotives.
GE has defended its position but the criticisms highlight the reputational risk it faces as it strives to ditch its traditional image of an old-style industrial conglomerate.
