Emerging from the downturn is a priority: How can we best ensure that this recovery is green and does not resurrect the economic and social habits that drive unsustainable economies?
We must not forget the basic lesson that using capital needed for future investment to pay for consumption today is not sustainable. This is as true for national economies as it is for household budgets, and it is as true for natural resources as it is for finance. We cannot continue to consume exhaustible resources, whether it is fossil fuels or clean air, more quickly than we replenish them through innovation.
Coming out of the recession, businesses have an opportunity to shift toward sustainability. Corporations are no longer in a state of emergency; U.S. businesses are lean and profitable, with healthy balance sheets and a relatively low level of debt. Now is the time to relaunch investment and to build the industries of the future. We must take a long-term view and develop products and services that can bolster the sustainability of the overall economy.
Some skeptics say that U.S. and China success is a zero-sum game. Of course, GE is a major player in both countries. Can you give your view on this argument?
International trade brings benefits to all sides. When the U.S. imports goods from China, consumers benefit from lower prices and greater affordability. Resources are freed up that can be devoted to producing different goods and services in the U.S. At the same time, economic growth in China also translates into stronger demand for U.S. products. GE’s involvement in China and China’s involvement in the U.S. are therefore complementary. By contributing to investment and innovation in both of these major countries, GE helps make the global economy more resilient, to the benefit of both countries.
The painful reality experienced by workers laid off when industries shift, however, feels very different from this economic analysis of the mutual benefits of globalization. People must find new jobs, sometimes move to new cities, sometime retrain—and all this is harder for older workers. Enabling people to make the transition depends on fostering education, innovation and investment, to ensure that economies remain flexible and capable of seizing new opportunities.
Smart public policies are important in advancing sustainability in business strategies and practices: What would be on your wish list for a policy agenda from this perspective?
Government has a crucial role to play in leveraging the creativity and strength of the private sector. Businesses respond to incentives. Exhaustible resources remain overused because the damage to the environment caused by their consumption is not reflected in their price. At the same time, companies do not invest sufficiently in research and development in areas such as alternative energy, which would benefit the whole economy. Governments can help to correct these market failures through tax and price incentives, to unleash private-sector innovation and investment.
GE firmly aligns its business strategy with sustainability issues. Do you see a time when economic and environmental realities mandate that each company integrate sustainability into its business practices in order to be successful?
That time is approaching fast. The rapid economic growth of large emerging markets is driving demand for raw materials, and this is already being reflected in rising commodity prices. These price rises are a warning signal that is flashing red, telling us that for people in China and India to fulfill their aspirations for a better life, we will all need to become hugely more efficient in the way we use natural resources. Economic factors like prices are becoming more and more aligned with environmental factors, putting inescapable pressure on business. The companies that recognize this inexorable trend, and invest ambitiously in sustainability innovation, have the greatest chances of success in coming decades.