Human Rights

In 2009 we committed to enhancing our efforts to undertake human rights due diligence, including consideration of Human Rights Risk Assessments where appropriate. Working through the Company’s Human Rights Champions in place within each business, we encouraged due diligence processes through checklists and other instruments and have issued guidance on Human Rights Risk Assessment processes. The nature of the GE businesses’ initiatives in 2010 did not lead to a full-blown Human Rights Risk Assessment. We will, however, keep looking for appropriate opportunities to engage in such efforts in 2011. Following are other developments undertaken in 2010 related to human rights.

Due diligence is integral to our Implementing Procedures, which utilize existing operating cycles and management structures and appends a human rights lens to their scope of review. Particular areas of concern are highlighted in the Procedures but each business is called upon to undertake its own due diligence on human rights touch points that are most relevant to their business’ operations and growth plans. The General Counsels of each of the major businesses have identified Human Rights Champions to be responsible for undertaking this due diligence effort and report any risks and abatement plans to their business’ Compliance Review Board (Session D). The rhythm of these efforts varies by business, as do the human rights issues of concern. Quarterly telephone convenings have been held to share concerns and best practices.

China Sourcing Controversy Worker Conditions and Overtime

In July of last year a U.S. labor-based NGO alleged that a supplier located in Guangzhou Province employed labor practices that violated Chinese law. GE was one of several U.S. manufacturers alleged to have sourced products from this supplier. Some of the allegations were that the supplier allowed (or forced) employees to work overtime in excess of China’s statutory monthly overtime limit (36 hours), required employees to stand at their work station for 12 hours with insufficient breaks, provided substandard housing for their workers, forced employees to write “letters of repentance” for mistakes, and hired numerous illegal temporary workers. Upon learning of these allegations through the press, GE immediately dispatched a team of investigators to the facility under our “eyes always open” process. This sourcing partner cooperated willingly and helpfully with our investigation.

Over the next several months GE and the supplier worked closely to address certain of the allegations which were deemed to have merit. Overall, we found the supplier’s operations to be in keeping with Chinese law, maintaining reasonable standards for worker health, safety and living conditions. Only in one area, overtime, did GE find practices that were stubbornly outside the bounds of existing Chinese law. We continue to work with the supplier to develop practices which, in time, are intended to reduce working hours to within acceptable limits. The issue of excessive overtime in China is an intractable one insofar as the statutory monthly limit of 36 hours is:

1. more restrictive than many other countries;
2. largely unenforced by government authorities;
3. unwelcomed by workers seeking premium overtime pay; and
4. particularly restrictive for migrant workers who do not have family or leisure life to enjoy outside of work.

Many multinational corporations participate in standard-setting organizations that allow their Chinese suppliers to work overtime in excess of 36 hours per month. Nevertheless, we continue to work with our suppliers to reduce overtime to levels commensurate with local requirements.