Today is a watershed day for General Motors — and I’m not talking just about the historic and record-breaking initial public offering marking the company's return to the stock market, and away from majority ownership by the taxpayers.
Today, Chevrolet, the company’s largest brand, announced it would invest $40 million in 8 million tons of carbon offsets — equivalent of roughly a year’s worth of driving the cars it will sell next year.
It may not be the most innovative move — dozens of other companies have made significant investments in planting trees, building renewable energy plants, weatherizing buildings, and other things that reduce energy and greenhouse gas emissions. But it’s a bold move, both in its size and its timing.
Consider: On a day when of America’s most iconic companies has come back to life as a public company after going through bankruptcy and government bailout, its first gesture is an environmental one.
Clearly, something different is going on here.
I’ve had a opportunity to track GM’s road to this announcement over the past few months, through the window of my relationship with the consultancy GreenOrder, and through my friend Sue Hall, founder of the Climate Neutral Business Network, which shepherded the project through GM. Last week, I attended a small brainstorming session convened by Hall at GM headquarters in Detroit to look at how the announcement and its messaging were shaping up, and to provide feedback.
And over the weekend, I spoke with Joel Ewanick, GM’s vice president of marketing, the principal driver of this initiative, as he was — well, driving a Chevy Volt from Detroit to Los Angeles, where today’s announcement was made, at the L.A. Auto Show.
First, the basics. GM today stated its intention to “invest $40 million in various clean energy projects throughout America” with the aim of offsetting 8 million metric tons of carbon. The company estimates that the goal equates to the emissions in 2011 from driving the 1.9 million vehicles Chevrolet is expected to sell in the United States over the next year. Chevy will be making the investments through third-party organizations such as the Bonneville Environmental Foundation, a nonprofit organization based in Portland, Ore.
The project began with Ewanick, who joined GM in May by way of Nissan and Hyundai. “When I first started, we began talking about the direction the company was going to take, and fact that there was a real need over the long haul to balance our portfolio,” he told me about 1,700 miles through his 2,300 Detroit-Los Angeles trek, just outside Moab, Utah. “For at least the past 25 years, we’ve been heavily dependent on trucks. We haven’t put as much emphasis on fuel-efficient sedans. And our Japanese and Korean competitors did.” The company had begun to turn the corner, creating the electric-gas Volt, a 42 mpg Cruze, greening up its operations — roughly half of its manufacturing plants worldwide are now zero-waste facilities — and taking other efforts.
“But we said, ‘There must be more we can do.’ We need to show that we’re no longer that company that’s going to send a legion of lobbyists to Washington to say climate isn’t important, because it is. As a company that produces cars, we can go a long way to making people aware of our responsibility, both from a corporate standpoint and an individual standpoint. And that’s where this whole thing started.”
“This whole thing” took a variety of twists and turns. A wide range of bold and audacious ideas were tossed around by Ewanick and other members of the senior leadership. The idea of offsets rose to the top, though the company understood that offsets can be a dicey proposition, for several reasons. One, they’re not that easy to explain to the general public. Two, they’re complicated and controversial as to whether they really reduce emissions. And three, GM’s demand for offsets might be sufficiently large that it could outstrip supply.
In the end, the notion of offsetting a year’s worth of driving got the green light. GM acknowledges that it doesn’t know exactly how it will achieve its goal — that is, where it will invest money to buy, at an average of $5 per ton of offsets, enough quality projects that it will truly reduce emissions, and not simply write a check for something called "renewable energy credits" and be done with it. The projects it has eyed include providing energy-efficient technology such as smart energy sensors and solar panels to schools, supporting wind farms and solar projects that help family farms increase their revenues per acre, and capturing flammable methane from community landfills to deliver clean energy to the grid and improve local air quality and safety.
Pulling all that off might be relatively simple, compared to explaining all this to the American masses.
I asked Ewanick, “What did you hear in the research that convinced you that offsets were the way to go, that people would understand what they were and that this would move the needle on people’s perceptions of GM as a result?”
“It’s going to be a difficult challenge,” he conceded. “A lot of people don’t understand this issue -- that we can do something about CO2 by doing other things, by finding more efficient ways of producing energy, weatherizing schools or finding things we can do with the methane gas [from landfills].
“In our research, we found that people don’t believe in ‘being green.’ But if you ask them if they do things that help the environment, just about everyone we talked to said, ‘Of course.’ A lot of people feel they’re doing good things by buying more fuel-efficient cars. Others recycle. But the unifying thought that happens is that they feel helpless as individuals, that what they do as individuals doesn’t really make that much difference. There’s no way to make people feel collectively that they’re making a huge difference. So, here’s a way through Chevrolet where we can say, ‘Collectively, you and us are making a huge difference.’ And we can quantify that difference and they don’t feel helpless.
“They constantly told us, ‘As an individual, I can only do so much. Companies need to do more, the government needs to do more.’ They said that ‘If a company did something good for the environment, I would support them.’”
GM plans to push the story out to the mainstream, seeking that support. Full-page ads will show up soon in major U.S. daily newspapers. Starting Sunday and over Thanksgiving week, TV watchers will see a series of commercials touting the carbon commitment. Additional ads will follow, though less intensively. There's a new website devoted to the initiative.
“It’s a really great time to do it over Thanksgiving,” said Ewanick. “Families are home together. There’s a lot of conversation at the dinner table. With any luck at all, maybe Chevrolet will be part of that conversation. People can talk about what we’re doing.”
Can General Motors truly change the conversation on carbon and climate? It’s an audacious, almost unfathomable notion, particularly when you think about where GM has come from: suing state carbon regulators, lobbying against federal action, stonewalling activists, selling Hummers, and all the rest.
I, for one, will be anxious to see how that works. Certainly, there will be critics on both sides -- environmentalists who blindly charge greenwash, because that’s what they do; and conservatives who will rail against this somehow as a misuse of taxpayer bailout money — because that’s what they do.
Personally, I wished the company’s messaging had taken this head-on. I would have preferred that GM had said, “America, you invested in us. Now that we’re back, we’re returning the favor. We’re going to invest in schools and communities around our 3,100 showrooms. We’re going to put people back to work -- not just making greener cars, but making greener buildings and greener energy. We're going to invest in a more sustainable future, in clean air, in energy independence. We’re going to turn the tables on that old adage: ‘What’s good for GM is good for America.’”
As he cruised along U.S. 191, passing some of America’s finest scenery, I asked Ewanick what success looked like -- “What’s the story you’ll get to tell five years from now if you get this right?”
He responded, “We’ll look back and say, ‘Finally a car company stepped up and signaled to the world that cars are part of the issue when it comes to CO2.’ And as the car industry grows around the world, that we got together and started doing initiatives like this together. In the end, it can’t be just Chevrolet. A lot of our competitors need to join us on this.”
Can GM really move the needle on climate change — and on its own image as a responsible company? It’s a long, long journey, filled with potholes at every turn. The destination is far off, at times elusive.
But for at least a day, we should celebrate what’s at minimum a symbolic shift by America’s largest automaker, and very possibly much more than that.
A really interesting story that is enhanced by your insider tidbits. Chevy's site is nicely put together, but it is typically hard to discern how the decisions were made and what the real intentions and expectations were. I also hope that other automakers follow suit. BEF can also help by providing updates on the projects that are being funded. Thanks.
Posted by: bklafter | November 18, 2010 at 02:03 PM
Very interesting Joel. This initiative felt to me like it was thrown together in a hurry when Joel Ewanick talked to me about it. I couldn't tell whether it was timed to coincide with the rollout of the Volt or the IPO (as you suggest). And I like your messaging much better than his.
But it certainly does seem as if the culture of GM (along with Ford and Nissan) is changing in ways that are all to the good.
They've got a lot riding on the Volt. If it's a hit (and the reviews have been awesome), great. If not, uh-oh.
Posted by: Marc Gunther | November 18, 2010 at 02:25 PM
Thanks for this, Joel -- I think you're on the right track in suggesting activities and messaging directed at jobs and investing in our infrastructure and our future. I said so at http://www.calcars.org/calcars-news/1124.html and urged our subscribers to come over here and read your full posting.
Posted by: Felix Kramer | November 19, 2010 at 12:37 AM
It's a start, but "save the planet" with an 8 million ton reduction goal over 3-5 years, when humanity is releasing around 25 BILLION tons of fossil CO2 "annually"? Hmmm. Still, it would be interesting to see what the annualized reductions are five years from now vs. the annual emissions of all their vehicles.
Posted by: Ryan T | November 19, 2010 at 07:59 PM
gm has a lot to make up for destroying their ev-1 vechile-. have they ever apologized to the general pubic for this?
Posted by: hugh wilson | November 22, 2010 at 05:51 AM
I think we can save the Earth for ourself - this is the secret. The key is in or hand: not to allow make us sad because of others' behaviour but do our best...
Posted by: Tree Planter | November 24, 2010 at 01:54 PM
Joel, You mentioned environmentalists and conservatives who might be against this, but I think you should also include the green biz people, as I don't think this step makes much sense from both a green marketing a strategic perspectives.
Few thoughts that come into mind:
1. This is just one step and not a long-time commitment with short and long term goals like we see with Wal-Mart, GE, Unilever, M&S and others, so I really doubt how much value it has for GM in terms of branding and changing people's perception of GM.
2. Strategically speaking, not only that offsetting is not innovative, but it doesn't have any connection to the core business of GM, which looks a bit weird when it comes from a company that manufactures products that no matter how you look at it contribute significantly to global warming. Wouldn't it make more sense to use the $40M to do something useful that is related to their core business?
Michael Porter and Mark Kramer of Harvard wrote in his 2006 article 'The Link Between Competitive Advantage and Corporate Social Responsibility' the following: "The fact is, the prevailing approaches to CSR are so fragmented and so disconnected from business and strategy as to obscure many of the greatest opportunities for companies to benefit society. If instead, corporations were to analyze their prospects for social responsibility using the same frameworks that guide their core business choices, they would discover that CSR can be much more than a cost, a constraint, or a charitable deed - it can be a source of opportunity, innovation and competitive advantage."
Well, at least to me, it looks like GM operated exactly in the way Porter and Kramer are describing as the wrong way. They could definitely do much better from a green biz perspective.
Posted by: raz godelnik | November 28, 2010 at 08:07 PM
Thanks, Raz. I appreciate your comment. And I'd agree with it if this were the only thing GM is doing -- the sum total of its environmental activities. Fortunately, it's not. GM has been doing a lot, though it isn't all evident in its cars. For starters, roughly half of its ~140 manufacturing plants worldwide are now "zero waste." GM is one of the largest users of landfill gas to produce electricity. And, of course, it's been investing in a range of new technologies, including, most notably, the Volt.
Posted by: Joel Makower | November 28, 2010 at 08:13 PM
Its good to see global companies finally moving on this
Posted by: Dave | December 11, 2010 at 02:12 AM
I'll throw my hat in the ring with the term "Improvers." I like this because rather than looking to sustainability's end-point, it is an ambitious call to constantly look for ways to make things better. Do you want to provide the essential needs of the world's poor, or do you want to provide them opportunities for a better life? Do you want to sustain our ecosystems (i.e. avoid their collapse), or do you want to continually find ways to lessen our impact on them, thereby allowing them to flourish? Do we want a flat Triple Bottom Line, or do we want to point towards untold heights? Improvers will look to create the proverbial rising tide which carries all boats.
Posted by: Vimax | December 12, 2010 at 05:41 PM
If GM wouldn´t be a carmaker, all these ecological efforts would be great. But the fact, that GM spends millions of dollars to save the earth by "planting trees" and on the other hand produces cars that need enormous amounts of fuel to drive, thats contradicting. They should invest in more efficient cars (e.g. electric cars) and a greener energy poduction infrastructure.
http://green-and-energy.com
In order to make sure that the customers are appropriate for electric vehicles, GM could donate them this app
http://dottribes.com/iev
Posted by: Thomas Electric Car | February 12, 2011 at 03:23 AM