January 12, 2006
GE Comes Clean, Disclosing Costs Related to PCB Cleanup on the Hudson
by William Baue
The move prompts the Tri-State Coalition for Responsible Investment, which characterized some of
these expenditures as delay tactics, to withdraw its shareowner resolution requesting this
How much does it cost to address the cleanup of the 1.3 million pounds of polychlorinated biphenyl
(PCB) that GE (ticker: GE) discharged into
New York State's Hudson River--200 miles of which has been deemed the largest Superfund site in the US? A reasonable question for
shareowners to ask of their company, it would seem. However, GE has opposed a shareowner resolution
requesting "disclosure of costs of delay of cleanup of toxic sites" since the Tri-State Coalition
for Responsible Investment (Tri-CRI) started filing it in
"We disagreed with them that this disclosure was a productive exercise--how
would it at all improve the situation on the Hudson?" said Gary Sheffer, GE's executive director of
communications and public affairs.
However, GE recently changed its tune. This week,
Tri-CRI announced that GE finally broke its silence and disclosed all expenditures from 1990 to
2005 related to PCBs--a known animal carcinogen according to the Mayes Rat
Study by GE Corporate Research & Development, and a probable human carcinogen.
"We're releasing this information now at their request because we want to put this behind us
and focus on the cleanup, which is the phase of the project that we're in," Mr. Sheffer told
The report was
included in GE's "no-action" letter to the Securities and Exchange Commission (SEC) requesting permission to exclude the resolution from its proxy
since it is fulfilling the terms. GE's revelation that it spent over $799 million to address PCB
cleanup prompted Tri-CRI to withdraw the resolution, which received 27.5 percent support from
voting shareowners last proxy season.
"While not all of that money was spent on
foot-dragging by General Electric, much of it clearly was," said Sister Pat Daly, executive
director of Tri-CRI, a coalition of Catholic institutional investors from New York, Connecticut,
and New Jersey. Co-filing the resolution with Tri-CRI were many other members of the Interfaith
Center on Corporate Responsibility (ICCR), a
coalition of 275 faith-based institutional investors with over $110 billion in assets.
reports that it allocated $122 million to what Tri-CRI characterizes as "delay tactics" such as
public relations and lobbying ($33.4 million), legal "maneuvering" ($86.6 million), and
governmental relations ($2.1 million).
"Most of the spending we disclosed was on
investigation and cleanup--in fact more than 80 percent," said Mr. Sheffer.
shows that GE spent $510 million on site investigation and remediation on the Hudson and two of the
other major polluted sites (the Housatonic River in Pittsfield, Massachusetts and a former
transformer facility in Rome, Georgia).
"Whether the delay-specific 'tab' for GE
shareholders is $122 million--or even more of the $800 million of PCB-related costs--the bottom
line is clear: this is a staggering amount of money and an astounding use of corporate funds to
postpone the inevitable," said Sr. Pat. "The fact is that GE will have to clean up its toxic PCB
Mr. Sheffer does not contest the fact that the Environmental Protection Agency
(EPA) is indeed requiring the company to clean up its PCB contamination, but
he does advance a different interpretation of the timeline and the reason for GE's opposition to
the proposed cleanup.
"We don't control the schedule--the schedule is controlled by the
EPA," said Mr. Sheffer. "EPA has said we are not the cause of that delay."
scientific disagreement about what's best for the Hudson River--we felt that dredging up the bottom
of the river was a bad idea and we made our feelings known about that," said Mr. Sheffer. "The
river is being sedimented--in other words, the PCBs are buried on the bottom of the river, and PCB
levels in fish and in water have dropped 90 percent over the last decade or more, so we thought it
was better to leave the sediment and the PCBs buried at the bottom of the river rather than risk
re-suspending them during a dredging project."
While a 90 percent drop in PCB levels is
welcome, it may not be sufficient. The shareowner resolution notes that "PCB concentrations in
Upper Hudson fish, sediment, and water continue to exceed federal and state guidelines, creating
unacceptable health and environmental risks."
Sr. Pat also counters GE's argument against
"EPA is not suggesting we use Tonka Toys for dredging," she said. "There are
ways of doing this from the bottom of the river--almost like a vacuum--so that that
re-contamination is limited or non-existent."
"There are concerns that a number of groups
that live along the river have with the proposed next steps to initiate the cleanup, namely that
the GE plan does not utilize the sophisticated technology that is available," added Sr. Pat.
"We're hoping that GE and the EPA will decide to use the most sophisticated technology, which would
then assure us that additional contamination would not happen."
GE is certainly renowned
for its mastery of sophisticated technology, and is applying its expertise to environmentally
friendly, energy-efficient products through its Ecomagination initiative.
Ecomagination relates to the disclosure of PCB costs in that both exhibit corporate responsibility.
Oddly, though, Mr. Sheffer denies any connection between the two.