ge 2005 citizenship report

Our ActionsGE 2005 Citizenship Report

TABLE OF CONTENTS

Section 1: Overview 11.1 A Letter from Jeff Immelt,

Chairman of the Board and CEO,General Electric Company 2

1.2 About This Report 31.3 On Citizenship:

A Letter From Ben Heineman,GE Senior Vice President for Law and Public Affairs 4

1.4 Focus Areas 101.5 Business Directory 131.6 Stakeholders 14

Section 2: Governance 172.1 Board 192.2 Governance of Citizenship 19

Section 3: Compliance 213.1 The Spirit & The Letter 223.2 Ombudsperson Process 233.3 Legal Processes and Systems 243.4 Financial Processes and Systems 27

Section 4: Public Policy 29

Section 5: Environment, Health and Safety 315.1 Policy 32 5.2 Operating Systems 335.3 EHS Tools 345.4 Training and Communication 345.5 Metrics to Measure Progress 355.6 Climate Change 415.7 Waste 435.8 Remedial Responsibilities 445.9 Excellence Programs and External Recognition 45

Section 6: Globalization 476.1 GE Around the World 486.2 Emerging Economies 496.3 Job Migration 496.4 On Human Rights:

A Letter from Bob Corcoran, GE Vice President of Corporate Citizenship 50

6.5 Human Rights 51

Section 7: Community 537.1 Philanthropy 547.2 Volunteerism 587.3 Product and Service Donations 607.4 The Indian Ocean Tsunami 61

Section 8: Customers, Products and Services 638.1 Customers and Markets 648.2 Product Use Issues 688.3 R & D 70

Section 9: Suppliers 739.1 Supply Chain Standards 74

Section 10: Investors 77

Section 11: Employees 7911.1 Workforce Information 8011.2 Employee Relations 8011.3 Training and Development 8411.4 Diversity and Inclusiveness 8511.5 Privacy 8711.6 Work/Life Flexibility 87

Section 12: Our Commitment 88

Section 13: GRI Index 89

GE has a heritage as a performance company. In simple terms, this means that we set challenging growth targets and deliver on what we say we will do. We measure our progress by tracking results against our goals. We recognize that our actions speak louder than our words.Naturally, we measure our Company’s performance through financial results and stock price. But we also view how that performance is achieved in a broader context: the health, safety and opportunities for workers, the impact of our opera-tions on the environment and communities, our interaction with governments and regulatory agencies around the world, and our compliance with legal and accounting rules. Our goal is to grow responsibly while engaging stakeholders.

We have applied GE’s characteristic rigor in delivering our first Citizenship Report. This report provides a clear view of our actions: our goals, measures and progress, as well as an honest discussion of our challenges. You will find a myriad of metrics throughout the report, including our workplace injury and ill-ness rates, greenhouse gas (GHG) emissions, total energy use, and diversity profile. We are continuously re-examining our metrics to ensure they are relevant, comprehensive and allow us to set forward-looking targets. GE has set a 30% GHG intensity reduction goal by the end of 2008, along with a 1%

absolute reduction by the end of 2012. Progress will be measured against a 2004 baseline. We believe this report represents a significant step forward in our disclosure and transparency and look forward to engaging our stakeholders on its content. We have primarily designed this content as a Web-based report (visit www.ge.com/citizenship) and intend to keep this site updated as new issues arise, new targets are set, or new goals achieved.

GE has always been driven to perform and be among the best at what we do. Today, in an increasingly global and transparent world, we aspire to perform against all of our citizenship measures. Every day, in businesses and countries around the world, we take actions to align our performance ever closer with the standard of what it means to be a good and trusted world citizen.

GE 2005 Citizenship Report 1

Overview

Dear Friends,GE’s heritage of leadership spans the terms of nine chairmen, generations of employees and decades of business transfor-mation. We have a history of firsts in technological innova-tions and in management practices that have influenced the way businesses grow and lead. And we are known for a per-formance culture that consistently delivers results. But these accomplishments alone will not ensure our leadership in the future. Leaders and companies that seek to continue to lead must perform with an unyielding integrity that earns the trust of our stakeholders — integrity in our relations with customers and suppliers; integrity in our disclosure to shareholders and creditors; integrity in our products; integrity in our relation-ships with our employees; integrity in our compliance with legal and financial rules; and integrity in our interactions with regulators, media and communities.

GE has consistently refined and increased its citizenship efforts as the Company has grown. So while this report presents progress in our long-standing efforts in areas such as compli-ance, and environmental health and safety, it also illuminates two areas in which we believe GE can proactively and positively influence the practice of business and its impact: 1) governance and 2) global natural resources and demographics.

Governance: Making Integrity VisibleOver the past few years, we have made substantial progress in our governance practices and strengthened our long-standing commitment to performance with integrity. We have substantially increased disclosure and improved transparency, and we have implemented controllership processes ahead of regulatory timelines. Our engaged and independent board has led the effort to align CEO and executive compensation with investor interests.

Global Resources and Demographics: Investing to Meet Future Needs By taking a broad view of fundamental global trends, including energy consumption, the growing need for more renewable energy sources, and the increasing scarcity of potable water, GE can help address important global issues while laying the foundation for our future growth. Our Company is developing wind and water technologies that provide renewable energy and clean water, and is developing more energy-efficient products such as hybrid locomotives, gas turbines and ENERGY STAR appliances.

A Letter from Jeff ImmeltChairman of the Board and CEO, General Electric Company

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Overview

GE is also looking at demographic trends that will create global needs and business opportunities in the years ahead. One compelling example is reflected in healthcare; as people across the world are living longer, more of them are suffering from diseases including Alzheimer’s, heart disease and cancer. GE has invested in businesses that give it the scale and broad reach needed to transform the way medicine is practiced, and we are developing more advanced programs that can result in much earlier diagnoses and more specifically targeted ther-apies. GE also continues to invest research and development dollars in technologies to offer greater access to and higher quality of care.

These are cases where a lack of resources and a surge in demographic trends are directing our business strategy while also allowing us to solve real customer problems that can contribute positively to the quality of life. To me, opportunities to do business and do good are not mutually exclusive, nor are they less valuable for having a positive business impact. This marriage of business opportunity with global need can create a model that our own Company and others will see as an opportunity to deliver more than financial performance and have a far-reaching impact.

GE, by virtue of its products and services, and its performance, plays a vital role in both business and society. In fact, I believe that we have the opportunity to make an impact that few companies can — in ways that improve how we live and how we work. However, we are still a company working to stay competitive, return value to shareholders, develop our employ-ees and make a positive difference to all of our constituents. This is never an easy balance. But I am an optimist. As a learn-ing company, GE will continue to examine where we can make a difference, and how we can improve. We are committed, to performance with integrity and to being a good global citizen.

Jeffrey R. ImmeltChairman of the Board and Chief Executive Officer

Although GE has published summary documents detailing its performance in environmental health and safety, this report provides a more extensive view of GE’s approach to corporate citizenship. It includes our views on globalization, our work in the community, our environmental, health and safety per-formance, our approach to compliance, our products, our research and development investment, our commitment to our employees and other stakeholders, and the areas in which GE is leading and those where it can improve. This report also addresses GE’s worldwide operations and relates to the 2004 fiscal year.

The Global Reporting Initiative (GRI) 2002 Sustainability Report-ing Guidelines have been one of a number of resources used to inform the development of this report — a very important one (http://www.ge.com/en/citizenship/overview/meaning.htm). We have used the GRI Reporting Principle of relevance (or materiality) to help decide what issues to include in this report and have covered the GRI core indicators that we believe are most relevant to GE and its stakeholders.

About This Report

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Good corporate citizenship has a special urgency today because corporations need to regain and secure the trust of investors and other key stakeholders.

This trust has been eroded by the string of scandals that have been white-hot front page news, not just business page news. The corporate checks and balances that purportedly serve the public have been under withering attack, and for good reason. Company management, boards, accountants, lawyers, finan-ciers, regulators, analysts and the business media have been found wanting in notorious cases. It is incumbent on corpora-tions to demonstrate that these are not systemic problems, infecting free enterprise, but a discrete number of cases (still too many) involving a few.

But, good citizenship has a more positive and more enduring purpose than countering the ills of the moment. In a phrase, it sets a challenging goal — high performance with high integ-rity — for successful companies and, indeed, for 21st century capitalism. In my view, it has three key interrelated dimensions.

1 Strong economic performance over a sustained period of time. Such long-term performance provides myriad benefits to innumerable shareholders, creditors, employees, retirees, customers, suppliers and communities.

2 Rigorous compliance with fundamental accounting and legal requirements. Sustained economic performance must be built on the foundation of rigorous compliance with all financial and legal rules — and on compliance systems and a compliance culture which require tremendous time, effort, resources and, most importantly, leadership.

3 Going beyond compliance. Supporting ethical actions and the reasonable concerns of stakeholders where there are opportunities to create benefit for society and the long-term health of the enterprise.

Overview

On Citizenship:A Letter from Ben Heineman, GE Senior Vice President for Law and Public Affairs

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Overview

GE brings to each of these dimensions of corporate citizenship our characteristic rigor — goal setting, systems building, detailed processes, meaningful metrics, thorough auditing and then continuous improvement. This system and process rigor suffuses — and makes concrete and real — the three dimensions of GE corporate citizenship.

1. STRONG, SUSTAINED ECONOMIC PERFORMANCE

Discussions of corporate citizenship and corporate social responsibility may ignore completely the extraordinary ben-efits to literally millions of people conferred by a company’s successful and sustained economic performance — and also can ignore the painful impact of a corporation’s poor perfor-mance (as when companies cannot meet their pension obligations or injure all stakeholders by imploding). Yet, in my judgment, the first task of being a good corporate citizen is to be a successful economic entity for the near-, mid- and long-term because in doing so the corporation creates vital benefits for many.

In our case, GE is a highly complex social and economic organization that serves millions upon millions of stakehold-ers. GE’s economic growth, our profitability, our cash flow, our resulting financial structure and market capitalization serve these stakeholders in direct and vital ways, support the communities in which they live and, to take it to the highest level, contribute to a stable and peaceful global economy.

In the past 10 years, GE’s revenues have grown from $60 billion to more than $150 billion; our net income from $4.7 billion to $16.6 billion; our cash flow from operating activities from $6 billion to more than $15 billion; and our market capitalization from $87 billion to more than $386 billion. This performance is typical of the only company to be part of the Dow Jones Industrial Average since that index was started in 1896.

But these general numbers have a very human face and provide real and diverse benefits.

Shareholders We have 10.6 billion shares outstanding and more than 5 million shareholders — we are the most widely held stock in the world. About 42 percent are individuals, including nearly 40,000 GE retirees. And many of our institutional holders are pension funds which, in turn, serve individuals who will receive or who are receiving retirement benefits. Thus, millions of retirees directly or indirectly hold GE stock and rely on our performance. If $1,000 had been invested in GE stock in 1993 and the dividends reinvested, it would have increased to $5,250 by the end of 2004, an average annual growth rate of 16%.

Creditors At the end of 2004, GE had more than 11,000 holders of its debt, largely institutional holders but with a growing retail market of individual investors. This debt, made safer by GE’s Triple-A ratings, is used, in part, to finance our Consumer Finance and Commercial Finance businesses that, in turn, pro-vide financial services to literally millions of individuals and businesses and, in so doing, stimulate economic growth.

Employees At the end of 2004, GE had a total of 307,000 employees with more than 700,000 dependents, comprising a total GE family of more than one million. More than half of those employees work in the U.S. and have a total payroll of more than $16 billion. After taxes and savings, the spending of these employees provides significant economic support to their communities and supports tens of thousands of local jobs. And these GE jobs are highly valuable: while average U.S. compensation and benefits grew 3.9% percent from 1994-2003, GE’s compensation and benefits grew 5% — and our average compensation and benefits were two and a half times the national average in 2003.

Retirees GE bears a critical responsibility to its retirees and to those who have vested benefits but have yet to receive them. In our principal pension plan, we have 205,000 retirees and beneficiaries, as well as 315,000 individuals who do not yet receive benefits. In addition to these 520,000 people to whom we owe a duty under our principal plan, there are 82,000 other participants in plans inherited from acquired companies. So, today, we are responsible for retirement payments to more than 600,000 people.

Overview

GE 2005 Citizenship Report6

Customers GE’s direct and indirect customers number in the hundreds of millions. For example, GE Infrastructure, Aircraft Engines has 17,800 engines on more than 8,100 aircraft at more than 400 airlines that fly 660 million passengers each year. GE Healthcare has 32,000 diagnostic imaging machines at 15,000 direct customers around the world who conduct more than 230 million scans per year. GE Infrastructure, Energy has an installed base of nearly 3,000 turbines serving 350 world-wide customers, providing capacity for nearly 700 gigawatts of efficient and reliable energy — creating nearly one third of the world’s electricity. GE Consumer Finance has more than 100 million cardholders or other customers across the globe. And GE Commercial Finance has 900,000 business customers in more than 30 countries that, in turn, serve individuals num-bering in the tens of millions.

Suppliers Each year, GE buys approximately $50 billion in materials, components, goods and services. These expenditures support millions of supplier jobs that, in turn, support communities around the world.

Profits Corporate profits are often the subject of scorn from critics, populist public officials and the general media. But this view is incorrect. In 2004, GE’s after-tax profits were $16.6 billion. Assume for the moment that this equates to available cash we had during that year. What did we do with the money? More than 50 percent ($8.5 billion) was distributed to our five million shareholders (primarily through dividends). Virtually all of the remainder was used to grow GE: through direct investment (e.g., plant, equipment, R&D, new technology products) or through acquisitions complementary to our solid organic growth. So, profits are a critical force in making the company stronger, for the benefit of all stakeholders.

As this brief discussion should make clear, the sustained, strong economic performance of GE is of extraordinary value to tens, indeed hundreds, of millions. When we think about the human face of GE’s economic mission, it confers, on a sustained, reliable basis, critical benefits to stakeholders across our society — and our world. That is why it should be considered the first element of good citizenship.

2. RIGOROUS COMPLIANCE WITH FINANCIAL AND LEGAL RULES

Rigorous compliance with financial and legal rules is the sec-ond dimension of good corporate citizenship. This compliance is the foundation on which GE is built. Lack of compliance with fundamental financial and legal rules is at the root of all the recent corporate scandals — as the arrests and, more impor-tantly, the flood of guilty pleas and convictions make clear.

In some discussions of corporate social responsibility, the greater focus is on “ethics” with “compliance” downplayed because compliance is something companies are required to do. But, in my view, compliance should be viewed as another fundamental tenet of corporate citizenship because it does not happen automatically: it requires a tremendous expenditure of time, effort and resources to build into business processes. Most importantly, it requires the deep, visceral engagement of business leaders — not just the legal and finance staffs. It requires conscious choice and focused effort to do well. And the consequences of a compliance failure can have devastating effects on all stakeholders.

The Core of Business LeadershipCompliance is at the core of business leadership because internal pressures combined with external trends require performance with integrity:

• Internal pressures such as demanding customers, the desire to make cash flow and earnings numbers, tough global markets and competitors who may play by different rules

• External trends such as the outpouring of law and lawsuits, anti-corporate politics and media, the criminalization of reg-ulatory statutes, the unceasing growth in punitive damages, the quest for government revenue as well as foreign enforce-ment trends which follow the U.S.

At GE, as we grow and build around the world, business lead-ers must drive compliance as a uniform global value which can never be compromised.

This is especially true in emerging markets where there may be no stable rule of law, endemic corruption and conflicts of interest as a way of life. In such markets, we often have the challenge of properly supervising small outposts with attenu-ated controllership and newer employees with different cultural backgrounds.


Overview

Compliance SystemsLeaders must create basic systems: for preventing problems and detecting problems, and for responding to and remedying these same issues. Such system building has many dimen-sions, including training, toolkits, checklists, a vibrant ombuds system, metrics, audits, close-out processes, early warning systems, integrating acquisitions with different cultures, investi-gations, disciplinary processes, system reform processes and compliance reviews and compliance review boards at all levels of the Company.

In the GE world, leaders must drive the traditional compliance issues: anti-bribery, anti-trust, environmental health and safety, fair employment and trade controls. But they must also be ahead of the curve on emerging compliance issues not only in the U.S. but around the world: controllership, account-ing regulation, corporate governance, consumer compliance in financial services, data privacy, money laundering, counter-terrorism and the intellectual property rights of others.

Similarly, GE has a highly disciplined set of financial systems and processes to ensure that the basic numbers of the Company are accurate, comply with appropriate rules and are fairly disclosed. Each business team is responsible for all accounting and reporting; GE’s Chairman reviews the busi-nesses six plus times a year; the controllers in the businesses and at headquarters conduct regular balance sheet reviews and account reconciliations. In addition, the GE Corporate Audit Staff, which numbers about 380 high-potential employees and reports directly to the Audit Committee of the Board as well as to the CEO and CFO, provides extensive auditing of financial fundamentals on an ongoing basis. Disclosure committees comprised of employees from various functions within the Company vet public statements and filings — both at the busi-ness and corporate levels. Moreover, 300 partners from our outside auditing firm, working with their colleagues and the Audit Staff, conduct, in turn, the necessary statutory reviews.

Creating a Culture of ComplianceBeyond creating the basic compliance systems of prevention, detection, response and remediation with respect to financial and legal rules — and beyond the need to be sensitive to emerging risk as those rules or the political culture change — the leaders must discharge an even more important duty: they must create a culture of compliance. They must commu-nicate effectively to every employee in their organization that compliance is the core of competitiveness; it is the first priority and it must be approached with intensity. And the leaders themselves must live it, with no double talk, no body

language, no winks and nods. At GE, we place great weight on creating a culture of compliance. Let me illustrate with an important example. One of the strongest signals GE sends on compliance is when we terminate senior executives for failure to create a compliance culture. For a company of more than 300,000 employees, we only have about 200 officers, and when we terminate one for negligence in creating a culture of compliance — not for any overt, improper act — it is a thun-derous message to the organization. And we have taken such action when, under a senior executive, improper acts went undisclosed and unreported for too long or involved too many — when there was a cultural failure at the core of a compliance failure.

The Importance of Compliance Ombuds SystemsAnother critical check and balance, both in the internal management of the corporation and in creating a compliance culture, is a robust ombuds system. Employees and others with connections to the Company must have confidence that they can report concerns about financial, legal or ethical viola-tions; that their anonymity will be respected; that there will be no retaliation; and that the concerns will be dispassionately investigated by Finance, Legal and HR, and outside specialists if necessary, with appropriate individual and remedial action and without fear or favor.

At GE, we have a long-standing ombuds system for all employees. As a result of the Sarbanes-Oxley Act of 2002, we have parallel hotline systems for anyone to report concerns directly to the directors and for lawyers to report concerns to their legal supervisors. In our legal channel we just made it simple: any lawyer in the Company with any concern should lodge it with the ombuds system like other employees but also cut through any legal layers and immediately report it to the Company’s General Counsel.

We discipline people for failure to report a concern which they did know or should have known, and we fire people for retali-ating against those who make reports. We have independent processes for investigating and resolving those concerns and reporting to the Board. This ombuds process is, we believe, a critical element of a compliant culture because it gives power-ful voice to people all across the organization.

The Impact on Stakeholders of Compliance FailuresLet me return then to why I view compliance as the second critical task of corporate citizenship. One reason, as noted, is that compliance requires an extraordinary systemic and cultural effort at the heart of business operations. A second

Overview


reason is that a compliance miss has enormous consequences for a company: huge diversions of time and resources; managements fired; executives indicted and jailed; market cap tanked; the resources of the company depleted by illegal activity or by lawsuits; and the company’s reputation tarnished, perhaps permanently.

These consequences, in turn, have a dramatic, deleterious impact on the company’s stakeholders: not just the investors — the shareholders and the creditors — but also the employ-ees, retirees, customers, suppliers and communities. Do we need any cautionary tales beyond Enron, Worldcom and Parmalat (although, sadly, others exist)? Thus, there is no more urgent socially responsible act, especially in this post-Enron world, than creating a culture of compliance and ensuring a global corporation’s observance of diverse and complex finan-cial and legal rules.

3. ETHICAL ACTIONS BEYOND COMPLIANCE

The third element of corporate citizenship is to take ethical actions that are not required by financial and legal rules but which, in the judgment of management, directly advance the long-term health and reputation of GE. The actions may occur after we have listened carefully to our varied stakeholders — as a good corporate citizen, we must always be open to the considered views of our many constituencies, accepting some but not others.

Such ethical actions can be taken with respect to our many stakeholders and our activities in the public arena:

• The Company’s charitable activities in its communities

• The Company’s employees, retirees and their dependents

• The Company’s shareholders and creditors

• The Company’s partners, customers and suppliers

• The Company’s positions on public policy

GE Ethical Actions Beyond What the Rules RequireHere are some examples, from the GE world, of decisions we have made to take ethical actions that go beyond what the financial and legal rules require.

• Our governance principles and practices in important respects go beyond the set of rules set forth by the NYSE and the SEC following the scandals of recent years: for example, we have a more strict definition of director independence; we require that all directors on the Management Development and Compensation Committee and the Nominating and Corporate Governance Committee be independent, as well as those on the Audit Committee (which is the current legal requirement); the Board decides in December what the criti-cal strategic issues are which it wishes to review in the com-ing year, effectively setting a core agenda for its subsequent meetings; and, to align directors’ interests with the long-term interests of the Company, sixty percent of director compen-sation comes through Deferred Stock Units which do not vest until one year after the director leaves the Board.

• We build greenfield facilities outside the U.S. to industry or world environmental standards, which often exceed local law. With respect to acquired facilities outside the U.S., we have clear expectations and time requirements for improve-ments to meet local law and implement GE’s EHS programs and systems. As part of acquisition audits we identify and institute priority actions for conditions which may present serious risk to our employees and communities.

• We are the U.S. leader in having the largest number of facilities designated by the Occupational Safety and Health Administration as “Star” sites for programs with outstanding processes and practices and also outstanding worker health and safety results.

• We have banned bribery in all commercial settings outside the U.S., not just to foreign government officials as required by the Foreign Corrupt Practices Act (and we, of course, have this ban in the U.S. as well). We now have a strong presump-tion against “facilitating payments” allowed under the FCPA but questionable under local law — and special processes for reviewing requests for such payments.

• Our non-discrimination provisions apply to all GE employees around the world, not just to U.S. citizens.


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• When we qualify suppliers, they must not only meet technical and quality standards but also ethical ones involving such issues as child labor, prison labor, environmental health and safety, wages and working conditions, even though we may have no legal duty to inquire into these matters.

• We ask customers to certify that they will not use our prod-ucts for certain unethical purposes or purposes which are banned under local law, such as using ultra-sound equip-ment for purposes of sex selection — and we provide educa-tion and training and warnings to customers on this subject.

• For third parties representing GE, such as consultants, agents, sales representatives and distributors, we require that they agree to follow the ethical and legal requirements contained in our integrity guidelines — The Spirit & The Letter.

• When our employees are directors of non-controlled affi li-ates, they are required to attempt to have those affi liates, through appropriate corporate decision making, adopt and follow policies corresponding to The Spirit & The Letter.

• We have money laundering prevention practices that go substantially beyond what is required by laws around the globe — such as restricting forms of payment we will accept.

• We have a systematic process for reviewing the desirability of business activities in countries that the U.S. government has identifi ed as states sponsoring terrorism, as states potentially involved with production of weapons of mass destruction, or as states involved in money laundering or illicit drug traffi cking.

• We have been a corporate leader in the global initiative to strengthen anti-bribery and anti-corruption laws — to drive a public policy position that, while generally benefi cial, is less directly in our immediate interest than other positions we may take.

The list of ethical actions we have taken beyond what the law requires could go on and on. So could the list of ethical actions which we are considering or which others request that we take.

Making Decisions About Ethical ActionsThe question is: how do companies decide these ethical dilemmas? We do not have a Senior Vice President for Political Philosophy who derives our actions from moral philosophy. Our Chairman does not sit in his corner offi ce deciding between natural rights and utilitarian theories.

Our starting place instead is a traditional business method — looking at risk-reward. But it is a different, broader, risk-reward equation, with other complex factors, than may normally be the case in business decision-making. Taking an ethical action or failing to take an ethical action can benefi t or cause harm to our reputation which, in turn, can cause economic benefi t or economic risk.

This is so because our action or inaction will have a reputa-tional impact with some or all of our stakeholders and inter-ested parties — recruits, employees, GE communities, shareholders, creditors, customers, suppliers, political leaders, regulators, interest groups, the media, opinion leaders and the public at large. And all of these stakeholders are, in their many different ways, of signifi cant importance to the health of the enterprise.

A company’s reputation is an intangible asset — like its brand — which may be hard to measure precisely but which common sense tells us is of real, indeed signifi cant, value to the company’s long-term success. Our across-the-board opposition to bribery and our rigorous compliance with that stricture can make public offi cials in nations with endemic corruption want to do business with us because, in so doing, they can be properly protected against charges of impropriety. Our positions and actions on the environment or ethical sourcing or diversity help us attract the best of a new genera-tion with broad views of the type of company for which they want to work. Indeed, every example above and every policy or practice described in the Citizenship Report can be con-nected to a very important business goal or to use the old phrase — to the enlightened self-interest of the Company.

But, most ethical actions, while they may have long-term or indirect economic benefi t, may also have a very real economic cost. This gets us back to the more complex risk-reward equation.

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Of course, to say this is just to start a discussion that requires, at the end of the day, the considered judgment of the senior leaders of the corporation and, in important cases, the Board of Directors. For example, who is that “reasonable” stakeholder to whom we should respond?

So starting with reputation — not just in the sense of the “newspaper” test but in a much broader, longer-term sense — is, we have found, a useful framework for thinking about these decisions, even if it does not yield easy answers. It does connect to relations with stakeholders and ultimately to the health of the corporation, and it avoids abstract arguments about morality, which are great in the academy but difficult for public companies with diverse stakeholders who have widely varying views on ethical questions. By locating the decisions in a broad risk-reward framework, with reputation as the touchstone, we can connect ethics with the long-term strength of the Company. This process describes in outline the real world decision-making behind important citizenship actions — they are ultimately judgments by senior management and the Board about what is in the long-term interest of GE.

In our Citizenship Report, you will, I hope, find numerous con-crete steps that GE has taken to discharge our fundamental duty of being a good corporate citizen. Our innovative policies, our comprehensive actions and our rigorous management systems speak eloquently about how seriously GE views our citizenship responsibilities: of how, in Jeff Immelt’s words, we strive to be a great company and a good company and always to perform with integrity.

Ben HeinemanSenior Vice President, Law and Public Affairs

GE is proud of its ability to lead demonstrable change in the area of corporate governance and its common environmental, health and safety system standards across the Company. At the same time, we face the complexities of managing a global company with the highest regard for compliance, integrity, the safety and fair treatment of our employees, and consider-ation of the dynamic global climate that impacts our business decisions in various markets. Identifying Focus Areas provides a foundation for maintaining best practices and helps us set the course for future improvements.

Governance• Our strong leadership in corporate governance has been

recognized by a variety of observers including The Financial Times and Governance Metrics International, which gave GE a perfect score for our governance practices. The achieve-ment of this recognition is a result of GE’s prioritization of governance as a critical issue. Since that time, GE has made a number of changes to further increase transparency and better align executive and CEO compensation with shareholder interests. Many of these efforts are detailed in the Governance section of this report. (http://www.ge.com/en/citizenship/governance/index.htm)

• Based upon our ever-changing and complex environment, GE’s directors and executives conduct annual reviews to ensure that our governance systems address contemporary issues and serve the long-term needs of our many stakeholders.

Compliance and Controllership• Although GE has advanced compliance systems and pro-

cesses, achieving full compliance with financial and legal regulations requires a tremendous expenditure of time, effort and resources. GE strives to build a culture of compliance and to fully engage business leaders — not just the legal and finance staffs — in this ongoing and never-ending effort. We must minimize mistakes to the greatest extent possible and learn from them as they occur.

Focus Areas

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Overview

Environment, Health and Safety• The integration of new businesses, including Amersham and

Universal, into GE’s Environmental Health and Management system is well under way. A vital part of this process is training business leaders and other new employees on GE standards and expectations for EHS performance and on GE’s tools to help them achieve this.

• In our own operations, GE has achieved reductions in its injury and illness rates, and continues to work to maintain a productive and healthy workforce — and is a world leader in this area.

• During 2005 GE may not achieve the historic level of work-place injury and illness rates due to the acquisition of Universal during 2004, which has an injury rate higher than GE’s current rates. However, we hope that we will return to our reduction path in 2006.

• GE has recently launched ecomagination, an initiative to bring to market new technologies that will help customers meet pressing environmental challenges. Significant progress has been made by businesses including GE Infrastructure’s Energy and Water units in developing products and services with environmentally beneficial applications. You can read more about these efforts at (http://www.ge.com/en/citizenship/ehs/index.htm). As part of ecomagination, GE has highlighted its products and research designed to help customers operate in a carbon-constrained world. GE is also tracking its own greenhouse gas emissions and has developed concrete goals for reducing greenhouse gases and for increasing GE’s energy efficiency. (http://www.ge.com/en/citizenship/ehs/greenhouse.htm)

• GE produces our products under the rigor of our worldwide environmental, health and safety standards in addition to the industry standards that impact each product. However, there are products that remain controversial due to their misapplication or misuse or inherent qualities.

Globalization• As a global company, GE continually assesses how and where

it does business with regard for variable political climates and other factors that have the potential to adversely affect its reputation and ability to serve customers.

• During 2004 GE decided not to accept new business in Iran. GE’s non-U.S. subsidiaries will fulfill their commitment to existing customers.

• When GE acquires or divests a business, it must be respon-sible in guiding a transition that takes into consideration a number of potential issues, including: evaluating its corporate citizenship model, workforce overlap, locations of business operations and how to handle integration of new products.

Community• GE’s quick and generous response to the tsunami disaster

exemplifies the Company’s ability to give back through a multifaceted range of donations that few companies can match. The GE family contributed over $20 million in cash, products and services and helped raise $32 million more. Our combination of funds, employee contributions and matching grants, our use of NBC and its affiliates’ efforts through public programming to generate donations and our contribution of vital products to meet immediate clean-water needs, show how size and scale can make a meaningful difference in philanthropic giving. The GE family also responded quickly after the attacks on the World Trade Centers on September 11, contributing nearly $25 million in cash products and services.

Supply Chain • GE continues to make progress sharing standards and

best practices with its suppliers to meet GE’s standards for environmental, labor, health and safety practices.

• GE monitors its supply chain for quality, financial, environ-mental, health and safety, and employee issues performance. (http://www.ge.com/en/citizenship/suppliers/chain.htm) GE deploys a specific system of regular assessments and compliance monitoring to ensure that GE suppliers meet GE’s commitment to ethical sourcing as stated in section 9.1 of this report.

• GE has terminated about 200 suppliers since the inception of this program, though our preferred focus has been on corrective actions, with over 16,000 improvements being made over the same time period at more than 3,000 suppliers.

Employee Diversity • Although GE has made important strides in improving the

diversity of its executive ranks across the Company, ongoing challenges remain in advancing diversity goals globally and increasing GE’s cultural sensitivity relative to different markets.

• GE continues to make progress in its diversity efforts, winning the “Catalyst Award”, “Executive Leadership Council Corporate Award” and making the list of Working Mother Magazine’s “100 Best Companies for Working Mothers” distinction in 2004. GE continues to make diversity a global effort, working to define the meaning and implications of diversity as it applies to a global workforce.

Overall• GE’s inclusion in the Dow Jones Sustainability Index is a

strong example of our commitment to meet performance benchmarks. In 2004, GE ranked “best of industry” in several key dimensions, including philanthropy and volunteerism, environmental management systems, investor relations, customer relationship management and talent attraction and retention.

• GE continues to evaluate how to maximize the range and depth of engagements with NGOs and governments so we can learn how to best deliver products and services that meet the needs of society and the environment.

Overview



Overview

GE is made up of six businesses, each of which includes a number of units aligned for growth.

Business Directory

1.5

GE Consumer Finance

GE Consumer Finance is a leading provider, under the GE Money brand, of credit services to consumers, retailers and auto dealers in countries around the world, offering financial products such as private label credit cards, personal loans, bank cards, auto loans and leases, mortgages, corporate travel and purchasing cards, debt consolidation and home equity loans and credit insurances.

GE Commercial Finance

GE Commercial Finance offers an array of services and products aimed at enabling business worldwide to grow. GE Commercial Finance provides loans, operating leases, financing programs, commercial insurance and reinsurance, and other services.

GE Healthcare

GE Healthcare is a leader in the development of a new paradigm of patient care. GE Healthcare’s expertise in medical imaging and information technologies, medical diagnostics, patient monitoring systems, disease research, drug discovery and biopharmaceutical manufactur-ing technologies is dedicated to detecting disease earlier and helping physicians tailor treatment for individual patients.

GE Infrastructure

GE Infrastructure is one of the world’s leading providers of fundamental technologies to developed, developing and emerging countries, including aircraft engine, energy, oil and gas, rail and water process technolo-gies and services. GE Infrastructure also provides aviation and energy leasing and financing services.

GE Industrial

GE Industrial provides a broad range of products and services throughout the world, including appliances, lighting and industrial products; factory automation systems; plastics, silicones and quartz products; security and sensors technology, and equipment financing, management and operating services.

NBC Universal

NBC Universal is one of the world’s leading media and entertainment companies in the development, production and marketing of entertainment, news and information to a global audience.

Overview


The modern corporation’s constituencies are broad, diverse and dispersed. The long-term success of our Company depends on wise strategies for growth, technology development and customer service, and in satisfying the needs of our stake-holders. GE is committed to meeting the differentiated needs of investors, employees, customers, end-users, suppliers and

communities. GE also strives to establish open, respectful and value-added relationships with governments, advocacy groups and non-governmental organizations (NGOs). Among each of these groups, GE strives to understand and respond to a range of expectations:

STAKEHOLDER EXPECTATIONS

Business Partners

• Positive supplier relationships• Productive venture partnerships• Mutually beneficial alliances

GE Engagement Examples

• Proactive communications• Training and best practice sharing

Communities

• Environmental responsibility• Dependable community impact• Community investment

(volunteerism/philanthropy)• A good neighbor


• Grants programs from GE Foundation

• Linking our technology with community needs

• Global volunteer network• Regular meetings with socially

responsible investor groups and consultants

Employees

• Fair compensation, fair treatment• Safe and healthy

working conditions• Personal growth and

development• Pride and a sense of purpose• Unyielding integrity


• Annual global employee opinion survey

• Environmental, Health & Safety tools and training

• Quarterly CEO employee broadcasts

• 2.6 million learning course completions in 2004

• A robust compliance system • In-depth personnel

review processes

NGOs & Advocacy Groups

• That GE engages in social, environmental and economic issues

• A GE that listens and considers alternate inputs

• An ability to partner appropri-ately for responsible change

• Ethical actions beyond financial and legal requirements


• Outreach on major GE initiatives, performance and issues

• Funding for major citizenship and relief efforts

• Dialogue on citizenship issues• ecomagination initiative

Governments

• Regulatory compliance• A responsible corporate citizen• An economic base• A leader in the community


• Ongoing and regular discussions with government officials

• Training and best practice sharing with governments

• 307,000 GE jobs around the world

• Partnerships on research• Assistance with major crises

and disasters

Investors

• Good governance & increased disclosure

• Fiscal responsibility• A sustainable business model• Profitable growth and returns• Strong cash flow


• 250+ private/group investor meetings

• Monthly perception studies covering 50-75 shareholders

• 10+ GE security analyst meetings• Socially Responsible Investment

roundtables & Webcasts

Customers

• Ethical dealings• A good value proposition• Products and services that

help them win• A GE that stands

behind products


• Seek day-to-day feedback• Customer Scorecards • At the Customer,

For the Customer Program• Best practice sharing of

programs including Six Sigma• Crotonville learning center

leadership sessions

Stakeholders1.6


Overview

Our goal is to continue to increase the range and depth of our engagements with NGOs and advocacy groups to identify how GE can best perform and deliver products and services that meet the needs of society and the environment.

GE maintains an open dialogue with all groups under nine guiding principles:

Make a business out of solving the world’s toughest

problems

Build exceptional governance with a strong Board

Give back to communities through philanthropy and

volunteerism

Be open and transparent

Set high standards of performance

Take ethical actions beyond what the rules require that are in the

long-term interest of stakeholders and the Company

Make compliance a core operating principle

Develop great leaders with the right incentives

Maintain a culture that makes performance with integrity the bedrock principle

of the Company

Section 2:

GovernanceIn a recent study conducted by the consulting firm Booz Allen Hamilton, GE was named one of the World’s 10 Most Enduring Institutions of the last 100 years — putting GE in the company of the U.S. Constitution, Oxford University, the Olympic Games and the Rolling Stones. Criteria included an institution’s ability to maintain market leadership over time, an ability to innovate and to lead in governance practices. In a poll of global CEOs conducted by the Financial Times and PriceWaterhouseCoopers in November 2004, GE was rated the most respected company in the world for corporate governance and the most respected company overall for the seventh consecutive year. In February 2005, GE was named the “World’s Most Admired Company” in a poll of business leaders conducted by Fortune magazine. And GE was one of only 34 companies to receive a perfect score of 10.0 from GovernanceMetrics International (GMI), an independent service evaluating the quality of a company’s corporate governance.

“ To endure for over one hundred and twenty-seven years, a company must earn a reputation for integrity and performance over time.”


Governance


Our governance practices are grounded in actions instilled by leaders, implemented through rigorous systems and processes, and evaluated through transparency. Since 2000, GE’s corporate governance practices and principles have been significantly revised to ensure an engaged and independent board, increased transparency and a CEO and executive com-pensation program that is aligned with long-term shareholder interests. For example, in 2003 GE’s Board of Directors created a new form of stock-based incentive for the CEO — awarding Jeff Immelt 250,000 Performance Share Units in place of any stock options or restricted stock grants. If GE’s total share-owner return for the five years from 2003 through 2007 meets or exceeds the total shareowner return for the S&P 500 for the same period, then half of Jeff Immelt’s 250,000 Performance Share Units will be converted into 125,000 shares of GE stock. Similarly, if GE’s operating cash flow increases an average of 10 percent or more during this five-year period, then the other half of his Performance Share Units will be converted into GE stock. If these performance goals are not met, Mr. Immelt will receive no shares of GE stock.

Because they are based on two critical performance metrics, total shareowner return and operating cash flow increases, GE’s Performance Share Units align CEO stock-based pay directly to long-term investor interests. Additionally, GE has enacted a series of processes and activities to increase the participation of the Board, and to increase transparency:

GOVERNANCE OVERVIEW

Management • CEO reviews businesses 6+ times/year• 8 scheduled GE Board of Directors meetings• Active Board• Digitized leadership cockpit• Address business issues

Controllership• World-class finance function• 380 staff auditors• 1000s of audits per year• Process-based accountability• Formal integrity/EHS reviews• Shared values

Visibility• 250 analyst and investor meetings annually• Reviews with regulators, rating agencies• Industry-based oversight• Strong oversight by external auditors• Meet global standards


Governance

GE’s Board plays a vital role in governing GE. It is two-thirds independent, ensuring a level of objectivity critical to making our role and influence more meaningful and effective. GE expects its Board to play an active role in overseeing the per-formance of the Company. GE believes that an effective board is one that challenges and stretches management, providing in-depth oversight of the major strategic issues facing the Company. A great board is one that can be both a tough critic and a wise counselor.

In 2004, GE directors made more than 30 visits to different GE business sites, demonstrating a commitment to serve at the highest level of involvement.

We have made numerous changes to our governance practices recently.

Chaired by independent director Sam Nunn, the Public Responsibilities Committee reviews and oversees the Company’s positions on corporate social responsibilities and issues of public significance that affect investors and other key GE stakeholders.

The Committee’s Charter is as Follows:• To review the Company’s key public policy positions taken in

legislative, regulatory and judicial forums around the globe

• To review the Company’s actions in furtherance of our corporate social responsibility

• To review key trends in legislation, regulation, litigation and public debate around the world in order to determine whether the Company should consider additional corporate social responsibility actions

• To consider the impact of Company procedures and processes on employees, citizens and communities, especially with respect to environmental, health and safety matters

• To consider the manner in which the Company conducts its public policy and government relations activities

• To review the Company’s support of charitable, educational and business organizations

Board2.1

Governance of Citizenship

2.2

Section 3:

ComplianceGE’s commitment to performance with integrity includes a commitment not only to proper governance but also to compliance with financial and legal rules, regulations and standards. Financial and legal rules comprise a framework in which a company’s performance can be measured with confidence. GE operates within such a framework as described in the following section.


Compliance

The best-intentioned governance policies are at risk if there is no infrastructure of compliance and deep cultural values supporting those policies. For GE, with more than 300,000 employees working in more than 100 countries and having a strong corporate reputation, the stakes for the Company and its shareowners are high.

Maintaining GE’s strong reputation requires clear communi-cation of policy, rigorous processes for detecting potential violations, proactive leadership and personal responsibility. GE’s integrity guide, The Spirit & The Letter, articulates the foundation of these actions. Each employee receives a copy of The Spirit & The Letter and is asked to commit personally to upholding its policies in every country in which GE conducts business.

The title of The Spirit & The Letter recognizes that our employ-ees must not merely adhere to the letter of the law, but uphold its spirit as well. The Spirit & The Letter emphasizes both the individual employee’s responsibility to act with integrity and GE leaders’ responsibility to create a culture of compliance in which employees can exercise sound judgment and feel comfortable about raising concerns without fear of retaliation.

To this end, GE leaders conduct regular “Session D” compliance reviews in which employees help identify potential compliance risks in their businesses and develop specific action plans to manage them. The results of these Session D reviews are periodically reported to the corporate Policy Compliance Review Board (which consists of senior executives, including the General Counsel, CFO and CEO). In addition, GE Legal works with the Corporate Audit Staff to conduct regular com-pliance audits that focus on a specific GE business, region or subject. Their findings include identification of any weak-nesses and best practices, and result in commitments from businesses to carry out any required actions.

The Spirit & The Letter

3.1


Compliance

GE has an extensive Ombudsperson process that serves as a mechanism for employees to ask questions and report integrity concerns without fear of retaliation. Employees and other stakeholders must have confidence that they can report concerns about legal or ethical violations, that their anonymity will be respected, that there will be no retaliation, and that the concerns will be objectively investigated by Finance, Legal and Human Resources, and outside specialists if necessary, with appropriate individual and remedial action and without fear or favor.

Employees are subject to discipline if they fail to report a concern that they knew about or should have known about. In addition, retaliation against those who raise integrity concerns is prohibited and is grounds for disciplinary action. GE has processes in place for objectively investigating and resolving those concerns and reporting Ombudsperson system activity to the Audit Committee of the Board of Directors. GE’s Ombudsperson process is a critical element of a compliant culture because it gives powerful voice to people across the organization.

The system encompasses more than 300 Ombudspeople globally, covering every business and every country in which GE operates, and is set up to ensure that everyone — employees, customers, vendors and shareholders — can raise integrity issues. The Ombudsperson network comple-ments our Legal, Human Resources and management functions in addressing concerns and answering questions about compliance with policies and procedures.

All Ombudspeople speak the local language and understand the culture and business environment of their location.

Contacts to the Ombudspeople may be anonymous, and confidential investigations are conducted when concerns about possible violations of GE policy or the law have been raised. Non-conformance with Company policies and proce-dures results in corrective actions being taken, and although many cases result from unintended mistakes, disciplinary actions are often taken in cases of negligent or intentional non-compliance.

We believe that prompt corrective action and discipline demonstrate a strong integrity culture at GE. During 2004, 1,338 integrity concerns were reported through the Ombudsperson process across a variety of issues:

INTEGRITY CONCERNS REPORTED BY POLICY 2000 2001 2002 2003 2004

Fair Employment Practices 308 319 363 390 402

Conflicts of Interest 220 227 237 212 240

Controllership 94 108 224 181 247

Environment, Health & Safety 42 63 63 88 83

Supplier Relationships 62 73 78 82 71

Complying with Competition Laws 16 18 46 36 23

International Trade Controls 16 20 36 44 39

Working with Governments 70 91 80 75 55

Intellectual Property 16 27 51 35 34

Improper Payments 78 29 22 33 28

Privacy 15 25 26 48 35

Money Laundering Prevention 3 14 15 4 4

Insider Trading/Dealing/Stock Tip — 4 2 3 0

Security & Crisis Management — — 18 2 10

Other Integrity Concerns 151 106 105 126 67

Ombudsperson Process

3.2

Compliance


These concerns led directly to 368 disciplinary actions being taken against GE employees, including 125 dismissals, 198 warnings, 16 job changes and 29 financially impacted employees. Of the 368 disciplinary actions, approximately 56% occurred outside of the U.S. Of the 1,338 investigations in 2004, 34% were the result of anonymous submissions.

The rising rate of concerns is a sign of our healthy integrity and compliance culture. It demonstrates that employees recognize their responsibilities to raise compliance questions and concerns that come to their attention. Increased usage of the Ombudsperson process also demonstrates that leaders have set the right integrity culture, creating an environment that encourages employees to come forward with their questions and concerns without fear of retribution.

Ombudsperson Process in JapanOur process in Japan is an excellent example of how GE works to foster a compliant culture that protects employees and shareholders in every country where we do business. Over the last three years, GE Japan has made continual improvements in its Ombudsperson process. Through an extensive education program using examples of the Ombudsperson process in action, GE has strengthened the visibility and acceptance of the role that the process plays in protecting the Company in Japan. Today there are approximately 45 Ombudspeople in Japan covering over a dozen businesses. GE established a lead Ombudsperson in Japan, and has frequent Ombuds council meetings to share best practices, unify efforts and coordinate consistency. As a result, the number of Ombudsperson contacts has grown in the last three years from nearly zero to over 200 annually, of which 84 were integrity concerns. We view reports as a symbol of a healthy system. In any year, the instances of non-compliance are a tiny fraction of our employee population.

The GE Legal organization includes over 1,000 experienced lawyers located at GE businesses throughout the world whose job it is to help GE achieve performance goals with unyielding integrity and compliance with the law. GE’s diverse industries and disparate locations are united by a common legal culture with robust processes for the analysis and management of legal risks. The legal team at each GE business reports not only to the business CEO but also on a dotted-line basis to the General Counsel of the Company, ensuring rigor and consis-tency in acquisitions, employment issues, dispute resolution as well as compliance.

Many of GE’s legal professionals are dedicated specifically to compliance. The legal compliance team includes compliance leaders at each GE business, specialists at corporate head-quarters and regional experts who are familiar with local legal requirements in all of the countries in which GE does business. This team tracks and monitors legal developments and trends across the globe, and a Compliance Leaders Council meets several times a year to review compliance issues and initiatives.

The legal compliance team also works closely with Finance and the global Ombudsperson network to report on compli-ance matters to the Policy Compliance Review Board (PCRB). Periodic updates are provided to the Audit Committee of the Board of Directors.

Although each GE business and location faces different com-pliance challenges, they all focus on an approach comprising three basic processes: prevention, detection, and response. GE’s legal organization works under the leadership of business executives to execute these three crucial processes.

Legal Processes and Systems

3.3


Compliance

DETECTION

Measurement and monitoring allow GE to detect compliance problems at an early stage and determine root causes and take corrective action early on.

All GE businesses are required to have a process in place to ensure systematic monitoring of key compliance risks. Officers and managers must regularly review policy compli-ance with their direct reports and provide the results of those reviews to the business leader who, in turn, periodically reports on those reviews to the Corporate Policy Compliance Review Board. In addition, GE trains employees regarding their obliga-tion to report compliance concerns and provides a variety of channels to make it possible for employees to do so, including corporate and local Ombudspersons, as well as an email address and phone line that allow anonymous reporting of concerns directly to the Board of Directors.

GE businesses also perform detailed mapping of key business processes to help detect risks, and have early warning systems, which monitor problems in their respective industries, and review those with senior management regularly.

Compliance issues may also be detected through GE’s rigor-ous acquisition due diligence and integration processes. Integration of both new businesses and remote locations has been mandated as a priority for all GE business leaders.

GE businesses are also required to conduct robust screening of third parties such as suppliers, dealers and sales represen-tatives, to ensure their compliance with various laws, including laws relating to trade controls, money laundering and anti-terrorism efforts.

PREVENTION

The most effective solution to compliance problems is to prevent them before they occur.

Companywide, GE employees acknowledge their commitment to abide by GE’s integrity policies as set forth in The Spirit & The Letter and receive training to help them apply those poli-cies to their particular job function. The compliance training received by GE employees includes award-winning videos, in-person sessions, e-learning modules which apply the details of particular policies to real-life scenarios, and an integrity Web site which helps employees find policies, procedures and answers to commonly-asked compliance questions in multiple languages. GE has also designed specialized training for leaders and a “Leader’s Guide” setting forth the specific steps GE lead-ers are expected to take to achieve a culture of compliance.

Within each business, a Compliance Review Board (CRB) consisting of senior operational and functional leaders presides over the compliance practices within the business. The CRB is responsible for full implementation of all elements of the compliance program, for establishing business-specific com-pliance policies and for reviewing current compliance issues and cases. Each CRB uses a database or other automated tool to track open compliance issues within that business. The Corporate CRB meets regularly with the businesses’ boards to review policies and practices and ensure consistency throughout GE. GE also has elected CRBs in many regions and countries — for example, China and Mexico — to focus on common compliance standards to review regional or country Session D standards.


Compliance

RESPONSE: INVESTIGATIONS AND REMEDIAL ACTIONS

Concerns can come in from a variety of sources: from an employee; from an allegation in an actual or threatened law-suit; from an inquiry or subpoena from a regulator; or from an article in the press. When a concern does arise, leaders act promptly to have it evaluated and investigated by counsel and other persons with the appropriate expertise. If the concern turns out to be warranted, appropriate disciplinary and remedial action is then promptly taken.

The GE Legal team is responsible for finding the facts and analyzing the applicable law, including an evaluation of the Company’s reporting obligations, if any. GE’s legal team includes former prosecutors and others with substantial experience in conducting investigations. The Corporate Audit Staff consists of highly motivated and capable employees recruited to this elite service, whose job is to help GE remain compliant.

If allegations of wrongdoing are substantiated as a result of the investigation, the Legal team helps management imple-ment measures to stop the misconduct and ensure that it does not recur. Appropriate discipline is imposed through a fair process designed to evaluate relative degrees of responsibility. Steps are taken to make all required disclosures or take other action needed to manage legal exposure arising out of the misconduct.

The integration of the prevention, detection and response functions as part of GE’s legal culture ensures that the Company learns from past mistakes and uses our experiences to build stronger, more robust compliance processes.

COMPLIANCE LEADERSHIP: CULTURE Integrity leadership is the key

Creating a Culture of

Compliance

Detection

Prevention Response


Compliance

GE employs a 12,000-person finance team, including more than 500 accounting professionals, who operate a rigorous set of systems and processes intended to ensure that the Company meets the legal and regulatory requirements for controllership and transparency.

GE makes every effort to adopt appropriate accounting policies and devotes its full resources to ensuring that those policies are applied properly and consistently throughout the world. The Company maintains a dynamic system of internal controls and procedures designed to ensure reliable financial record-keeping, transparent reporting and disclosure, and protection of physical and intellectual property. Controllers in each GE business and at headquarters conduct regular balance sheet reviews and account reconciliations, and discuss issues and best practices at regular meetings of the GE Controllership Council.

GE’s internal audit team of 530 auditors, including the 380 members of the Corporate Audit Staff, conducts thousands of financial, compliance and process improvement audits each year, in every geographic area, at every GE business. The Corporate Audit Staff reports directly to the Audit Committee of the Board as well as to the CEO and CFO. In addition, 300 partners from KPMG LLP, GE’s outside auditing firm, work with their colleagues and the Audit Staff to conduct the necessary statutory reviews.

This work is overseen by senior management of the businesses and the Company, which conducts regular reviews of opera-tions at each business. The CEOs and CFOs of GE’s businesses have signed representation letters attesting to financial results for years, long before the Sarbanes-Oxley Act of 2002 made such letters a legal requirement.

GE’s commitment to controllership enabled the Company to complete the evaluation of internal controls over financial reporting that is required by Section 404 of the Sarbanes-Oxley Act of 2002. The Company’s assessment found that our internal controls are effective as of December 31, 2004.

Disclosure committees at both the business and corporate levels are composed of executives with detailed knowledge of GE’s businesses and the related needs of investors. They evaluate the fairness of financial and non-financial disclosures and report their findings to the CEO, the CFO and the Audit Committee. The Company makes these disclosures in full compliance with Regulation FD of the U.S. Securities and Exchange Commission.

Financial Processes and Systems

3.4

Section 4:

Public PolicyGE takes positions on public policy issues that affect the Company as a whole (for example, trade, tax, environmental and justice issues) as well as its individual businesses (for example, healthcare policy, energy policy, communica-tions policy). It is involved at both federal and state levels in the United States, as well as in major nations and regions around the globe.

In developing these positions, GE proceeds from the general recognition that companies today operate in a mixed economy — with government performing vital functions in, for example, national defense, foreign policy, public order, market regulation, environmental protection, education and social safety net arenas. In performing those functions, government must also ensure that the engine of a free society — private economic activity — has the ability to innovate, invest and compete. GE strives to advance balanced, long-term public policy positions that, while in GE’s interest, are based on sound facts, detailed analysis and a weighing of important competing values that lie at the core of any complex public policy issue. While differences on policy issues are a hallmark of free societies, GE seeks to advance positions that are responsibly developed and responsibly presented.

The Public Responsibilities Committee of the GE Board of Directors annually reviews GE’s major public policy issues around the globe. In addition, GE’s compliance function seeks to ensure that, at all times, GE complies carefully with campaign finance and disclosure laws, and such other rules as may apply to participation by corporations and their employees in the public policy process.

One key example of GE’s long-term approach to advancing policy changes in the broad public interest is the Company’s role in fighting corruption around the globe. GE has long held the view that the standards of the U.S. Foreign Corrupt Practices Act should be applied across the globe (leveling up), rather than weakened (leveling down). This stems from our belief that bribery of public or private officials is antithetical to sound economics, effective development and concepts of corporate integrity. GE helped organize Transparency International (TI), a non-governmental organization, which was launched in 1993 to combat corruption. It also helped found and staff the U.S. Chapter of TI, and it has been instrumental in securing the support of other transnational companies in the

global anti-corruption initiative. As a result of TI and GE efforts and the efforts of others, the Organization for Economic Co-Operation and Development (OECD) countries adopted an anti-bribery convention. In addition, due to TI efforts the World Bank, the International Monetary Fund and many other financial institutions now recognize that corruption is a major obstacle to international development and are taking action to control corruption in projects they finance. TI’s Corruption Perception Index, published annually since 1995, now rates corruption levels in over 140 countries. The Index receives extensive publicity all over the world and has helped transform corruption from a taboo subject to a prominent place on the international agenda.

GE has taken the lead on important public policy issues such as anti-money laundering and asbestos litigation reform. GE has taken aggressive action, including forgoing business, to ensure that the Company does not inadvertently become involved in money laundering in international business transactions. U.S. law enforcement officials have praised GE’s actions. On asbestos reform, GE has helped lead discussions aimed at finding a bipartisan solution to fix the U.S. asbestos tort system and to ensure that people who are demonstrably sick as the result of asbestos exposure will be compensated appropriately through a no-fault, fast-pay trust fund. GE, along with hundreds of other companies, has been named in lawsuits arising from asbestos exposure, even though GE has never mined, milled, manufactured, or produced asbestos.

GE’s reputation and business expertise, its role as an employer, and its contributions to communities through employee activities all contribute to its relationships with key decision makers. Where appropriate and permitted, GE’s Political Action Committee (GEPAC), a political action committee that raises voluntary contributions from eligible GE employees, supports candidates for federal and state elective offices whose views are consistent with the values and goals of the Company. In 2004, GEPAC raised over $1 million from approxi-mately 3,000 employees, and contributed nearly $845,000 to federal candidates and $51,000 to state candidates. The Federal Election Commission regulates GEPAC’s activities, and reports detailing its activities are available at www.fec.gov.


Section 5:

Environment, Health and SafetyWith products ranging from locomotives to plastics, jet engines to theme parks and wind turbines to financial services, managing environmental, health and safety (EHS) issues at GE is a tough challenge. We have developed common uniform EHS expectations and management systems that allow us to identify and control our diverse EHS issues.

Over the past 15 years, GE has put in place a management system that takes into account GE’s structure and that applies to all GE businesses. The applicability of some aspects of the program will be different depending on the nature of the business, but all GE businesses report on core metrics, under-take compliance assessments and implement the Company’s EHS framework.


Environment, Health and Safety


Our expectations for EHS performance — the tools we provide and the results we pursue — are the same from Shanghai to Schenectady and every place in between. Commitment to EHS goals and compliance is embedded in our culture and is one of the values that a GE leader must have to be part of the GE team.

Policy5.1

The key building block for GE is compliance with the laws wherever the Company operates. However, we also set common global standards for EHS in areas such as industrial hygiene, ergonomics, personal protective equipment, process safety, chemical storage and handling, spill prevention and waste disposal.

Full compliance is easy to say and hard to do. This is especially true for a company of our size, breadth and reach, with operations in over 100 countries, manufacturing sites in 40 countries and tens of thousands of laws, regulations and requirements across the globe.

Integrating Amersham, Universal and a number of other recent acquisitions into GE has reinforced the importance of compliance as a driver of EHS performance.

EHS POLICY GOALS

Assess all new activities and products

for EHS impacts

Implement the GE EHS management

system in all locations

Eliminate hazards and provide a safe

workplace

Minimize the use and release of

hazardous materials

100% compliance everywhere we operate or

sell products



GE has a reputation for operational rigor in executing its business strategy and financial goals. This same rigor and focus on operations helps us make sure our EHS aspirations translate into action through training, tools and metrics. In addition to our EHS policy, the key elements of our EHS operating system are:

• Processes for operational ownership and accountability

• Tools that our operations can use every day

• Training and communication

• Supporting GE’s growth plans by evaluating EHS risks and integrating newly acquired businesses

• Assurance mechanisms

• Addressing business-specific risks

• Metrics to measure progress

• Identifying trends

• Continual re-evaluation to improve existing programs and add new elements

PROCESSES FOR OPERATIONAL OWNERSHIP AND ACCOUNTABILITY

Ultimate responsibility for EHS performance resides with our business leaders, including our plant managers and service operations leaders who are supported by more than 1,000 GE EHS professionals.

We train our operations leaders on their responsibilities through Plant Manager Training, which is given about 25 times each year in locations around the world and attended by 800 to 900 GE employees annually. During a two-day interactive course, attendees learn about the Company’s EHS expectations, how to demonstrate leadership, and how to create top-level EHS performance. Most importantly, employees interact with their peers and come away with action plans to implement when they return to their operations.

Each day, our operations leaders drive accountability into their organizations through the use of GE PowerSuite tools that provide access to digital cockpits of real-time data on operations and individual performance.

Each quarter, a GE EHS Scorecard goes to our CEO and other top leaders showing individual business performance on 22 metrics.

Finally, our Session E process requires all operations leaders to discuss their EHS performance annually — including areas for improvement — with both their business leaders and GE’s senior environmental leaders. These sessions are conducted in front of their peers and provide an opportunity to test knowledge and commitment. We conduct about 25 Session Es each year, with about half occurring outside the United States.

Operating Systems

5.2

GE has one set of goals and expectations that apply globally to every facility. These goals are implemented and measured using a common set of metrics. Compliance with tens of thousands of EHS laws and regulations is the building block for our EHS operating system. To make this a reality, we developed regularly updated online, Web-based modules containing EHS legal requirements — in 17 languages as well as English — for more than 20 countries.

And for our global standards, we have developed EHS Frameworks containing 27 elements, 700 questions, and guide notes to act as a Web-based multi-language tool that combines “how-to” information with methods of evaluation.

Throughout all of our systems, the Web plays a vital role in promoting consistency and regular monitoring. Our GE PowerSuite is a Web-based tool that facilitates global communication, standardized compliance auditing and task management to provide consistent reporting and measure-ment across GE.

Today, GE PowerSuite consists of more than 30 applications that range from Health & Safety workflow management tools focusing on Ergonomics and Industrial Hygiene, right through to detailed environmental compliance management systems such as AirLog™, Waste Tracker™ and the ODS Sentinel™. PowerSuite applications digitize business processes in a way that allows sites to own, track and manage their individual data, and permits operations and business managers to monitor performance in real time by business segment.

We currently have over 30,000 users of PowerSuite in GE. During 2004, GE PowerSuite managed 1,032,247 compliance self-assessment checks, 747,203 EHS Framework validations, 222,429 compliance obligations, 56,750 safety observations and 6,113 waste manifests.



GE’s EHS Council is led by our Vice President for EHS Stephen Ramsey and meets three times a year with the EHS leaders from each of GE’s businesses to discuss programs and priorities, and to exchange best practices.

GE operates 10 task forces — on topics such as industrial hygiene, air, water and ergonomics — with cross-business participation. GE also operates 16 geographically focused, cross-business EHS Councils in many parts of the world, including Mexico, Southeast Asia, China and Europe.

GE also has both subject- and geography-specific EHS train-ing. Last year, GE operations conducted more than 1.6 million units of EHS training. To facilitate this, GE invests in multi-language translation of key training courses and has developed more than 100 online multi-lingual training courses available to our businesses.

Supporting GE GrowthGE evaluates EHS risks for every potential acquisition. EHS considerations are part of GE’s deal review process as well as all finance transactions proposed by Consumer Finance and Commercial Finance.

For those businesses acquired by GE, EHS is a key element of integration planning. Prior to closing, an integration plan is prepared that includes a timetable for implementing EHS programs as well as identification of the specific EHS resources needs.

Assurance MechanismsAssurance of both compliance and meeting GE global expec-tations is provided in GE’s EHS management system through a combination of methods, including:

• Conducting compliance self-assessments by sites over a cycle of up to two years.

• Requiring that 90% of Self-Assessment and Business Audit compliance findings are to be closed within 30 days and 100% within 180 days. During 2004, 95% were closed within 30 days, and 99.9% were closed within 180 days.

• Conducting operating reviews on selected topics every year, ranging from audits of all GE facilities in a particular country to specific compliance topics.

EHS Tools

5.3 Training and Communication

5.4



• Sending GE’s corporate EHS team on more than 500 visits to over 200 GE facilities around the world every year to evaluate EHS management system performance.

• Auditing numerous GE facilities each year to qualify their environmental management systems for certification by the International Standards Organization, and for safety excel-lence certification in the U.S. Occupational Safety and Health Administration’s Voluntary Protection Program.

• Having more than 1,400 EHS-related inspections by govern-ment authorities around the world in 2004.

• Using a mix of third-party and business audit teams to pro-vide independent review of compliance with applicable laws and GE EHS programs, which supplements annual required self-assessments and government inspections (during 2004, more than 500 business-level EHS audits were conducted).

Addressing Business-Specific Risks and Product Stewardship ImprovementThe varied nature of GE businesses means that some require a special focus to manage risks unique to their operations.

One example is the handling of mercury in our lighting business. Although GE is conducting research to develop non-mercury-based technologies, mercury is necessary to ensure the energy efficiency of today’s compact fluorescent lamps. Because mercury can present potential hazards to employees and the environment if not handled correctly, GE’s lighting business developed a Mercury Management Scorecard that incorpo-rates specific requirements for mercury handling for our plants. These include industrial hygiene controls and employee monitoring, maintenance requirements for equipment and proper handling of wastes. These requirements are tracked on individual plant scorecards that are reviewed frequently and audited by the business EHS team and operations leadership as well as an annual review by Corporate EHS at Session E. GE also voluntarily invested several million dollars for equip-ment to allow separation and reuse of scrap materials containing mercury.

GE has built a number of systems and processes to measure EHS performance. The base year for most of our EHS metrics is 1996, the first year of GE’s global EHS scorecard. Since then, the number of manufacturing and assembly facilities at GE has increased by 40%.

Workplace Injury and Illness GE has achieved a 76% reduction in workplace injury and illness rates and a 74% reduction in lost-time case rates since 1996. This means that we have thousands fewer injuries and more employees working safely.

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WORKPLACE INJURY & ILLNESS RATES(Rates are based on 100 employees working 200,000 hours annually)

Metrics to Measure Progress

5.5

Critical elements in achieving these reductions have been a yearly goal to reduce both rates 20%, the global implementa-tion of our health and safety framework with an emphasis on employee involvement, management leadership and account-ability, and participation of GE sites in government-run health and safety programs (USA and Mexico) and in GE’s Global Star program (rest of the world).

However, we anticipate that during 2005 we may not achieve this level of reduction due to the 2004 acquisition of Universal, which has had an injury rate higher than GE’s current rates. As with all acquisitions, we are instituting a full set of EHS expectations and programs and we hope to achieve our histori-cal reduction rate in 2006.

Reducing our injury and accident rates has created a safer workplace for our employees and prompted workplace changes that have improved our productivity. Our improvement since 1996 has resulted in thousands of fewer injuries and savings in 2004 (compared to 1996) of more than $50 million annually.



WORKPLACE INJURY, ILLNESS AND LOST TIME CASES

1996 2004

Injury and Illness 5.60 1.38

Lost Time Cases 1.33 0.36

Air and Wastewater Exceedances and ReductionsSince 1996, wastewater exceedances have been reduced from 624 to 83 and air exceedances (since 1998) from 68 to 22. We have driven these reductions by the use of Six Sigma tools, immediate corporate involvement for any exceedance and the institution of environmental program expectations culminating in the 2003 launch of an Environmental Framework, containing specific measurable program expectations, includ-ing those for wastewater and air.

GE’s wastewater reduction goal in 2004 was 33% and we achieved 29%. Our 2005 goal remains at 33%. The total num-ber of wastewater violations has been reduced so much that just one or two significant events at any of GE’s facilities with wastewater discharges can adversely affect these metrics. For instance, in 2002 and 2003, 22% of the wastewater exceed-ances came from one plant in India, where contaminants coming into the facility exceeded what we were allowed to discharge. In 2004, 13 of our 83 exceedances came from one newly acquired site in Ireland, which is now in compliance.

Since 2001, GE’s air exceedances have been in the same range (see chart). Our facilities subject to air regulation and permit requirements can have up to one million opportunities a year to have an exceedance. We are using Six Sigma tools, PowerSuite’s Air Log and Compliance Calendar functionality and training to minimize exceedances.

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AirWW

AIR & WASTEWATER EXCEEDANCES

Air exceedances include exceedances of any numerical limit that applies to any regulated air emission source and to any failure to obtain any required permit or other required authorization for any air emission source.22% of the wastewater exceedances for calendar years 2002 and 2003 were directly attributable to the quality of influent water to a single GE facility, and therefore did not accurately reflect the wastewater quality from this facility.In 2004, 13 of the 83 wastewater exceedances were from a newly acquired facility. Baseyear exceedances — Wastewater 1996 (624), Air 1998 (68).

1

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3



Toxic Release Inventory (TRI) Emissions Since 1987, GE has reported emissions in the U.S. to the Environmental Protection Agency and has achieved reductions of toxic emissions of more than 80% despite the growth in facilities and production during that time period. However, during 2003 emissions rose for the first time. Approximately half of this increase was due to a new acquisition in our silicones business, while the balance occurred as a result of operational difficulties at one plant, changes in the method-ology of emissions calculations at another site and fuel switching at two locations.

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TRI Releases33/50 Chemicals

Covers releases in U.S. only.TRI released from Section 5 of U.S. EPA reports — on-site releases.GE TRI reductions are 83% from 1987 baseline.33/50 Chemicals refer to former EPA program focused on 33 chemicals.GE 33/50 reductions are 91% from 1987 baseline.

12

3

TOXIC RELEASE INVENTORY (TRI)(In millions of pounds)

GE’s Plastics and Silicones EmissionsGE Industrial’s Plastics and Silicones/Quartz units constitute the bulk of GE emissions (approximately 70% in the U.S.). These units have achieved consistent reductions (more than 80% as a result of voluntary actions). Unlike the TRI chart, the chart below is adjusted to account for acquisitions and divestments.

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TRI (U.S.)VOC (International)

TRI (U.S. section 5 on-site releases) 53% reduction from 1996 to 2003.VOC (International) 56% reduction from 1996 to 2003.

12

GE’S PLASTICS AND SILICONES(In millions of pounds)

EHS TrainingTraining of our employees is a key to achieving the EHS per-formance we strive for. The total of training units completed has increased from 943,000 in 2000 to 1,571,528 in 2004. This is a function both of the growth of the Company and a more rigorous approach toward identifying and providing training. In addition to required training, extensive training related to internal GE EHS requirements is also given to our employees.



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Covers EHS training required by local EHS law or regulation.One training unit equals one EHS course for one person. For example, one employee requiring EHS training in 5 subjects would have 5 training units.

12

EHS TRAINING UNITS COMPLETED(In thousands)

EHS PenaltiesWith more than 400 manufacturing and assembly facilities worldwide, GE has a tremendous compliance record. However, there have been a few instances where penalties of $50,000 or more have been imposed for non-compliance.

In 1997, GE discovered and voluntarily disclosed that both the Company and Ohio EPA had underestimated air emissions from two of GE’s operations. GE took numerous compliance actions, including substantial investments in control technol-ogies, after which Ohio EPA commenced an enforcement action that was settled for $205,000 in 2003.

Penalties paid in 2003 were driven by two major matters. At our Waterford, New York, site, GE paid the State of New York $300,000 as a result of issues related to wastewater discharges, spill containment and hazardous waste manage-ment. The site has instituted a multi-million dollar upgrade project, including enhancements to wastewater treatment and spill containment capabilities.



GE paid three significant penalties during 2004. GE paid a $70,000 penalty for failure to apply for a wastewater permit modification at our Rome, Georgia (USA), location. GE paid $47,000 to settle a matter with the Ontario (Canada) Ministry of Labor as a result of a serious injury to an employee at our Oakville plant. An extensive machine guarding upgrade was undertaken by the facility. A $40,000 penalty was paid after carbon monoxide caused a fatality at the Hendersonville, North Carolina, plant in 2003. This incident led to a global alert and review of ventilation procedures and work practices.

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EHS PENALTIES(In thousands)

Includes penalties paid during calendar year.Does not include pending matters not resolved.

12

Agency InspectionsAgency inspections in the U.S. have remained in the same range for several years. In 2004, for the first time, the number of inspections outside the U.S. exceeded those inside.

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AGENCY INSPECTIONS(Inspections of GE operations by governmental EHS authorities)

New MetricsGE undertakes frequent reviews of the need for new metrics. We focus on ensuring that our current metrics are implemented fully on a global basis and understood by our operations before adding new ones. The most recent addition came when we started to collect data on 2002 Greenhouse Gas (GHG) emissions. We are currently planning to collect water use data across the Company starting in 2006.

Identifying TrendsBecause we have many different types of operations, trend monitoring and future issue identification is done by each GE business, while the corporate level focuses on trends with multi-business implications. For example, new European Union directives require the elimination of some hazardous materials from electrical and electronic products (ROHS) and the take-back of those products at the end of their useful life (WEEE). GE actively followed the development of the directives for years prior to their adoption. Since adoption, the businesses with covered products have put in detailed investment and management plans for phasing out the restricted materials, and we expect to be in full compliance by the implementation date. On WEEE, GE is planning a mix of direct take-back and participation in collective schemes. While the EU is out in front on this issue, China has proposed similar legislation, and Japan and a number of U.S. states have already adopted programs that start down the path the EU has taken. We have an active task force monitoring and working with our businesses to prepare for these initiatives.



Continual Evaluation Through our EHS operating system, we identify areas for improvement based on audit and enforcement data, internal investigation of incidents, feedback generated in our various EHS Council, Task Force and training activities, suggestions from our operations and trends in stakeholder expectations.

These improvements cover a broad range of activities from such simple things as improved fall protection procedures to detailed rules for dealing with electrical safety (Lock-Out Tag-Out program). In the environmental area, we’ve focused heavily on improving our chemical management programs as well as developing the Environmental Framework to make GE expec-tations clearer and more user-friendly for our operations.



There will continue to be an increasing need around the world to reduce greenhouse gas emissions. Our climate change strategy has six elements:

1 Providing a wide array of products across our businesses to help today’s consumers and business customers meet their needs for energy efficiency and reduced GHG emissions. For a comparison of the GHG emissions from GE operations to the GHG emissions reductions that our products create for our customers, we looked at the GHG emissions avoided by the current installed base of GE wind turbines — just one of GE’s products that contribute to improved energy efficiency and GHG reductions — and found that avoided emissions from our wind turbines are almost equal to the GHG emis-sions from GE’s own global operations.

The Carbon Disclosure Project, a consortium of institutional investors interested in climate change, commented after reviewing GE’s product portfolio in 2003 that “GE stands out as being especially well-placed with respect to providing low-carbon solutions to a number of key greenhouse gas emitting markets.”

2 An aggressive research program looking at next-generation technologies such as hydrogen storage, hybrid locomotives and solid state lighting.

3 Funding longer-term research at academic institutions. GE and other companies are sponsoring Stanford University’s Global Climate and Energy Project (GCEP), an unprecedented, multi-million dollar collaborative research project to identify and develop alternative and next-generation energy tech-nologies. The research results will be shared globally with scientists, governments and other private institutions in order to accelerate the development of these technologies.

4 Ensuring governmental authorities and regulators are aware of the capabilities of GE technologies. For instance, GE has testified in the U.S. Congress about its Integrated Gasification Combined Cycle (IGCC) technology.

5 Participating in efforts to discuss the difficult technological and policy issues raised by climate change. In 2004, GE convened an Energy 2015 conference with its customers. We are also one of nine companies in the Northeast Climate Group organized by the World Resources Institute (WRI). The WRI recently issued a report on the group’s activities entitled “A Climate of Innovation — Northeast Business Action to Reduce Greenhouse Gases” which is available at http://www.wri.org. GE researchers are now partici-pating in technology discussions organized by the UN Intergovernmental Panel on Climate Change. GE is a multi-year sponsor of the annual Green Trading Summit held in the U.S., devoted to increasing knowledge of trading schemes to help reduce carbon emissions and provide other environmental benefits.

6 Taking action on the GHG emissions generated by GE’s own operations.

Climate Change

5.6

Greenhouse Gas (GHG) Emissions GE has undertaken an annual inventory of its greenhouse gas emissions since 2002. The third inventory covering the 2004 calendar year will be available in mid-2005 and will be posted on the GE Web site.

GE has set a 30% GHG intensity reduction goal by the end of 2008, along with a 1% absolute reduction by the end of 2012. GE has also set an energy efficiency improvement goal of 30% by the end of 2012. Progress will be measured against a 2004 baseline. During 2004, GE Infrastructure’s aircraft engines and rail businesses joined the EPA Climate Leaders program and made a GHG intensity reduction commitment of 25% covering 2003-2008. GE is also the largest participant in EPA’s Million Monitor Drive to enable power savings features on personal computers.

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IndirectDirect

GE GHG EMISSIONS(In millions of metric tons)

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GE TOTAL ENERGY USE(In millions of gigajoules)



GE has about a dozen manufacturing facilities in Europe covered by the European Union Emissions Trading System coming into effect in 2005. Based upon initial information regarding CO2 allocations, we anticipate that these facilities will be able to operate within their allocations.

GE Infrastructure’s Energy Financial Services unit is an indus-try leader in setting practices to ensure that environmental issues are thoroughly considered in financing transactions. There is a special staff of 27 environmental experts for these reviews. These practices have been integrated into decision making at all management levels including the Board of Directors. GE Energy Financial Services has begun to supple-ment its investments in conventional energy with investments in renewable sources, including solar, biomass, hydro, wind and geothermal. GE Energy Financial Services now has $568 million in renewable energy assets. These assets are in the form of equity (common and preferred stock), debt and lease financing. Additional investments in renewable and conventional energy sources are planned along with financing for water-related projects, including desalination and waste-water treatment.

GE takes great care to ensure that the waste it generates goes to sites that meet GE’s standards, standards significantly more protective of the environment and worker safety than local legal minimums.

We operate a Waste Site Qualification Program in 25 countries that requires the auditing and pre-approval of locally permitted facilities before our operations can use them and we plan on adding six more countries to the program during 2005.

GE’s standards frequently require disposal sites to upgrade and improve their operations beyond local law requirements if they want to be approved for GE use. GE has expanded its program in Latin America and Asia (GE rejects over 50% of locally licensed sites in these regions). One consequence of this program is that because of GE’s high standards, there are occasions when we cannot approve a disposal facility for a particular waste stream or in a particular area. In those circumstances, GE sites must store their wastes securely onsite until such time as an approved site becomes available.



Waste5.7

Remedial Responsibilities

5.8

GE is a 126-year-old company, with facilities across the globe. Many of those facilities began operating at a time when scien-tific understanding and regulatory requirements were far different from today. Changing standards and knowledge require that these “legacy” issues must be addressed. We are currently involved in 87 sites on the Superfund National Priorities List. At many of these sites, GE’s involvement is very small. We have sole responsibility at just eight. We have reached agreements with federal and/or state regulators at almost every site about the right way to proceed.

We have worked cooperatively with government agencies to address remedial issues at virtually all sites and we meet our commitments. Here is an update on the status of our most significant PCB sites.

Hudson RiverGE used polychlorinated biphenyls (PCBs) at two plants on the Upper Hudson River in New York State many decades ago, before concerns were raised about their human health and environmental impacts. GE’s use of PCBs as a fire retardant was at all times legal. GE discontinued their use in 1977. These industrial operations discharged PCBs into the Hudson River. After a two-decade long assessment of what to do about the PCBs, the U.S. Environmental Protection Agency (EPA) decided in 2001 to dredge portions of the river. Since then GE has been working constructively with EPA on the dredging project. In 2003, GE and EPA reached an agreement under which GE will design the project at a cost of about $25 million. In addition, GE agreed to provide EPA an additional $13 million for costs EPA will incur on this project and to reimburse EPA $15 million for past costs EPA incurred on GE’s Hudson River PCBs reassessment.

GE has also completed a $25 million sediment-sampling program in the Upper Hudson. GE and EPA reached agree-ment on this project in July 2002. More than 40,000 samples were taken from the river and analyzed to help determine where dredging should occur. As part of this agreement, GE reimbursed EPA another $5 million for past costs and agreed to reimburse EPA for up to $2.65 million in costs related to overseeing and reviewing GE’s work.

This brings GE’s financial commitment to the EPA dredging project during 2003 and 2004 to nearly $90 million. GE and EPA are negotiating resolution of the remedial phase of the project. EPA has said publicly that GE has been a cooperative partner on this project. Overall, GE has spent more than $300 million investigating and cleaning up PCBs from the Hudson River since 1976. GE and EPA have had a scientific policy disagreement over the advisability of dredging but GE has met all EPA deadlines and is now constructively working with EPA because the Hudson River remedial decision has been made.

Rome, GeorgiaGE is working cooperatively with the Georgia Environmental Protection Division (EPD) to remediate PCBs at GE’s former Rome transformer manufacturing plant. GE is regulated under a state permit, which addresses investigation and cleanup of PCBs both on the plant side and outside the plant, and recently completed a soil cleanup along streams and creeks where small amounts of PCBs flowed with storm water runoff from the plant. In addition, GE has remediated 17 homes at which homeowners used PCB oil around their property for weed control. GE has spent over $55 million on environmental investigation and cleanup in Rome and will continue to do all the necessary work to remediate the property and its environs.

Housatonic RiverGE, the EPA, the State of Connecticut, and the Commonwealth of Massachusetts are working cooperatively under a compre-hensive settlement agreement reached in 2000. The work is proceeding smoothly. GE has completed work on the first half-mile of remediation of PCBs from the Housatonic River in Pittsfield, Massachusetts, where GE formerly manufactured transformers and capacitors. GE is also undertaking a cleanup of the former plant area. GE will transfer 52 acres of land to the PEDS for development in one of the largest “Brownfields” projects to date. The EPA is conducting the next phase of the river cleanup, a project funded through a GE-EPA cost-sharing arrangement. GE has spent almost $400 million to date on its environmental investigation and cleanup at its former transformer plant and nearby areas.





Safety excellence programs are one of the key ways GE ensures management leadership, engages employees and creates safe workplaces. GE is the #1 participant in the U.S. Occupational Safety and Health Administration’s Voluntary Protection Program (VPP), and we participate in similar government programs outside the U.S.

Based on the success of these government-sponsored initiatives, GE initiated its own Global Star program for those countries where VPP programs don’t exist. Global Star is only for the “best of the best” and requires sites to go through a lengthy preparation, pre-audits and a final audit by GE safety experts. The success of this program can be seen in the increase from one Global Star site in 1998 to 55 today.

As of the end of 2004, GE had 174 locations in recognized excellence programs. Today, almost 100,000 GE employees work at sites recognized for safety excellence.

The United States, Canada and Mexico have chosen GE to be their partner in the creation of a new NAFTA VPP-type program. We are also working with the Irish government on a VPP proto-type program being developed for Ireland.

Although ISO 14001 certification for environmental perfor-mance is not a requirement for GE facilities, many Company operations have been asked to obtain certification by their customers. Today, GE has 89 ISO 14000 sites. Our experience has been that the GE EHS management system provides most of the elements of ISO, so our operations are well prepared if customers ask for certification.

In Mexico, we have nine plants certified in the Clean Industries program run by the federal environmental agency and nine other plants are preparing applications to join the program.

In addition, last year, GE operations received almost 100 awards and other recognition for EHS performance and excellence from government agencies and customers.

AWARDS FOR SAFETY EXCELLENCE PROGRAMS

91 U.S. VPP sites #1 participant in program

23 Mexico VPP sites (all GE-controlled manufacturing sites except for recent acquisitions in last two years — and they will be applying for VPP)

5 Alberta VPP sites

55 Global Star sites including Hungary (8), Brazil (6), Canada (6), India (5), China (4), UK (4), Singapore (3), Spain (3) and Japan (3)

Excellence Programs and External Recognition

5.9

Section 6:

GlobalizationDoing business globally is a reality of conducting business in the 21st century. As technology has accelerated the rate of expansion and enabled a new era of communication, the world has become a more accessible and smaller place.

Business in this environment has become more dynamic, more competitive and increasingly complex. Competing within a global marketplace means understanding the needs of customers around the world, building new relationships and capabilities in diverse markets, evaluating the workforce to balance talent and productivity with cost and competitive-ness and navigating a regulatory environment with consistent standards of integrity across the globe.

As these changes occur, our ability to collaborate on problems and imagine solutions that can effect lasting change has never been greater. GE is convinced that participating in the global marketplace can create jobs, fuel innovation and grow its businesses in a way that solves some of the world’s tough-est problems and is beneficial to the communities where we work and live. Such participation helps integrate the global economy and promote development, stability and peace.

“Winning companies must think globally, but understand local consequences.”


Globalization


Being a successful company in the 21st century means serving customers all over the world. To do so, we must continually strike a balance between the future drivers of growth, the competitive dynamics of different markets and industries, and how we can grow our Company and employees to compete. GE employs more than 300,000 people in more than 100 countries around the world and has manufacturing facilities in more than 40 countries. The Company’s human resources policies and practices are intended to be global in nature and apply consistently across the world.

Our current revenues are derived from markets around the world and reflect our status as a truly global Company.

GE COUNTRY LOCATIONS WORLDWIDE (dark color indicates countries of GE locations)

GLOBAL REVENUE BY REGION

10% Asia/Pacific

6% Americas5% Middle East, Africa/Other

53% USA

26% Europe

GE Around the World

6.1


Globalization

Emerging economies are a huge opportunity; by literally every measure, GE can build value. As global markets become increas-ingly interdependent, the opportunities to grow business, influence ethical standards of behavior, and contribute vital infrastructure and products with high standards of environ-mental performance, have never been greater. We can make a positive difference.

In 2004, GE’s revenues from the developing world reached $21 billion, a 37% increase. We now expect to get as much as 60% of our future revenue growth from emerging markets including China, Russia, Eastern Europe, India, and the Middle East. These regions represent the fastest-growing markets in the world today. In these markets, GE can provide much-needed infrastructure. We will deliver vital systems for water, power, healthcare, and transportation to improve the quality of life and access to opportunity in these countries, and allow them to participate and benefit more fully in the global economy.

By providing critical infrastructure needs, GE has the opportu-nity to lay a foundation for sustainable growth. In each of its major infrastructure categories, GE has developed technologies that lead in environmental standards performance, producing lower emissions with heightened energy efficiency.

Beyond supplying infrastructure, GE is building relationships and sharing best-of-class systems. Because GE operates with the same environmental, health and safety and integrity standards in every country in which it conducts business, GE has the opportunity to share best practices and ensure adherence to high standards in developing countries. One example of this practice occurred in China where, in 2004, GE organized an EHS Forum in Shanghai with participation from Chinese officials from agencies responsible for the envi-ronment and safety. More than 100 attendees, including participants from other multinationals, came together for a day of education and sharing of best practices in EHS. At the request of the Chinese agencies, GE has agreed to share some of its EHS tools as they develop their own comprehensive programs to address China’s EHS challenges. GE will hold another EHS Forum in China in 2005. GE also is planning a simi-lar forum in China on the general topic of legal and financial compliance by private entities.

In recognizing the many opportunities that globalization brings, GE is also sensitive to addressing its challenges. Among these is the perceived threat of job migration. Although this is often perceived in relation to the U.S. market, it is truly a global issue. Markets in Europe are experiencing job movement between eastern and western countries, and Mexico is also confronting the challenge of job outsourcing to China. These considerations demonstrate the reality of an increasingly competitive global marketplace.

As GE’s presence has grown around the world, the composi-tion of its businesses and its core capabilities has changed to better serve those markets. Twenty-five years ago, GE’s core businesses were heavily concentrated in manufacturing. As with other companies, technology and innovation have streamlined our manufacturing, and we have had greater growth in seeing the greater part of our businesses today comprised of services.

To stay competitive, GE always seeks to lead in high-growth and high-tech businesses. To do this, we have moved operations to be close to our customers everywhere that we do business, and we work to ensure that we combine the lowest cost of manufacturing with the highest quality of products and ser-vices for all our customers. GE addresses the need to remain competitive with sensitivity to job preservation based on three principles: being competitive, compliant and compassionate.

Emerging Economies

6.2 Job Migration

6.3

CompetitiveAs a global company, GE competes and operates within a global market that is rapidly changing. To continue to grow jobs and business, GE must compete and win globally in response to the talents, products and services that are valued in that market and that are cost and quality competitive in world markets.

CompliantGE seeks to implement both the spirit and letter of the law wherever it conducts business, and respects the cultures and customs of employees, suppliers and customers. With this commitment, GE brings heightened environmental, safety and employment standards to facilities around the world and con-tributes to the economic development of emerging markets.

CompassionateBy recognizing market trends and subsequent employment impact, GE helps employees affected by workforce reductions transition to new careers. In most cases, GE provides long lead notice, job search assistance, education, training and preferen-tial placement for these employees. GE also often helps bridge many employees affected by job movement to early retirement.

Globalization

We face the same human rights challenges that any good company faces: setting the highest standards in our responsi-bility to and relationships with employees, enforcing appropri-ate labor standards with suppliers and addressing varying challenges in the countries in which we operate. Respecting basic human rights seems straightforward until you find more than 17 million results when you Google “Human Rights.” While there is general agreement that the Universal Declaration of Human Rights, first adopted by the United Nations in 1948, is the most widely recognized definition, there remains much debate on how to implement its Articles. It is a remarkably complex area in practice.

Let’s be simple. Our fundamental responsibility to employees is to maintain a culture in which every employee is treated with dignity and respect, has both a voice and a right to be heard and, in turn, is accountable for treating others with the same dignity and respect.

This responsibility extends to providing good wages and benefits, safe working conditions and an opportunity for employees to develop and do their best. GE employees are governed by The Spirit & The Letter of our Commitment and a simple set of fair employment practices that form the basis for treatment of employees around the world. They include merit- and qualification-based employment decisions, freedom from discrimination, a safe and secure workplace, privacy protection, freedom of association, recognition of the right to collective bargaining, prohibition of forced or child labor and a robust ombuds process to give voice. GE’s Fair Employment Practices Policy embraces the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work.

On Human Rights:A Letter from Bob Corcoran, GE Vice President of Corporate Citizenship

6.4


Globalization

More than 300,000 people come to work at GE every day — each unique, each with responsibilities, obligations, loved ones, hopes and dreams. Some are second-, third- and even fourth-generation GE families. To every one of them, GE repre-sents an opportunity. For some, it is the basic opportunity to put food on the table and provide security for their families; for others it’s the opportunity to grow and get ahead; for still others it is the opportunity to make a difference in the world. As a Company with global reach and a culture of meritocracy, each of these can be and is achieved at GE every day.

Our expectation of fair treatment and respect for human rights also extends to the way GE suppliers deal with their employees. We have a disciplined Supplier Assessment Program and a team of over 430 trained auditors who assessed more than 3000 suppliers to ensure adherence to requirements and standards for health and safety, labor practices and treatment, and environmental performance.

In the body of this report, you will be exposed to our thinking and actions across a broad array of issues. You will have a chance to view our policies and practices, our record of accomplishments and areas where we must improve. Although we’ve come a long way from Thomas Edison’s lab over 125 years ago, we have a long way yet to go. We look forward to the journey, and to making a difference in the world and on the difficult issues facing business today.

Robert L. CorcoranVice President, GE Corporate Citizenship and President, GE Foundation

It is our goal to treat every GE employee with respect and dignity. To ensure this, GE complies with all laws pertaining to freedom of association, non-discrimination, privacy, collective bargaining, compulsory and child labor, immigration and wages and hours. Beyond legal compliance, we strive to create an environment considerate of all employees wherever GE business is being conducted. Our fair employment practices do more than keep GE in compliance with applicable labor and employment laws. They contribute to a culture of respect.

At GE, we evaluate where we can conduct business in accor-dance with our standards of governance and citizenship, where we are confident that we can serve our customers effectively and where we can enact systems of safety and security for our employees. In countries where the political climate is evolving, we recognize the opportunity to function as a positive influence in shaping business conduct. Our goal is to ensure that a business opportunity never compromises our integrity, and that our involvement in any country will serve as an exam-ple of upholding the highest legal and ethical standards. We can and do operate with global integrity standards anywhere.

GE does have a regular process for reviewing commercial and reputational risk in nations where it is doing or plans to do business. GE tracks issues related to the state sponsorship of terrorism, states with present or potential involvement with weapons of mass destruction and states with significant human rights issues or narcotics and money laundering issues. In rare cases, continuing business in such a country may have an adverse impact on GE’s reputation and business. Such decisions are made by senior management in consulta-tion with the GE Board, weighing the risks and benefits of a withdrawal or moratorium.

Myanmar and Iran represent two examples of countries where GE has adjusted its business practices in response to these considerations. Myanmar has a history of human rights violations that, at this time, keep us from pursuing business opportunities, and we have long had a policy not to do business there. Recently, GE’s senior management, in consultation with the Board, decided not to accept new business in Iran (GE’s non-U.S. subsidiaries have decided to fulfill their commit-ment to existing customers) because of uncertain conditions related to that country.

Human Rights

6.5

Section 7:

CommunityThe better world we imagine becomes real by the actions we take in local communities around the world. Each year, the GE family makes an impact through the Company’s innovative philanthropy, committed businesses, active volunteers, engaged executives, generous employees and donated prod-ucts. Our ambitious programs include championing educational opportunity, spotlighting public service announcements on NBC and improving healthcare in Africa. In 2004, the GE family provided more than $150 million in cash, products and service to support local and global services organizations in commu-nities around the world.


Philanthropy7.1


Community

The core of our philanthropic effort is the GE Foundation. For more than 50 years, the Foundation has invested in programs based on a fundamental premise: a quality education ushers in a lifetime of opportunity, which helps build a strong and diverse citizenry and workforce. The Foundation seeks to have a positive influence through two primary channels: 1) by strengthening educational access, equity and quality for disadvantaged youth in targeted GE communities around the world, and 2) by supporting GE employee and retiree giving and involvement.

The need for quality education has never been more urgent, especially for individuals from disadvantaged backgrounds. The Foundation is committed to helping children learn and thrive, and its research-based grant initiatives are focused on achieving lasting change.

The Foundation’s efforts to address challenges in education are driven by some sobering statistics:

• In the U.K., one third of students will not complete a 12th grade education.

• In the U.S., only 67 out of every 100 students will graduate from high school on time, and only 18 will end up graduating from college.

• In China, 71 percent of the country’s illiterate population is female.

• In India, 40 percent of first-grade students will drop out by the fifth grade.

• In Mexico, 90 percent of students who start school will not get to college.

College BoundThe GE Foundation’s 15-year, $30 million College Bound program works with selected schools and GE businesses in 17 communities to significantly increase college attendance from low-income and inner city schools. Each school designs its project based on its unique needs, but all include GE volunteers, staff development, curriculum change and enrichment activities for students.

Desnikki Andrews, a participant in College Bound, is currently a senior at Aiken University High School in Cincinnati, Ohio. As a freshman, Desnikki and most of her classmates in the ninth grade didn’t believe that college was an option. With only her sister to support her, Desnikki assumed that a college degree was out of reach and that her future had already been determined. However, through College Bound and her GE mentor, Desnikki learned that opportunities are limitless with hard work and motivation. She is now in the twelfth grade and will graduate with the 2005 class. She plans to study psychol-ogy at Spelman College or Tennessee State — something she never would have dreamed of three years ago.

Aiken was GE’s first College Bound school. It is an inner city high school where more than 90% of the students come from minority backgrounds and more than 57% qualify for a subsi-dized lunch. Before the first GE Foundation grant to Aiken in 1989, the college-going rate was 10%. After implementation of College Bound, the college-going rate has risen to 62%.

“Not only is GE’s monetary support a key to main–taining a strong, viable College Bound program but the personal commit-ment of many individuals is also incalculable in pro-viding the kind of support crucial to each individual student’s success.” Donna Perzigian, Principal, Aiken University High School


Community

Desnikki and her fellow classmates have benefited from improved curriculum and instruction, school policy improve-ment efforts, college and career workshops, the GE volunteer network, and a postgraduate alumni network. Further, the Aiken Summer Bridge Program was implemented to capture students who might otherwise drop out and provide them with the skills and encouragement to continue.

To date, there have been more than 20,000 students involved in College Bound and 1,600 teachers in active schools. The chart below shows the increase in college matriculation rates after College Bound was implemented at several of the schools:

20031989

57%

25%

20031989

61%

23%

20031989

ALBUQUERQUE CLEVELAND LOUISVILLE

75%

22%

COLLEGE-GOING RATES AFTER COLLEGE BOUND IMPLEMENTATION


Community

“Whatever it took, I was willing to get there. My goal was to get into an accelerated math program. If I hadn’t taken trigonometry, I wouldn’t have been ready for engineering.”DeShawn Johnson, Former Math Excellence Student

Math ExcellenceThe GE Foundation’s Math Excellence program seeks to support comprehensive pre-college strategies for students that result in long-term, sustained impact on the skills, interest, and participation of under-represented students in engineering, information technology and quantitative fields in business. More than 16,700 students and 900 teachers have participated in Math Excellence activities.

A Math Excellence grant to the Lynchburg City Schools in Virginia is focused on increasing minority participation in college prep classes, increasing the number of college-bound students through curriculum enhancement, and fostering a better learning environment.

DeShawn Johnson graduated from Lynchburg’s E.C. Glass High School in 2004 and is pursuing a degree in computer engineering at the University of Tennessee. DeShawn was involved for three years in the Math Excellence initiative. He took two periods of math per day, worked with mentors and teachers regularly and participated in special classes to prepare him for college.


Community

India: Pratham Pune Education FoundationThis $100,000 two-year support program ensures that young children have access to formal education. The program includes a literacy component, a “bridge” course to encourage youth drop-outs to return to school, and a reading/arithmetic effort that empowers young women to teach.

Hungary: Opening Doors ProgramThis $250,000 investment supports three secondary schools in underprivileged parts of Hungary, helping students achieve academic success, prepare for university, and create opportu-nities to integrate them into the Hungarian and international job markets.

EMPLOYEE AND RETIREE GIVING AND INVOLVEMENT

GE employees continue to be generous in donating funds to a variety of causes and community initiatives, accounting for nearly $41 million of total GE family giving every year. These contributions provide support to thousands of local organiza-tions that include schools, parks, homeless shelters and com-munity organizations.

United WayGE is ranked number five among United Way supporters in the U.S. With annual giving over $30 million, the GE Foundation and GE employees support nearly 200 United Way organizations in communities across the U.S.

GE Foundation Matching Gifts Program2004 marked the 50th anniversary of the GE Foundation’s Matching Gifts Program. Matching $18 million annually in employee and retiree gifts, the GE Foundation helps increase the giving power of GE employees and retirees by matching donations to colleges and universities as well as approved social service, arts, environmental and other community-based organizations. In 2004, there were more than 1,600 recipient organizations. The GE Foundation created the concept of a corporate matching gift program in 1954; since then, more than 8,600 companies worldwide have adopted similar programs, contributing more than $1 billion per year.

PHILANTHROPIC HIGHLIGHTS AND RESULTS

Faculty for the Future Since 1990, more than $20 million has gone to programs to increase the number of women and minorities entering faculty positions in targeted academic fields: business, engineering and the sciences. More than 200 individuals have taken faculty positions to date after being supported by the program.

ScholarshipsThe GE Foundation’s partnership with the International Institute of Education (IIE) began in 1987 and has grown into an ambitious $1.4 million annual program that enables nearly 500 scholars each year to realize their higher education dreams at more than 100 universities across 12 countries. In recognition of GE’s support of education, IIE presented GE with the “Opening Minds Corporate Leadership Award” in 2004. The GE Foundation also works with organizations such as the Jackie Robinson Foundation, the Thurgood Marshall Scholarship Fund, the National Action Council for Minorities in Engineering (NACME) and others to increase the number of minority students pursuing higher education degrees.

U.K.: Science, Engineering, Technology and Mathematics Program (SETNET) SETNET is a $250,000 two-year program to build a pipeline of motivated and talented secondary school students from disadvantaged areas of the U.K. pursuing quantitative academic and career opportunities.

Brazil: International Medical Services for Health (INMED) Partnerships for Children is a $250,000, two-year initiative that strengthens primary education in the disadvantaged commu-nity of Jacarezeinho by delivering programs to students, par-ents, and teachers in the community.

China: China Youth Development Foundation (CYDF) The Project Hope program is an $800,000 program to support professional development for teachers from remote and dis-advantaged communities in China, where teaching and learn-ing standards lag far behind those in major cities.


Community

All over the world, GE people reach out to strengthen the communities where they live and work. GE volunteers contrib-ute more than one million hours of service annually, making an impact on education, human services and the environ-ment. Former President George H. W. Bush recently presented GE with the 2004 Award for Excellence in Workplace Volunteering from the Points of Light Foundation. The award honors businesses that have shown their commitment to mobilizing volunteers who help solve serious social issues. From building playgrounds in disadvantaged neighborhoods to mentoring students and assisting the elderly, people at GE make a difference year-round.

GE’s largest formal volunteer program, GE Elfun Volunteers, is a global organization made up of employees and retirees who help strengthen GE communities through effective and sustainable volunteerism. Each year, 50,000 GE Elfun Volunteers in 44 countries around the world implement more than 4,000 individual volunteer projects, with a major empha-sis on education, human services, and the environment.

GE Elfun Volunteers: Taunton, U.K.In the Southwest corner of the U.K., this Elfun chapter is involved in more than 50 projects every year. The chapter has developed strong partnerships with four inner city primary schools. Volunteers have been involved at multiple levels including:

• Improving early information technology training and development

• Working one-on-one with children to improve reading and math skills

• Leading workshops for school staff on effective meeting facilitation, brainstorming methods and team building

• Implementing team-building projects to enhance the learning environment of the school grounds

“Community Service Day is part of a long-standing GE tradition of contributing positively to the community and improving the quality of life around us.”Joe Hogan, President and CEO, GE Healthcare

Volunteerism7.2

Community Service Day: Milwaukee, U.S.An example of a community-wide volunteer activity is GE Healthcare’s Annual Community Service Day. Approximately 2,000 volunteers, including GE Healthcare, GE Healthcare Financial Services, and Milwaukee Public Schools staff work tirelessly to help prepare schools for the upcoming school year.

In 2004, volunteers arranged classrooms, painted murals, rehabilitated playgrounds, organized school libraries, landscaped and even provided technical assistance to set up computer labs.


Community

“Community partners like GE provide an abundance of help to Milwaukee Public Schools. The work done by thousands of GE volunteers over the last ten years has helped countless children start the school year in more pleasant classroom surroundings.”Milwaukee Public Schools Superintendent William Andrekopoulos

Global Community DaysA signature GE-wide volunteer effort is the annual “Global Community Days.” Over the course of one month, 11,000 GE volunteers from five continents were “One GE,” working on hundreds of service projects that addressed a range of community issues.

HIGHLIGHTS INCLUDE:

In Hungary, 200 employees from multiple GE businesses worked to make an orphanage for disabled children “obstacle-free.” The volunteers built ramps, widened doorways and constructed an accessible barbeque area.

In Japan, 300 GE employees participated in “Imagine a Better Community,” with 850 students at 14 local schools to come up with innovative ways to improve their communities.

Efforts in India included four cities: Chandigarh, Jaipur, Lucknow and Kolkatta. Projects ranged from free medical check-ups for senior citizens to health and hygiene education in disadvantaged areas to food supply and distribution for 170 people at Mother Theresa’s Home for the Dying and Destitute.

In the U.S., more than 860 volunteers in Fairfield County, Connecticut, worked on 22 projects that touched 75,000 people. Projects included clearing parks and nature centers, building playgrounds, partnering with Habitat for Humanity and Americares to renovate homes, and running Special Olympics events.

Junior Achievement GE volunteers participate in Junior Achievement (JA) pro-grams that seek to spur student achievement in disadvan-taged areas around the world. The GE Foundation provided a two-year, $1.5 million grant to support and expand Junior Achievement pre-college programs in 75 GE communities around the world. GE volunteers play a critical role in the over-all success of this program by helping JA students learn and demonstrate economic business concepts and skills. In 2004, more than 2,000 GE volunteers and 43,000 students took part in the GE/JA initiative.


Community

Product and service donations represent a unique way for GE to increase the quality of life in areas of need. What differenti-ates this type of giving from other contributions is GE’s ability to combine a wide range of technology and resources to ensure a broad and sustainable impact in local communities. Working with governments and other institutions to provide comprehensive solutions, GE’s resources can help improve the lives of people living in areas where basic needs remain unmet.

This approach is perhaps best exemplified by GE’s efforts in Africa. In October 2004, GE launched a $20 million humani-tarian project that aims to bring improved healthcare and infrastructure to African hospitals and clinics. GE Healthcare, GE Industrial and GE Infrastructure are donating products and services to address multiple critical needs simultaneously. Starting at two locations in Ghana, these contributions range from healthcare and power generation equipment to water filtration systems, appliances and lighting to increase the level of healthcare.

In addition to these efforts, the GE Foundation is matching employee contributions to support local education in the same African communities. GE is engaging its African American Forum to establish ongoing relationships at the community level, initiate benchmarking studies, and track progress.

“It has been on the high-priority list of the Ghana Health Service, with the intention to upgrade the Asesewa Health Centre into a district hospital. GE’s equipment donations to this health centre couldn’t have come at a better time and will really make a difference.”Professor Agyeman Badu Akosa,Director General, Ghana Health Service

Product and Service Donations

7.3


Community

The More You Know Campaign Since its inception in 1989, NBC’s “The More You Know” campaign has produced Emmy and Peabody Award-winning public service announcements that educate and raise aware-ness about important societal issues ranging from prejudice to parental involvement. “The More You Know” campaign is the longest-running, most comprehensive network public service campaign, valued at nearly $33 million annually and reaching more than 64 million viewers each week. Topics are presented by a range of NBC television personalities including Sean Hayes and Megan Mullally (Will & Grace), Ming-Na, Goran Visnjic, Mekhi Phifer and Linda Cardellini (ER), Donald Trump (The Apprentice), Jesse Martin and S. Epatha Merkerson (Law & Order) and Brian Williams (Nightly News). The program has tackled a range of issues such as talking to children about drugs and alcohol abuse and encouraging citizens to become mentors.

In executing “The More You Know” campaign, NBC works closely with a number of national agencies, including the U.S. Department of Homeland Security, the National Institute on Media and the Family, the Centers for Disease Control and Prevention, the VERB Campaign for Physical Activity, the Substance Abuse and Mental Health Services Administration, the National Mental Health Information Center, and the National Clearinghouse for Alcohol and Drug Information.

“El Poder de Saber” In January 2004, the Telemundo Network launched “El Poder de Saber,” a public service initiative geared toward the Hispanic community and focusing on education. “El Poder de Saber” was created for Spanish-language viewers, and includes on-air PSAs and a Web site.

The Indian Ocean tsunami that occurred on December 26, 2004, affected 12 countries and hundreds of thousands of lives. Never in our lifetime has such a natural disaster affected so many people in different parts of the world.

The GE family was able to uniquely apply our broad-based capabilities and contribute more than $20 million in cash, products and services, as well as manpower, to the tsunami relief efforts:

• GE Foundation contributions of $1 million to the International Red Cross and $100,000 to UNICEF

• GE employee contributions totaling $4 million, which was matched 100% by the GE Foundation for a total of $8 million

• Two water purification systems, plus dozens of smaller portable systems, provide tens of thousands of Indonesians with drinkable water every day in Banda Aceh, the country’s province hardest hit by the tsunami

• Two 800-kilowatt power generators donated by GE Infrastructure, Energy to run the water filtration systems (Energy also donated 10 power generators to Sri Lanka)

• Three thousand solar-powered lanterns for refugee camps in Indonesia

• A range of portable medical equipment, including X-ray and ultrasound machines to India, Indonesia, Sri Lanka and Thailand to assist in critical first-level healthcare

• Benefit telethons aired on NBC Universal’s broadcast and cable platforms, as well as on its owned and operated television stations, raised over $32 million from viewers. In addition, tsunami relief public service announcements aired throughout primetime, late night and daytime pro-gramming on the NBC Universal Network

GE volunteers in India delivered truckloads of relief materials to tsunami survivors in Bangalore, Chennai, Delhi, Hyderabad, Jaipur and Mumbai. At the GE India Business Centre, more than 1,600 people were examined and received medicines. In the U.S. and in Thailand, Elfun chapters led fundraising efforts and worked with local NGOs on distribution plans for relief materials. Volunteers from Indonesia’s Elfun chapter hand delivered donations and relief supplies to tsunami victims in the hardest hit areas.

The Indian Ocean Tsunami

7.4

Section 8:

Customers, Products and ServicesAs the economics of the global marketplace and the sustain-ability of our global environment become more interdependent, so does our collective future.

Based on existing data on climate change, population growth, natural resources and water usage, economists and business leaders see a widening gap in the access to environmental resources, especially clean water and energy. In response, we have established growth platforms in alternative and more efficient energy systems, water use and environmentally advantageous products that will help GE and our customers compete and protect the environment at the same time.

Addressing these challenges is not a simple task. Our Company’s heritage in technological innovation, our breadth of businesses and our depth of expertise allow us to tackle the toughest problems on behalf of our customers, our own future growth and for the benefit of our communities around the world.


Customers, Products and Services


Now more than ever, our customers are seeking ways to grow their businesses while also meeting or exceeding environmental standards. We are meeting those needs not only by improving the products and services in businesses we’ve had for years, but also by anticipating future needs and investing in new businesses that will shape our future and that of our customers.

Few companies can do this on the same scale as GE. The beauty of our multi-business model is the opportunity to make bold changes and place big bets on our future. This approach ensures that our citizenship efforts are not just reacting to the world as we know it today, but are proactively shaping our business strategy for the years ahead. Over the past few years, we’ve made significant acquisitions in businesses like wind energy and water and process technologies to strengthen our efforts in renewable energy and water purification. Invest-ing our technology and innovation into these businesses and others will help us to solve our customers’ challenges, grow GE and benefit the environment.

Water ScarcityA third of today’s global population faces severe water short-ages. According to the World Meteorological Organization, nearly 50% of the world’s population will live in water-stressed areas by 2005. One of the U.N. Millennium Development Goals is to reduce by half the proportion of people without sustain-able access to safe drinking water by 2015. GE is helping address the problem of water scarcity.

WORLD WATER SCARCITY

2030

2000

3% Stress5% Scarcity

92% Relative Sufficiency

24% Scarcity

18% Stress

58% Sufficiency

Customers and Markets

8.1

Conservation and reuse alone will not solve global water scarcity. GE provides a desalination process that removes the saline from seawater or brackish water to provide fresh water for drinking, irrigation or industrial applications. GE customers will benefit from a solution that decreases the cost of the water and the capital investment while making the associated land usage more efficient. The global market for desalination is projected to be $4.3 billion in 2005, escalating to $14.1 billion by 2014 and then doubling or even tripling by 2025.

Mobile Water is a trailer-mounted system that delivers high-purity water 24/7. Its round-the-clock availability and flexibility help customers avoid productivity losses due to planned or unplanned outages; in some cases, it provides a longer-term solution free of costly investment. With the acquisition in 2005 of Ionics — a global leader in desalination, filtration systems and services — GE’s fleet of mobile water systems now numbers more than 600.



Energy SolutionsAs energy consumption increases and concern grows about the potential for climate change, businesses and countries are looking for technologies that can both meet their energy needs and be less carbon-intensive. Achieving these critical objec-tives requires greater investment in both energy efficiency and renewable energy sources. GE is helping by investing in alternative energy technologies and by a sustained effort to develop new generations of products that are more efficient and can meet the environmental requirements of the future.

Wind PowerGE’s 1.5 megawatt wind turbine can power approximately 450 average U.S. homes. In late 2003, GE Infrastructure, Energy erected 108 wind turbines for the Colorado Green Wind Project — adding 162 megawatts of new “wind” capacity to the utility grid.

Wind energy also provides a solution for developing countries. For example, GE Infrastructure, Energy has signed an agreement with the Shanghai Power Industrial and Commercial Co. to supply wind turbines to the first two utility-scale wind-energy projects in China.

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GROWTH IN WIND POWER TAPPED GLOBALLY

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ecomaginationIn May 2005, GE launched ecomagination — a new initiative that represents the Company’s commitment to imagine and build innovative solutions that benefit our customers and society at large. By combining the strengths of our environ-mentally advanced technologies and the collective imagination of our employees worldwide, we can create solutions that are also economically advantageous. Over the years, we have built some of the world’s most energy-efficient natural gas power plants, aircraft engines, locomotives and household appliances. We are expanding our offerings in other advanced technologies to continue to be a leader.

OUR ECOMAGINATION COMMITMENT INCLUDES:

Doubling our research investmentWe will be pouring $1.5 billion into cleaner technologies in 2010, up from $700 million in 2004.

Introducing more ecomagination productsWe will continue to add to the $10 billion in products and services we already offer that provide significant environ-mental performance advantages to our customers.

Reducing greenhouse gas emissionsGE has set a 30% GHG intensity reduction goal by the end of 2008, along with a 1% absolute reduction by the end of 2012. GE has also set an energy efficiency improvement goal of 30% by the end of 2012. Progress will be measured against a 2004 baseline.

Keeping the public informedThrough our various stakeholder engagements and this Citizenship Report, we will communicate our progress in meeting these goals in measurable, transparent terms.

Offshore wind farms combine GE’s investment in alternative energy businesses with our focus on developing energy-efficient products to optimize and accelerate environmental performance. Offshore wind farms generate greater power than land-based wind farms by capturing the uninterrupted wind flow over the ocean. GE’s new 3.6-megawatt wind turbine includes higher efficiency blades, an improved gearbox and structural adjustments to enhance load absorption.

GE Infrastructure, Energy installed more than 975 wind tur-bines in 2003 and 611 in 2004.

Cleaner CoalAs reserves for oil and gas become increasingly constrained, the world is taking a new look at an abundant natural resource — coal.

GE’s cleaner coal technologies have the potential to reduce key air pollutants by as much as 50% through systems that convert coal into a gas that can be used in a power turbine. This process removes pollutants such as mercury, particulates and sulfur while reducing the production of nitrous oxide. With high oil and natural gas prices, customers can now efficiently produce electricity using an abundant, lower-cost fossil fuel in a way that is significantly cleaner than a traditional coal plant. Because of their ability to efficiently convert coal to power, new Integrated Gasification Combined Cycle (IGCC) plants can produce 18% less CO2 than the average U.S. coal plant operat-ing today. Should sequestration be proven as a viable carbon strategy, IGCC also offers a promising route to capture carbon from coal before it is converted to CO2.




“We are committed to being the leader in environmental technol-ogy solutions. It is an area that fits our current product offerings and where we see significant growth and profitability.”Jeff Immelt,Chairman of the Board and CEO, General Electric Company

H System TurbineGE’s first H System™ entered commercial service in 2003. The H System is the first gas turbine combined-cycle technology capable of achieving 60% efficiency, meaning it will use less fuel and produce fewer greenhouse gases for every unit of electricity produced compared with today’s plants.

Hybrid LocomotiveGE engineers are working on a hybrid locomotive that would capture energy released when the locomotive applies its brakes to slow its 207 tons and then save that energy in batteries for later usage. This stored energy could be capable of generating a 2,000-horsepower boost and would use 15% less fuel than the industry-leading GE Evolution locomotive — enough energy to power 150 households.

GEnx™ EngineGE’s latest jet engine, the GEnx, uses advanced compression and combustion technology to achieve 15% gains in fuel efficiency and reduce emissions of nitrous oxide and carbon dioxide by up to 40%. The GEnx aircraft engine also reduces noise by as much as 30% and has been selected by Boeing and Airbus for their new aircraft.

GE was recognized with the U.S. Department of Energy/Environmental Protection Agency “ENERGY STAR Partner of the Year Award” for outstanding contributions to environmental protection and energy efficiency in the manufacture of high-efficiency household appliances and lighting products. ENERGY STAR products exceed the DOE/EPA standards for energy efficiency and can save a typical U.S. household up to 30% off its energy bills — estimated at about $450 per year in savings. Since 2001, GE Industrial has invested heavily in high efficiency products resulting in 323 GE appliances and 163 GE lighting products achieving ENERGY STAR status.

GE has worked closely with DOE officials to develop new and revised ENERGY STAR product categories, specification levels and implementation schedules. GE has also aggressively sup-ported the ENERGY STAR program through broad consumer and customer education and has participated in national and regional events promoting ENERGY STAR products to consum-ers, dealers and homebuilders.



GE is committed to providing products that help solve cus-tomer problems and improve the quality of life. However, there are products that remain controversial due to their asso-ciated application, misuse or potential for negative environ-mental impact. While these issues must always be evaluated and monitored, we hope that by illuminating our approach to some of these products, we can increase transparency and diffuse concern around these issues.

There are a range of other GE products and services that are not addressed in this report for which some stakeholders have expressed concern — for example, sub-prime lending, and plastics made from petroleum. These issues are regularly reviewed by GE directors and executives.

Nuclear PowerNuclear energy remains a controversial power source due to concerns about safety and the storage of nuclear waste. GE sells many different types of power generation technologies from wind and solar to gas and nuclear. GE’s decision to con-tinue designing nuclear power facilities is based on three facts:

1 Nuclear power remains an important source of energy, providing 17% of the world’s electricity and energy, and environmental technologies are likely to require a mix of technologies in the future;

2 GE through service offerings is committed to helping our customers operate boiling water reactors safely and efficiently; and

3 The generation of electricity from nuclear power doesn’t emit greenhouse gases, making it a current and potential contributor to climate change solutions in the eyes of many.

There are 441* operating nuclear reactors globally, 77 of which are GE designed/built boiling water reactors operating in seven countries.

Military Aircraft Engines and WeaponryGE works with the U.S. government to provide engines for mil-itary aircraft, including fighters, bombers, tankers, helicopters and surveillance aircraft, which perform important national security, search-and-rescue and humanitarian missions. GE is not a manufacturer or a supplier of any other weapons or weapons systems. We are not involved in any way in land mine or cluster bomb production. GE does not make these devices, nor does it sell parts or components for use in produc-tion of these devices.

Ultrasound Used for Gender DiscriminationIn instances where our products might be applied for other purposes than their specified intent, we evaluate sales on a case-by-case basis. On our range of ultrasounds, we have administered strict warning labels against this misuse and provide training and support for their proper medical use.

*As of Jan. 25, 2005, IAEA Power Reactor database

Product Use Issues

8.2



LightingGE Industrial produces lighting products, including fluorescent and high-intensity discharge (HID) lamps that contain a small amount of mercury. While there are concerns about mercury in the environment, discarded lamps are not a significant contributor of mercury to the environment. In addi-tion, lamp-recycling rates have increased significantly over the past fifteen years. Both fluorescent and HID lamps are typically three to four times more energy efficient than incandescent lamps. Their increased efficiency reduces the need for power generation and thereby reduces power plant emissions, including mercury emissions. Based on a recent National Electrical Manufacturers Association (NEMA) survey, the average four-foot fluorescent lamp contains about 8.3 mil-ligrams of mercury. This level has been steadily declining as GE and other lighting manufacturers work to reduce mercury content. Today, the average four-foot lamp contains approxi-mately 85% less mercury than the same lamp produced in 1985. GE is also actively engaged in research to develop energy- efficient, mercury-free lighting technology.

NBCU Broadcast StandardsNBC Universal is committed to providing innovative, entertain-ing, quality television programming that respects and reflects the sensibilities of its diverse viewing audiences, including NBC Universal affiliates and advertisers, while complying with government and corporate regulations and policies.

NBC Universal’s Program Standards and Compliance Department collaborates with writers, producers and network and studio executives to meet this goal. The Department reviews broadcast network entertainment programming to provide guidance and judgment on content issues such as the depiction of sexual material, nudity, violence, language/dialogue, use of drugs and alcohol and potentially negative stereotypes.

To help families make informed viewing choices, the Department assigns an age-appropriateness rating to all NBC Television Network entertainment programs that appears at the top and in the body of these programs, and determines whether a particular program should also receive a program advisory.

The Department also ensures that entertainment programming on NBC Universal broadcast and cable networks complies with FCC rules and policies, relevant federal statutory provisions, and GE and NBC Universal corporate policies. The Department requires the integrity, fairness, safety and security of programs and their participants.

Universal Studios, the division of NBC Universal that produces feature films, is a member of the Motion Picture Association of America, whose film rating system helps families make informed decisions about the content of motion pictures.



GE is increasing its investments in R&D, and ensuring that its research efforts are directly linked to customers’ needs. Since 2001, GE has invested $100 million in its New York research and development headquarters, invested $80 million in a center in Bangalore, India, opened a $64 million research facility in Shanghai, China, and made a $52 million investment in a new center near Munich, Germany. These new centers enable us to attract the best technical talent from around the world and to bring our technology development closer to our customers.

Energy In addition to investing in new businesses and creating new products, GE is directing significant R&D efforts to drive energy efficiency and lower emissions:

Fuel cellGE researchers are developing solid-oxide fuel cells that are big enough to power entire neighborhoods and reduce green-house gas emissions. Recent innovations in this area have included the development of durable metals that can perform far longer in the intense heat within the fuel cell.

HydrogenHydrogen can produce three times the energy per gram of natural gas with no greenhouse gas emissions. GE is making strides in storage technology — a key challenge in building tomorrow’s hydrogen economy.

Solar energyWidespread use of solar energy for tomorrow’s cities is chal-lenged by the need to make sunlight a cost-efficient source of power. Last year, GE scientists investigated new solar designs that increase the efficiency of photovoltaic cells by 85%, and will use up to 40% fewer silicon wafers in rooftop semicon-ductor devices that convert sunlight into electricity.

High-efficiency gas turbinesGE’s H System is one of the most energy-efficient gas turbine combined-cycle technologies offered today. It is the first tech-nology platform capable of achieving 60% efficiency — a mile-stone that has been referred to as the “four-minute mile” of gas turbine technology.

Cleaner coal technologiesGE’s Cleaner Coal process makes coal a practical alternative by converting it into a gas and removing pollutants such as mercury, particulates and sulfur, and reducing the production of nitrous oxide. Using the “syngas” in a GE combined-cycle turbine system can reduce pollutants from a traditional coal-fired plant by as much as 50%.

Finding Tomorrow’s Energy SolutionsGE has committed $50 million toward a research project at Stanford University aimed at developing lower-emission energy technologies.

R & D8.2



Molecular MedicineGE Healthcare is combining GE’s leadership in diagnostic imaging with the former Amersham’s biological expertise to transform the way medicine is practiced, providing a more holistic approach to disease management:

Stem CellsGE Healthcare’s work in molecular medicine gives us an opportunity to build a future of more personalized healthcare. Part of the research we conduct utilizes stem cells as a resource for discovery. GE has or is planning research, using both adult-derived stem cells and established embryonic stem cell lines, to investigate the practicality of developing novel methods of producing human cells that could be used in predictive drug screening applications. GE will conduct research in accordance with U.S. federal guidelines, U.K. and any other applicable country’s legislation and recommendations regarding stem cell research. We recognize the sensitivities associated with the use of stem cells and have adopted a clear public position on our approach to the value and responsible use of stem cells. (http://www.ge.com/en/citizenship/ customers/rd/stem.htm)

Animal TestingGE conducts animal studies only when required by government regulatory agencies for registration of materials in worldwide markets, to provide needed information used to protect the health and safety of workers, customers and the environment, or in the discovery and development of new diagnostic products used in the identification and detection of disease. GE is committed to and adheres to a policy of using the fewest number of animals that will provide scientifically sound data for regulatory, worker and customer safety requirements. GE also participates in industry consortia that collaborate on testing. As each company is not conducting separate tests, these collaborative consortia efforts can reduce the number of animals tested. In medical applications, GE Healthcare adheres to the “Three Rs” through which the use of animals is Reduced, Refined and Replaced. This forms part of the strict regulatory regime controlling the use of animal testing in medicine. GE Healthcare’s position statement on animal testing is available on its Web site: (http://www.ge.com/en/citizenship/customers/rd/animal.htm).

PredictMolecular diagnostics can help physicians identify genes that create predispositions toward specific diseases, such as heart disease, and begin patient monitoring years before symptoms appear.

DiagnoseAdvanced diagnostic imaging, combined with diagnostic pharmaceuticals, can help identify an incipient disease and its specific location in the body.

InformInformation technologies will enable the smooth, seamless linking of critical healthcare data and information to allow physicians and patients to make more informed decisions about treatment and post-treatment options.

TreatGenetic predisposition and imaging techniques can help physicians identify an individual patient’s receptivity or resistance to specific drugs, prescribe more effective treat-ments and deliver them more precisely.

Section 9:

SuppliersGE’s relationships with suppliers are based on lawful, efficient and fair practices. We expect our suppliers to obey the laws that require them to treat workers fairly, provide a safe and healthy work environment and protect environmental quality. The obligation to ensure that our suppliers live up to these standards is set out in a detailed process that establishes the responsibilities of GE’s businesses and sourcing personnel, the level of due diligence they need to perform on suppliers in various categories and the data they must keep to docu-ment the progress achieved under the Company’s supplier review program.


Suppliers


Since 2002, GE has required most of its suppliers1 to certify their compliance with core environmental, health and safety (EHS) and labor standards through regular site visits and auditing procedures. Suppliers are required to certify that they:

• Do not employ workers below the applicable minimum age requirement

• Do not utilize forced, prison, or indentured labor, or workers subject to any form of compulsion or coercion

• Comply with laws and regulations governing minimum wages, hours of service and overtime for employees

• Comply with laws and regulations protecting the environ-ment and do not adversely affect the local community

• Provide their workers a safe and healthy workplace

For suppliers in the developing world — where legal standards generally are adequate but enforcement resources are often not — we inspect many suppliers prior to placing orders and periodically thereafter. The program is executed by the sourcing organization, more than 1,900 of whom have been trained on the program, its goals and expectations. There are 430 GE sourc-ing personnel trained in conducting supplier assessments.

Between 2002 and the end of 2004, GE assessed more than 3,000 suppliers. In addition, in 2004, we reassessed 766 of these suppliers who had their initial assessment in a prior year. The reassessments are an important ongoing aspect of the program as they help ensure that improvements made by the suppliers are sustained.

GE has terminated about 200 suppliers since the inception of the program. However, most suppliers seek to meet GE’s expectations, and the focus of the program has been on corrective action.

1 Not all suppliers are required to certify. Purchases from utilities, relationships with professional service providers (such as law or accounting firms) or financial institutions, and situations where GE has only a casual relationship with suppliers (such as airlines or hotels) are excluded from the certification requirement.

Supply Chain Standards9.1


Suppliers

As of the end of 2004, the assessments generated almost 18,000 findings. GE requires that all findings are addressed by the suppliers in a reasonable period of time and tracks supplier performance in GE PowerSuite. To date, more than 90% of these findings have been closed by the suppliers. The remaining open findings will be tracked to closure by GE. The findings break down as follows:

Emergency Preparedness

22%

14% Labor

4% Dormitory

40% Health & Safety

20% Environment

Section 10:

InvestorsGE recognizes that the performance of its stock and returns to shareholders are based on performance beyond simply meeting financial goals. The strength of our reputation, the trust in our brand and our governance, and the ability to perform as a good corporate citizen all impact our valuation.

We believe that regular communication is the greatest enabler of trust. We strive to speak externally in the same way that we run our Company internally. To facilitate transparency, GE pro-vides multiple ways for investors to access information about the Company’s performance against a range of measures. Our Web site is the most regular, accessible, and comprehen-sive source of information. Additionally, there are more targeted communications including perception studies, conferences, meetings and Webcasts. We conduct monthly perception studies that help us understand investor concerns and issues. We also participate in investor conferences throughout the year and conduct more than 250 institutional meetings touching more than 700 institutions annually. We also hold approximately 75 retail events a year involving thousands of brokers and individual investors. And we Webcast our earnings conference calls and post transcripts of them in seven languages. These communications help us stay up to date with investor concerns and foster a dialogue that allows us to respond. Our efforts to communicate with investors have been recognized with the following awards: we were recognized as having the best overall investor relations program by IR Magazine, as the “first team” by Institutional Investor magazine, and our Web site ranks # 1 globally according to the IR Web Report. Share-owners surveyed by IR Magazine gave GE the Best Annual Report award in 2005. These recognitions demonstrate GE’s commitment to provide exceptional services to its shareholders.

INVESTORS AND CITIZENSHIP

Investors aren’t merely defined by their financial goals; they are also our employees, neighbors and friends in communities around the world. As such, investors are increasingly interested in evaluating companies based on a broader set of criteria than just financial performance. Issues of environmental impact, employee health and safety and community involve-ment all shape perception of a company’s worth. As one of the most broadly held retail stocks in the world, GE takes its responsibility to investors and their needs seriously.


Section 11:

EmployeesGE strives to create a balance between the value that employees contribute to the Company and the rewards offered in return.

GE fulfills this goal by fostering a work environment where good ideas and a strong work ethic are encouraged through-out the Company.

At the heart of this dynamic culture is an investment in learn-ing. GE employees are both expected and encouraged to fulfill training that helps them navigate a more competitive market-place, learn domain expertise, develop skills and comply with the Company’s integrity and citizenship initiatives.

GE reflects the many communities in which it operates. GE fosters a diverse workforce and is making strides in increasing the representation of women and minorities as a percentage of the workforce and in management. As a global company, GE is also sensitive to the importance of protecting the privacy of employees and to enabling flexible work arrangements that accommodate the way that people work today.

While we have made continuous improvements in all of these arenas, our size, the breadth of our businesses and the dynamic pace in which we operate mean that we must be committed to facilitating an ongoing dialogue with employees to refine our approach to nurture their success and ours.


Employees


GE’s workforce is dynamic. Whether through organic growth, acquisitions or divestitures, GE’s total workforce expands and contracts on a frequent basis. Roughly 50% of GE employees have been with the Company for less than 5 years. Over the past five years, GE’s total worldwide workforce has remained fairly constant at about 310,000.

During the past several decades, the relationship between employees and their employers has changed dramatically. Employees change employers and careers more frequently than in past generations, and technology has enabled a new way of working — more mobile, faster and more technology-dependent.

GE has always been committed to the changing needs of our workforce. Our performance and our people are inextricably linked. We have maintained a leadership position across industries, geographies and generations because of the energy, drive and enthusiasm of our people.

GE prides itself on creating a culture where employees are empowered to achieve their greatest potential. Our perfor-mance meritocracy culture is demanding — but the rewards can be just as great. Few companies offer the range of businesses, products and services, and geographies of GE.

GE manages its relationships with employees through several forums. All are geared toward understanding what’s important to employees and providing access to tools, resources and information to help employees reach their potential.

TOTAL GE EMPLOYEES (In thousands of employees)

2000 2001 2002 2003 2004

U.S. 168 158 161 155 165

Other Countries 145 152 154 150 142

Total 313 310 315 305 307

Workforce Information

Employee Relations

11.2


Employees

Employee Opinion Survey

Employee feedback is a critical part of the way GE operates. GE’s heritage of formally tracking employee opinions about our Company dates back to the 1940s, and within the last decade, we have refined the process to what is now known as the GE Opinion Survey. This is an annual global, anonymous, Web-based employee attitude survey comprised of 65 questions on topics including hiring practices, fairness, training and development, diversity and complaint resolution.

In 2005, GE had a record response rate of 91% (out of approxi-mately 110,000 professional employees) and improvements in most categories. GE considers any question with a greater than 60% favorable rating as good, and a greater than 70% favorable rating as excellent. Here are a few examples of where employees rated GE highly:

Question % Favorable % Neutral % Unfavorable

In my current position, I am given the opportunity for challenging assignments. 76% 14% 10%

There are no compromises around here when it comes to conducting business in an ethical way. 84% 10% 6%

I am confident that the top corporate leadership of GE will keep the company competing successfully. 78% 15% 7%

My immediate manager/supervisor supports me when I need some time off to take care of personal needs. 88% 8% 4%

I like the kind of work I do. 75% 15% 10%

In my business people go beyond the minimum requirements of their job to do really excellent work. 78% 16% 6%

The people I work with treat me with respect. 88% 9% 3%

GE received the lowest score in the “Tools and Resources” category, which was scored favorably by 60% of the respon-dents. In the fast-paced, global world we live in today, our employees desire the tools and resources necessary to keep them efficient and enable them to do their jobs even better. The opinions of our employees influence many of GE’s organizational decisions. For example, previous Opinion Surveys have led to a renewed emphasis on GE’s technology leadership and “Employer of Choice” programs.


Employees

Session COur annual Session C process is at the core of our people development process and focuses on the needs of both the individual and the Company. It begins with the employees assessing their own accomplishments, strengths/development needs and career aspirations, followed by an assessment by their managers. The employee and manager enter their assessments in a computerized tool, which facilitates a one-over-one review. Results are rolled up to the Business Leader level where assessment, succession planning and develop-mental needs are discussed and action plans are put in place to support organizational and key business initiatives.

Session C enables GE to consistently have a talent pool that can support our growth and provide the leadership stability that is our hallmark.

Inside GEInside GE is GE’s global intranet and serves as a regular source for executive and employee news, individual business tools, growth strategies, values and integrity policies. Inside GE also provides tools to help employees access information more easily to help them get their jobs done. Employees can share resources and information, and access on-line learning, career development and training tools, HR information, IT resources and support networks.

Support CentralSupport Central is a global knowledge management system that contains thousands of support communities, tens of thousands of experts and cases and millions of accessed entries per year to help employees connect with subject matter experts and share best practices.

Corporate Leadership ProgramsGE has a long history of recruiting top college undergraduate and graduate students for our premier entry-level global Leadership Development Programs. These two-year rotational programs are offered in sales and marketing, engineering, finance, IT, operations and human resources. Many of GE’s top leaders can trace their career beginnings to these programs. It is through these programs that a common culture is nurtured and core processes and levels of expertise are developed that permeate the Company. Challenging assignments, mentoring, and regular exposure to senior management help to identify and develop future high-potential leaders.


Employees

EXPERIENCED COMMERIAL LEADERSHIP PROGRAM (ECLP)

Thomas Calzia is a participant in GE’s Experienced Commercial Leadership Program (ECLP). ECLP is a two-year program that invites experienced graduates to participate in several different rotations within GE businesses according to their area of expertise.

Originally from Lyon, France, Thomas received his master’s degree in engineering from the Ecole des Mines in Paris before working five years in business development and strategy consulting, and completing his M.B.A. at Harvard. Following graduate school, Thomas decided to join GE because of its great reputation for values and people and its unique business model.

During his first rotation, Thomas worked as a Sales Manager for GE Infrastructure, Energy in Bracknell, U.K., managing bids and negotiations for contractual services on GE gas turbines. Next he worked with GE Healthcare in Buc, France, negotiat-ing a distribution agreement to promote sales of equipment into new markets. For his third rotation, Thomas contributed to the development of new energy solutions for customers and explored new energy segments for organic growth and acquisitions with GE Infrastructure, Energy in Atlanta, U.S.A. Thomas is conducting his last rotation with Infrastructure’s Energy Financial Services unit in London, working on strategic initiatives and structured finance deals in the European energy market.

Thomas says that he has found the multi-faceted experience to provide a broad view of GE.

“At every level, you really get to know what GE people are about, from the support staff to the people in the field. GE leverages the talents of all individuals, motivates our employees beyond what they think they can achieve, and strives every day to be a better company for all our stake-holders and customers — it is second to none.”Thomas Calzia


Employees

Labor RelationsGE maintains constructive statutory and contractual relation-ships with a number of employee representatives throughout its global operations. The employee representative arrange-ments take on various forms but can be generally described as unions or works councils. The relationships with these employee representatives are structured based on applicable laws in the countries where GE has operations. In all cases, we respect employees’ rights to freedom of association and to bargain collectively.

In the U.S., GE’s labor relations landscape includes two national agreements: one with the IUE-CWA which represents 13,000 employees at more than 50 Company locations and another with the UE which represents about 3,500 employees at 15 locations. An additional 8,000 employees are represented by another 11 unions.

For decades, we have fostered a learning culture to ensure that we attract and develop the best talent in the world. In 1956, GE opened its Corporate Leadership Institute, now known as the John F. Welch Learning Center, in Crotonville, New York, as a forum for sharing best practices and values. Courses are offered to a select group of participants chosen by their business leaders and HR managers. During 2004, 10,628 students attended 465 classes at Crotonville.

In addition to Crotonville, business training centers are established in Evendale, Ohio, Schenectady, New York, and Waukesha, Wisconsin, in the U.S. and in China, Belgium, France and India. In emerging markets and economies, GE also offers management training and leadership best-practice sharing to help our key strategic business partners participate more fully in the global economy. We believe that the best way to stay competitive is to share intelligence across the organization, and to foster learning around the changing demands of the marketplace. This not only increases GE’s ability to compete, it also protects the Company’s workforce by ensuring that roles stay current or adapt to fit the changing needs of customers and markets.

Through both internal and external training initiatives, GE invests over $1 billion annually in training and development. In addition to internal training and development, GE invests over $38 million annually in tuition reimbursement for employee undergraduate and graduate degree programs.

Training and Development

11.3


Employees

As a global Company with operations in more than 100 coun-tries, diversity isn’t merely a noble idea — it’s the reflection of our business. Every day, GE works to ensure that all employees, no matter where they are located in the world and no matter where they come from, have an opportunity to contribute and succeed. Encompassed in that goal are promoting traditional ideas of diversity including ethnicity, race and gender, while at the same time exploring more contemporary concepts like inclusiveness.

We track diverse representation at all levels of the organization — by business, by geography and by function. We have robust reviews with the leaders of the Company to demonstrate where progress is being made, to glean best practices and to identify where we have work to do so that we can intensify efforts. Metrics are critical in setting goals and achieving results.

GLOBAL FEMALE REPRESENTATION

Female Representation

Executive 20%

Professional 27%

All Other 38%

Grand Total 33%

Note: As of December 31, 2004

U.S. RACE & ETHNICITY REPRESENTATION

American Asian/ Indian or Pacific Diverse Alaskan Native Islander Black Hispanic Representation

Executive 0.1% 5.2% 4.1% 2.4% 12%

Professional 0.2% 7.5% 4.7% 4.8% 17%

All Other 0.4% 3.4% 13.2% 7.6% 25%

Grand Total 0.3% 5.2% 9.3% 6.2% 21%

Note: As of December 31, 2004

While GE has made progress, significant efforts continue to improve the representation of women, U.S. minorities, and non-U.S. citizens in leadership roles in the Company. In 2004, 33% of Company officers and 40% of senior executives were diverse (women, U.S. minorities, and non-U.S. citizens) versus 22% of Company officers and 29% of senior executives in 2000. Nearly one quarter of GE’s leaders comes from outside the U.S.

Diversity and Inclusiveness

11.4


Employees

One of the key mechanisms for facilitating dialogue and progress in our diversity efforts is GE’s Affinity Networks: the African American Forum, the Asian Pacific American Forum, the Hispanic Forum, the Women’s Network and the Native American Forum. These Affinity Networks play a critical role in attracting, developing, engaging and retaining employ-ees at all levels across the Company. These networks work in close partnership with Chairman and CEO Jeff Immelt, business leaders and the human resources team to continu-ally uncover ways to improve in this area and opportunities for growth. These range from mentoring employees for professional growth to engaging customers for business growth. One powerful example of the impact of the Affinity Networks is GE’s philanthropic work in Africa. This initiative was a direct result of the Chairman’s involvement with the African American Forum and a collective desire to make a difference in Africa.

BARRIER FREE NETWORK

Building on the success of GE’s Affinity Networks, employees in Japan were inspired to launch the “Barrier Free Network” in October 2004. This group aims to improve the mutual understanding between employees with disabilities and their colleagues by increasing awareness of key issues and their impact. This is one of the first employee groups for the disabled ever formed in a major company in Japan.

This group will work to ensure that disabled employees have the same access to opportunity and the ability to reach their highest potential within the Company. The group has launched a Web site that details different types of disabilities and awareness activities developed by the network. The group has also started a sign language session with 20 participants who are learning the language for the first time.

Another facet of the GE diversity strategy is a commitment to diversity of our supply base. The Company’s Supplier Diversity program started more than 25 years ago and focuses on the development and inclusion of all capable suppliers.

2004 AWARDS:

“Catalyst Award” for efforts to advance women leaders within GE

“Executive Leadership Council Corporate Award” for leadership in advancing diversity in corporate America

Working Mother Magazine “100 Best Companies for Working Mothers” 2003, 2004

“Best Place to Work”…EU (multiple locations: Ireland, Czech Republic, Spain)

Diversity Inc — “Top 10 Best Companies for Asian Americans”

Woman Engineer — “#1 Company”


Employees

GE is committed to handling personal data responsibly in order to earn and preserve the trust of its employees and those with whom the Company does business, as well as to comply with applicable laws and contractual commitments.

GE collects personal data from employees as needed for human resources processes, business operations and safety and security. Pursuant to the “Fair Employment Practices” policy in The Spirit & The Letter, GE has adopted a global Employment Data Protection Standard that establishes consistent and compliant global practices for ensuring protec-tion and proper usage of employee information, exceeds the requirements of law in most jurisdictions and provides that any more stringent requirements of local law will also be followed. Disclosures about GE’s uses of personal data are made available to employees in GE policies and by other methods, including e-mail, posting on the GE intranet and in “pop-ups” in online tools.

GE collects data from customers, suppliers and others as needed for transactions and other business operations. GE has a privacy policy in The Spirit & The Letter that requires respon-sible and legally compliant handling of non-employee data.

Like all of the policies contained in The Spirit & The Letter, privacy policies are overseen by leadership at the business and corporate level, with the same assignment of responsibili-ties and potential penalties as our other policies. GE has a Chief Privacy Leader at the corporate headquarters level and within each business. GE has multidisciplinary privacy councils and committees at corporate headquarters and within each business, including an Employment Data Privacy Committee with GE-wide responsibilities.

In a recent study conducted by TrustE and the Ponemon Institute, GE was ranked in the top ten companies for privacy programs. The study was based on a survey of 6,300 consum-ers and a panel of privacy experts. The goal was to identify companies doing a superior job of building trust with custom-ers through the establishment and enforcement of progressive privacy practices.

GE is well known for its demanding high-performance culture. At the same time, however, the Company also recognizes the value of work/life flexibility in order for employees to be truly productive, and to feel professionally and personally fulfilled. GE is responsive to meeting specific employee needs to enable them to deliver their contributions to the Company while managing their personal life responsibilities. Flexible work arrangements have become an integral part of the way we conduct business.

The Company also offers tools to help employees deal with the challenges of today’s fast-paced world. To help employees to manage their commitments at work and at home, the Company offers GE Work/Life Connections (a service of LifeCare Inc.) in the U.S. The online site provides information and resources related to life, family, health, education, work and finances. There is also a toll-free telephone number that employees can call to speak to someone live. Outside the U.S., there are similar support programs such as FirstAssist, offered in the U.K. and Ireland to help employees with family challenges. Cultural differences shape local self-help programs. In Asia, for example, we are not as far along as we would like, but we continue to evaluate employee assistance tools that would be appropriate to the needs and culture of the local workforce and business teams.

Privacy11.5 Work/Life Flexibility11.6


Our CommitmentWe are committed to citizenship. We believe that reporting openly about our citizenship performance is important. Our first report acknowledges both our progress and our challenges and provides some key metrics that will serve as our baseline for future improvements.We will continue to set high expectations for ourselves in order to improve performance across our citizenship efforts. We will continue to engage our stakeholders to expand our understanding and approach to citizenship, and to address the challenges facing our industries and communities.

Your feedback on our first Citizenship Report is appreciated. Please send your comments to [email protected].

FOR ADDITIONAL INFORMATION CONTACT:

Media: Gary Sheffer, Executive Director, Communications & Public Affairs [email protected]

Investors: Sheri West, Director, Socially Responsible Investor Communications [email protected]

Non-Governmental Organizations: Amaya Gorostiaga, Leader, Citizenship Communications [email protected]


GRI IndexVISION AND STRATEGY section name

1.1 Vision and Strategy Jeff Immelt Letter, Ben Heineman Letter, Bob Corcoran Letter 1.2 Chairman and CEO Letter

PROFILE

2.1-2.8 GE Profile Business Directory, GE Around the World

2.9 Stakeholder Relationships Stakeholders

2.10-2.22 Report Scope and Profile About This Report, Our Commitment

GOVERNANCE STRUCTURE AND MANAGEMENT SYSTEMS

3.1 Board/Governance Structure Governance, Board

3.2 Independent Board Members Board

3.4 Board-level processes for economic, Governance of Citizenship environmental, and social issues

3.5 Executive compensation Governance

3.6 Organizational structure for economic, Governance of Citizenship environmental, and social issues

3.7 Codes of conduct and status of implementation The Spirit & The Letter, Ombudsperson Process

3.8 Shareholders’ recommendations Investors

3.9 Major stakeholders Stakeholders 3.10 Stakeholder consultation 3.11 Outputs of stakeholder consultation 3.12 Use of stakeholder consultation

3.16 Upstream and downstream impacts Customers & Markets, Product Use Issues, Environmental Health & Safety Policy, Supply Chain Standards

3.17 Indirect economic, environmental, Emerging Economies, Customers & Markets, and social impacts Product Use Issues

3.19 Programs and procedures for economic, EHS Policy, Legal Processes and Systems, environmental, and social performance Financial Processes and Systems

3.20 Certification status of management systems EHS Tools

ECONOMIC PERFORMANCE

EC2 Geographic breakdown of markets GE Around the World

EC10 Donations Philanthropy

EC13 Indirect economic impacts GE Around the World, Emerging Economies


ENVIRONMENTAL PERFORMANCE

EN8 Greenhouse gas emissions EHS Metrics to Measure Progress EN9 Ozone-depleting substances EN10 NOx, SOx and other significant air emissions EN11 Waste EN12 Discharges to water EN13 Chemical, oil and fuel spills

EN14 Environmental impacts of principal Customers & Markets products and services

EN16 Non-compliance on environmental issues EHS Metrics to Measure Progress

EN26 Changes to natural habitats Environmental Legacy EN27 Native ecosystems and species in degraded areas

EN33 Environmental performance of suppliers Supply Chain Standards

SOCIAL PERFORMANCE

LA1 Total workforce Workforce Information LA2 Employment creation

LA3 Employee representation Employee Relations

LA4 Policy and procedures on changes in operations Job Migration

LA7 Standard injury, lost day and absentee rates EHS Metrics to Measure Progress

LA10 Equal opportunity policies and programs Diversity and Inclusiveness LA11 Composition of senior management

LA16 Programs to support employability and Job Migration to manage career endings

HR1 Human rights policies, procedures and monitoring Bob Corcoran Letter, Human Rights, Supply Chain Standards, HR2 Human rights in investment and Employee Relations, Ombudsperson Process procurement decisions HR3 Human rights performance of suppliers HR4 Policy, procedures and programs to prevent discrimination HR5 Freedom of association HR6 Child labor HR7 Forced and compulsory labor

SO1 Description of policies to manage impacts on Philantropy, Volunteerism communities in areas affected by activities

SO2 Bribery and corruption Spirit and Letter, Ombudsperson Process

SO3 Political lobbying and contributions Public Policy

SO7 Anti-competitive behavior Spirit and Letter

PR1 Customer health and safety Product Use Issues

Visit our interactive online citizenship report at http://www.ge.com/en/citizenship

General Electric Company Fairfield, Connecticut 06828www.ge.com

ge 2005 citizenship report

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