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What to Make of GM’s $40 Million Investment in Renewable Energy

Posted on the 05 March 2011 by 2ndgreenrevolution @2ndgreenrev

What to Make of GM’s $40 Million Investment in Renewable EnergyTowards the end of last year, GM announced that its largest brand, Chevrolet, would invest $40 million over the next three to five years in external clean energy projects across America. As outlined on its website, the projects will address three areas: renewable energy, energy efficiency programs, and planting trees. Ultimately, Chevy’s goal is to offset the amount of carbon dioxide produced in one year by driving 1.9 million cars, its 2011 domestic sales estimate. Sounds great, right? 

The truth is that there are compelling arguments for and against this initiative. Supporters would argue that by offsetting carbon pollution with community projects, Chevrolet is addressing one of its core environmental issues, while enhancing its brand and reputation. Furthermore, the press release leads us to believe that the investment was not made haphazardly. As should always be the case before considering offsets, the company has started to take a hard look at the main source of its carbon emissions – the use of its products. The recent unveiling of the Volt, which captured national attention for its efficient power train, shows that Chevrolet understands this responsibility. It also demonstrates the huge financial commitment Chevy has made to become a technology leader in this area. Yes, it still makes gas-guzzling vehicles, but so does Toyota, and this is a compromise it must make between planet and profits.

On the other hand, skeptics would argue that there is an inherent disconnect between these community projects and GM’s core business of manufacturing and selling cars. Though a noble act, GM should have chosen projects that more directly enhance its competitiveness. Perhaps the money could have funded a graduate engineering program and challenged students to improve on existing designs. Maybe the best students could even be recruited to help Chevrolet engineers explore creative side projects. Important as it is for companies to engage in Corporate Social Responsibility (CSR), critics of GM’s decision (and I’m sure its shareholders) argue it is imperative that they underpin corporate strategy.

Despite the fact that Chevrolet is still playing catch-up, it is clear that automotive efficiency is now a central focus. With rising concern over carbon pollution, yet increasing scrutiny over one possible way – carbon offsets – to mitigate that pollution, it will be interesting to see how GM’s decision is ultimately judged.

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