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Energy and Climate Programs

IBM recognizes climate change as a serious concern that warrants meaningful action on a global basis to stabilize the atmospheric concentration of greenhouse gases (GHGs). We believe all sectors of society, the economy and governments worldwide must participate in solutions to climate change.

Climate Change

IBM has been a leader in addressing climate change through its energy conservation and climate protection programs for decades. Learn more about our position and policy on climate change. IBM’s leadership is defined by our:

  • Longstanding global commitment
  • Comprehensive and multifaceted programs—covering the company’s operations, products and services
  • Leading-edge innovations and client solutions
  • Significant results, both early and ongoing, benefiting IBM, our clients and the world

A Five-Part Strategy

We have a five-part strategy to reduce the GHG emissions related to our operations:

  1. Designing, building, updating and operating facilities, including data centers and manufacturing operations, that optimize their use of energy and materials and minimize GHG emissions
  2. Purchasing electricity generated from low CO2-emitting and renewable energy-generating sources where feasible
  3. Minimizing the use and emissions of perfluorocompounds (PFCs—a family of GHGs) in semiconductor manufacturing
  4. Reducing employee commuting and business travel
  5. Increasing the efficiency of IBM’s logistics operations

In addition, in the area of our hardware and software products and services, IBM’s strategy includes designing energy efficient products and providing clients with energy efficient solutions that also help protect the climate.

IBM does not have plans to use emissions offsets to become “carbon neutral” for all or part of its operations. Our efforts to reduce IBM’s GHG emissions are focused on delivering results in the areas where the company can make the greatest positive impact on climate protection—by devoting available resources to actions, products and solutions that actually increase energy efficiency and reduce GHG emissions for both IBM and our clients, rather than offsetting them.

Conserving Energy

IBM’s commitment to energy conservation dates back to 1974 and has continued, unabated, over the intervening years. Energy conservation is a major component of our comprehensive, multifaceted climate protection program because the release of CO2 by utility companies powering our facilities, or from the use of fuel for heating or cooling, represents the greatest potential climate impact associated with our operations.

In 2011, IBM’s energy conservation projects across the company delivered savings equal to 7.4 percent of our total energy use versus the corporate goal of 3.5 percent. These projects avoided the consumption of 378,000 megawatt-hours (MWh) of electricity and 326,000 million BTUs of fuel oil and natural gas, representing the avoidance of 175,000 metric tons of CO2 emissions. The conservation projects also saved $43 million in energy expense. These strong results are due to the continued, across-the-board focus on energy demand reduction, efficiency and the implementation of standard, global energy conservation strategies for facility operating systems.

IBM’s energy conservation goal recognizes only identified projects that actually reduce or avoid the consumption of energy in our operations. Reductions in energy consumption from downsizings, the sale of operations and cost avoidance actions, such as fuel switching and off-peak load shifting, are not included in the results for measuring performance against achieving this goal. Moreover, the above results are conservative in that they include only the first year’s savings from the conservation projects. Ongoing conservation savings beyond the first year are not included in the tally. Accordingly, the total energy savings and CO2 emissions avoidance from these conservation actions is actually greater than this simple summation of the annual results.

Electricity and Fuel Use and Related CO2 Emissions
(Scope 1 and 2 CO2 Emissions)
Year Electricity and Fuel Use
(thousand MMBTU)
CO2 (EST)
(metric tons × 1,000)
2007 23,638 2,541
2008 22,443 2,502
2009 21,507 2,436
2010 21,622 2,156
2011 21,758 2,182
Energy Conservation
3.5%
Goal

Achieve annual energy conservation savings equal to 3.5 percent of IBM’s total energy use.

7.4%
Result

In 2011, IBM’s energy conservation projects across the company delivered savings equal to 7.4 percent of its total energy use.

175,000 metric tons of CO2 emissions avoided through IBM’s energy conservation projects

Between 1990 and 2011, IBM saved 5.8 billion kWh of electricity consumption, avoided 3.7 million metric tons of CO2 emissions (equal to 55 percent of the company’s 1990 global CO2 emissions) and saved $442 million through its annual energy conservation actions.

Our global energy management program leverages the expertise of more than 40 IBM energy management professionals deployed around the world. The team has created best-practices checklists that set minimum expectations for building systems and operations, including controls and equipment for lighting, HVAC, central utility plants (CUPs), compressed air, data center and IT systems, cafeterias and office systems. All IBM sites using 2,000 MWh/year or more of energy must complete the checklists, perform a gap analysis and develop an energy conservation implementation plan a minimum of every three years. The program is buttressed by several enterprise-level databases that collect and store energy-use data, conservation project results and completed checklists, enabling monthly metrics reporting to the management team. The continuous review of energy use and conservation performance has driven the strong results noted above.

We use a full range of energy efficiency initiatives in achieving our results. In 2011, more than 2,300 energy conservation projects were completed at 364 IBM locations around the world. Some examples:

  • Projects to match building lighting and occupancy schedules or to install more efficient lighting systems were implemented at 203 locations, reducing electricity use by 16,220 MWh and saving $1.9 million.
  • HVAC systems or operating schedules were modified at 155 locations, reducing electricity use by 41,870 MWh and fuel use by 97,130 MMBTU, saving $5.2 million.
  • CUP projects were implemented at over 60 locations:
    • Boiler and chiller optimization projects reduced electricity use by 12,330 MWh and natural gas use by 2,790 MMBTU, saving $1.4 million.
    • Free cooling projects reduced electricity use by 11,890 MWh and natural gas use by 1,700 MMBTU, saving $1.6 million.
    • Equipment upgrades reduced electricity use by 14,900 MWh and natural gas use by 2,500 MMBTU, saving $1.6 million.
  • Re-commissioning projects at 12 locations delivered reductions of 14,800 MWh of electricity use and 32,100 MMBTU of fuel use, saving $1.2 million.

IBM is also implementing innovative, leading-edge technologies that enable real-time management of energy use. We are deploying IBM’s Smarter Building technologies to increase the energy efficiency of our own facilities. In 2011, IBM deployed this solution at 10 of its highest energy consuming facilities with an additional 18 locations planned for deployment in 2012. In two of the initial projects, the IBM Rochester, Minnesota, and Silicon Valley Lab, California, facilities reduced energy consumption associated with air handlers by 12 percent and 8.3 percent respectively. Together, the energy reductions at these two sites generated significant savings. When fully deployed, the Smarter Building application will be used at facilities that represent 50 percent of IBM’s energy usage—reducing consumption, eliminating GHG emissions and saving an estimated $5 million in annual operating expense by 2015.

5.8 billion kWh of electricity conserved,

3.7 million metric tons of C02 emissions avoided and

$442 million saved between 1990 to 2011 through IBM’s annual energy conservation actions

Data Centers

IBM manages a diverse portfolio of data centers, consisting of both IBM and IBM-managed customer facilities all over the world. IBM also operates additional raised floor space to support our internal operations as well as design and test centers for our Systems and Technology Group and Software Group.

We take a holistic approach to managing our data center portfolio, building new, high-efficiency data center space where we need to expand our raised floor space to meet the needs of existing and new customers, and retrofitting and improving existing data center space to increase utilization and derive more workload per area, equipment and energy resources. These efforts are accomplished through the following initiatives:

  1. Building new high-efficiency data center space. IBM’s most recent data center expansions in the United States have achieved LEED® certification and use state-of-the-art design and system techniques to enable PUE measurements of 1.4 to 1.6 when the data center is fully populated. PUE (Power Usage Effectiveness) is the ratio of the total power required at the data center divided by the power required to operate the IT equipment.
  2. Implementing best practices and thermal monitoring programs at our existing data centers to optimize cooling delivery and minimize energy use and cost.
  3. Virtualizing and consolidating existing workloads for our internal operations and customer accounts, and utilizing cloud computing capabilities where it provides leverage to our operations and our client operations. Virtualizing workloads allows a single server to support multiple applications or images, making use of the full capabilities of state-of-the-art IT equipment and executing more workload in less space with less energy.

New Data Center Construction

IBM’s most recent data center expansion, constructed in 2011 in New Zealand, uses state-of-the-art design and system techniques to enable PUE measurements of less than 1.4 when the data center is fully populated. The data center has several leadership characteristics:

  • Smarter data center management: Intelligent building systems connect IT equipment with the centralized energy consumption analysis system, constantly measuring power, water and fuel use in real-time to identify opportunities to conserve energy in line with demand.
  • Free-flow cooling: Energy consumption is reduced by taking advantage of free cooling—using the outside air to cool the data center, and rain water stored in over-sized underground pipes for cooling tower make-up. By extracting heat through plate exchangers connected to each cooling tower, this free cooling is made possible for longer periods, even in Auckland’s sub-tropical climate. The facility also uses the cool temperatures of the public water supply to pre-cool outside air before releasing it to the data center systems.
  • Variable speed fans: The data center cooling system uses variable speed fans with directed air flow into the raised floor space, dampers on the perforated floor tiles to manage cooling air flow, and a ducted air return system to optimize the efficiency and coverage of the cooling air delivery.
  • Building standards: The entire structure is built to a targeted Building Green Star rating of four stars, a targeted Office Green Star rating of five stars and a targeted Data Center Green Grid Level 2 rating.
  • Cloud computing capability: Built to global IBM cloud architecture specifications, the data center is enabled for virtualization, auto provisioning, metering and billing, and integrated service management to allow clients to access IT resources as they are needed.

Existing Data Centers

In 2011, we completed 228 projects at 86 existing data center locations that reduced energy use by over 33,700 MWh, and saved more than $3.8 million. These projects included blocking cable and rack openings, rebalancing air flow, and shutting down, upgrading and reprovisioning air flow from computer room air conditioning units. Total savings from these projects are equivalent to the energy use of a 4,000 to 6,000 square meter IBM strategic data center.

IBM’s Measurement & Management Technologies, a thermal monitoring management system, was installed at 40 data centers. This innovative technology from IBM Research produces a real-time three-dimensional thermal map of the detailed heat sources and sinks within a data center, allowing for accurate identification and mitigation of data center hot spots and increased data center operating temperatures, with attendant reductions in cooling requirements.

As an example, implementation of best practices, thermal balancing of the raised floor, and increasing the raised floor temperature by 2°F at IBM’s Rochester, New York, data center achieved an annual 7.3 percent reduction in energy use in the raised floor area.

Our Global Technology Services business unit initiated a program to verify that x86 servers have power management capabilities enabled when they are installed in IBM data centers. Based on server purchase data and a conservative estimate of idle to maximum power ratio and server utilization rates, this effort is estimated to have reduced electricity use across IBM data centers by 5,000 MWh in 2011.

System Virtualization and Cloud Computing

Virtualizing workloads allows a single system to support multiple applications or images, making use of the full capabilities of state-of-the-art IT equipment and executing more workload in less space with less energy.

IBM is utilizing virtualization technologies to consolidate multiple workloads from servers and storage systems with low utilization onto single systems, reducing energy use and cost by more than 142,000 MWh and $16.5 million in 2011. IBM has virtualized more than 90,000 applications in our owned/leased data centers in the past three years, moving them from single-use systems to either existing or new virtualized servers or storage systems, and we are continuing to implement virtualization projects at a similar pace in 2012, with an expectation of similar results in improved operational efficiency and lowered capital and operating costs.

We expanded IBM’s cloud computing programs over the course of 2010 and 2011. Cloud computing is an efficient model for providing IT services, representing a computing services model that optimizes the use of virtualization technologies. It allows us to better balance workloads, adjust power consumption and virtualize infrastructure in data centers to better align processing needs with power consumption. IBM has established a globally integrated cloud delivery network with centers in New Zealand, Singapore, Germany, Canada and the United States, including the leadership data centers in Raleigh, North Carolina, and Boulder, Colorado, along with 13 global cloud labs.

IBM’s Auckland, New Zealand, Data Center

Voluntary Data Center Energy Efficiency Initiatives

In January 2012, the European Commission (EC), the executive body of the European Union (EU), awarded 27 IBM Data Centers in 15 different countries in the EU with “Participant” status in Data Center Energy Efficiency, based on the EU Code of Conduct (CoC) for Energy Efficient Data Centers. The registered data centers represent more than 70 percent of IBM’s strategic outsourcing data center space in the EU. The honor represents the largest portfolio of data centers from a single company to receive the recognition to date. The EU CoC is a voluntary initiative that aims to promote energy efficiency performance standards for data centers.

IBM maintains energy efficiency leadership in its data centers by deploying uniform practices across its global data center portfolio. In addition, IBM applies innovative solutions such as Measurement & Management Technologies thermal monitoring and control system, virtualization technologies, dynamically managed air conditioning control systems and development of alternate power systems such as the direct current solar system at IBM’s Software Group lab in India.

IBM data center and IT system professionals continue to be involved in governmental and professional data center energy efficiency initiatives including the EU CoC for Energy Efficient Data Centers program, ENERGY STAR® and The Green Grid® initiatives. These programs set operating criteria or metrics that inform and encourage data center operators and owners to reduce energy consumption in a cost-effective manner while enabling operators to maintain the mission-critical functions of their data centers.

27 IBM data centers in 15 different countries were awarded “Participant” status in Data Center Energy Efficiency, based on the EU Code of Conduct for Energy Efficient Data Centers.

Renewable Energy

In 2011, IBM purchased 518 million kWh of renewable energy. These purchases represented 10.2 percent of the company’s global electricity usage and a CO2 emissions avoidance of 215,000 metric tons. IBM continued to contract for renewable energy purchases in Australia, Austria, Belgium, Denmark, Finland, Japan, Netherlands, Sweden, Switzerland, the United Kingdom and the United States in 2011. Renewable electricity purchases declined by 7.6 percent from 2010 to 2011 due to varying market conditions and renewable energy availability in the various markets in which IBM purchases renewable energy. IBM’s energy conservation efforts and its procurement of renewable energy in 2011 combined to avoid the emissions of 390,000 metric tons of CO2.

Renewable Energy Procured

Percentage of Total Electricity

IBM endeavors to procure renewable energy to power its data center operations whenever it is available and financially reasonable. Of the 27 data centers registered to the EU CoC, 18 receive some or all of their electricity from renewable generation sources. In the United States, both the Boulder, Colorado, and Raleigh, North Carolina, data centers receive a portion of their electricity from renewable sources.

Research to Advance Renewable Energy

In addition to procuring renewable energy for our own use, IBM is working to further the availability and affordability of renewable energy by investing in IT-related research and development. Three recent examples:

  • IBM Teams With Bureau of Energy Efficiency to Prepare for India’s First Smart Grid Project

    In May 2011, IBM announced a collaboration with The Bureau of Energy Efficiency (BEE) in India to create the country’s first smart grid project. Together they will create a cost-benefit analysis for smart grid activities as part of the National Mission for Enhanced Energy Efficiency (NMEEE). A BEE project, NMEEE is one of eight national missions that promote innovative policy and regulatory regimes, financing mechanisms and business models that help sustain the market for energy efficiency.

    Through this project, IBM plans to apply our deep services expertise to help determine smart grid readiness in India. We will lay out a strategic assessment framework that looks at the adoption of new smart grid technologies and identifies alignments in policy and regulatory frameworks to make each solution possible. We will help BEE determine global smart grid potential and also create toolkits for regulators and utilities to assess the benefits of smart grid investment decisions.

  • IBM Joins European Consortium to Build a Smart Grid Using Renewable Energy

    In October 2011, IBM announced we had joined a collaborative consortium to help develop an energy grid that uses at least 50 percent of renewable energy sources such as wind power, solar energy and biogas. Led by an EU-funded consortium, the EcoGrid EU project will demonstrate a smart energy grid that allows smart devices to use renewable electricity based on near-real-time pricing and availability.

    With 16 partners from 10 different countries, the project will continue for the next 48 months with set goals to increase consumer interest in smart grids, and develop new technologies that will improve energy forecasting and cost balancing, as well as reduce the congestion and losses across the distribution grid.

  • IBM and Sustainable Energy Authority Ireland Focus on Renewable Energy

    In October 2011, IBM announced a collaboration with The Sustainable Energy Authority Ireland (SEAI) to understand and minimize the environmental impact of converting wave energy into electricity. This project, the first to utilize real-time streaming analytics for monitoring underwater noise generated by wave energy conversion devices, represents a significant step toward the ability to successfully and sustainably utilize the ocean as a new renewable energy resource.

CO2 Emissions Reduction

IBM has committed to reduce our operational CO2 emissions in accordance with the objective detailed in the adjacent sidebar. As of year-end 2011, our energy conservation results and procurement of renewable energy resulted in a 16 percent reduction in our energy-related CO2 emissions from the 2005 base year of this goal. Operational CO2 emissions increased slightly from 2010 to 2011 primarily due to the decrease in renewable electricity purchases and associated 12.9 percent decrease in avoided CO2 emissions.

IBM’s CO2 emissions reductions have been achieved through the actions outlined below. In addition, improvements in the CO2 emissions profile of the electricity that IBM purchased also had a favorable, albeit limited, impact on the company’s performance.

  • IBM’s energy conservation efforts have reduced or avoided a total of 1.5 million MWh of electricity and 2.7 million MMBTU of fuel use (based on one-year savings associated with conservation projects) from 2006 to 2011, which represents a reduction in IBM’s electricity and fuel use of 2.6 percent and 23.2 percent, respectively, against the 2005 baseline use adjusted for acquisitions and divestitures.
  • IBM purchased 518,000 MWh of electricity generated from renewable sources in 2011, resulting in an avoidance of 215,000 metric tons of CO2 emissions associated with the generation of the electricity used by IBM. We contract for these purchases through programs sponsored by suppliers or the responsible utility.
CO2 Emissions Reduction

Metric Tons x 1,000

CO2 Emissions Reduction
12%
Goal

Between 1990 and 2005, IBM’s energy conservation actions reduced or avoided CO2 emissions by an amount equal to 40 percent of its 1990 emissions. To further extend this achievement, IBM set itself an aggressive “2nd generation” goal: to reduce the CO2 emissions associated with IBM’s energy use 12 percent between 2005 and 2012 through energy conservation and the procurement of renewable energy.

16%
Result

As of year-end 2011, the company’s energy conservation results and procurement of renewable energy resulted in a 16 percent reduction in IBM’s energy-related CO2 emissions from the 2005 base year of this goal.

PFC Emissions Reduction

IBM releases some perfluorocompounds (PFCs) from our semiconductor manufacturing operations. Although the releases are in relatively small amounts (in CO2 equivalents, when compared to IBM’s indirect CO2 emissions), IBM was the first semiconductor manufacturer to set a numeric reduction target for PFCs in 1998. We subsequently set a second generation goal to achieve an absolute reduction in PFC emissions from semiconductor manufacturing of 25 percent by 2010 against a base year of 1995. We exceeded this goal by reducing IBM’s PFC emissions by 36.5 percent at year-end 2010.

IBM is presently evaluating a third generation goal for PFC emissions reduction. A separate but relevant activity is the Semiconductor Industry Association’s current work with the United States Environmental Protection Agency (EPA) to update various parameters (e.g., process emissions factors, emissions abatement system destruction efficiencies) and methodologies for estimating PFC emissions from semiconductor operations. IBM plans to incorporate, as appropriate, the updated factors and methodologies at the conclusion of this industry and EPA effort in establishing its next generation PFC emissions reduction goal.

While our goal-setting process is underway, we continue to take actions to reduce our PFC emissions and monitor performance. Between 2010 and 2011, we reduced our PFC emissions by 2.8 percent—primarily as a result of work at the Burlington, Vermont, facility where C2F6 was substituted by C4F8 in several chamber clean processes in the 200 mm fab. C4F8 is more fully utilized in the clean process and has a lower global warming potential than C2F6.

IBM also monitors two other materials with global warming potentials that are used in connection with manufacturing operations: 1) nitrous oxide (N2O), which is used in the manufacture of semiconductors but has lower global warming potential than the PFC gases; and 2) heat transfer fluids that are primarily used in tool-specific chiller units associated with manufacturing processes.

  • IBM emitted 29,200 metric tons of CO2e of N2O, which has a lower global warming potential than the PFC gases used in its semiconductor operations.
  • IBM generated a CO2e of 51,000 metric tons from fugitive emissions of heat transfer fluids used in chiller systems.

In addition to monitoring emissions, IBM continues to evaluate preferable replacements for these materials. At IBM’s Burlington facility, a wafer test team completed a two-year project to qualify a new non-conductive heat transfer fluid used in tool-specific chiller units. The new fluid fills the microscopic air gaps between the wafer chuck and the physical wafer, on wafer test equipment. It has a lower vapor pressure and a lower global warming potential, resulting in fewer process fluid losses and reducing the metric tons of CO2e emitted from the process by more than two orders of magnitude and the fluid expense by over $100,000 a year.

Voluntary Climate Partnerships

IBM continued its participation in the World Wildlife Fund’s Climate Savers program in 2011, working toward the committed reduction goal: Between 1990 and 2005, we reduced or avoided CO2 emissions by an amount equivalent to 40 percent of our 1990 emissions through our global energy conservation program. To extend this achievement, we intend to reduce CO2 emissions associated with our operational energy (electricity and fuel) use by 12 percent between 2005 and 2012 through energy conservation and the purchase of renewable energy.

Under Climate Savers, IBM has also committed to improving the energy efficiency and energy utilization of our internal and clients’ data centers through activities and offerings for data center best practices, measurement and monitoring programs, and virtualization and consolidation programs. Activities in support of this commitment are detailed in the Data Centers section above.

Though the United States EPA discontinued the Climate Leaders program in 2010, IBM intends to meet the second generation GHG reduction commitment we set under the Climate Leaders program: To reduce total global GHG emissions by 7 percent from 2005 to 2012. We achieved our initial goal by reducing total global energy-related GHG emissions by an average of 6 percent per year and PFC emissions by 58 percent from 2000 to 2005.

Transportation and Logistics Initiatives

Employee Commuting and Leased/Rental Vehicles

IBM has been active in promoting programs that reduce the commute to work for our employees. Key contributors to this effort are IBM’s two flexible work programs:

  • Work-at-home: Enables many employees to work from a home office
  • Mobile employees: Enables many other employees to work from home a designated number of days each week

In 2011, more than 128,000 of our employees (29 percent) globally participated in one of these two programs, which not only helps employees balance their work and personal responsibilities, but also benefits the environment. In the United States alone, IBM’s work-at-home program conserved approximately 6.4 million gallons of fuel and avoided more than 50,000 metric tons of CO2 emissions in 2011.

IBM joined the reconstituted United States Best Workplaces for CommutersSM (BWC) program in 2009. Currently, 22 IBM locations are registered as BWC sites, which represent approximately 60 percent of the company’s United States employees. Many locations actively work with their local or regional transit commissions to integrate IBM’s programs with regional programs to increase commuting options for the company’s employees. Globally, many of our locations provide support for the use of public transit systems, including shuttles from locations to mass transit stations, and alternate transportation or “loaner” cars for business trips during the workday.

In some countries, IBM provides leased vehicles for employees as part of their compensation package. In these cases, we continue our effort to move to more fuel-efficient vehicles by setting standard guidelines for smaller engine sizes with lower emissions profiles. These guidelines enable reductions in average car emission levels as their car fleets are renewed. For the cars our employees rent while travelling, we have worked with rental car companies to require and/or offer higher mileage vehicles for employee rentals.

Business Travel

In 2011, IBM further expanded the use of collaboration tools, both internally and externally, which provides business efficiency and boosts productivity by connecting our global workforce 24/7 while reducing travel-related resource consumption and emissions. We conducted more than one million online meetings and exchanged more than 15 billion instant messages. We also have increased our use of video conferencing to help reduce the need for travel while enabling team interaction. In addition to more than 400 video-equipped IBM conference and briefing rooms globally, we completed work on an initial IBM Sametime® desktop video pilot to extend video capability to employees’ desktops. Expansion of this capability through further global desktop video pilots is planned for 2012.

Efficiency of Logistics

IBM is reducing the CO2 emissions associated with transporting our products through the efficient design of our packaging, working with suppliers on their packaging designs and optimizing logistics. In the area of logistics, IBM has been an active member of the United States EPA’s SmartWay® Transport Partnership since 2006.

SmartWay is a voluntary initiative to improve fuel efficiency and reduce GHG emissions associated with logistics operations.

Since 2009, 100 percent of IBM’s spend for shipping goods within the United States and from the United States to Canada and Mexico went through a SmartWay logistics provider. IBM also voluntarily applies specific SmartWay requirements to our distribution operations globally.

IBM’s packaging programs also help reduce transport-associated CO2 emissions by reducing the volume and weight of the company’s product shipments through innovative packaging design. Accomplishments in this area are discussed in the Product Stewardship section of this report.

Energy and Climate Protection in the Supply Chain

During 2011, we continued our focus on working with IBM’s supply chain to foster greater energy efficiency and climate protection.

  • As noted elsewhere in this report, IBM is committed to doing business with environmentally responsible suppliers. We require that all of our “first-tier” suppliers—those firms with which we hold a direct commercial relationship—establish and sustain a management system to address their corporate and environmental responsibilities—including their use of energy. They are also required to measure their performance, establish voluntary, quantifiable goals in this area and publicly disclose their performance against those goals.
  • IBM has been an active participant in the Electronic Industry Citizenship Coalition (EICC) Carbon Reporting System, which completed its third year of operation. EICC requests that selected suppliers providing components or products to EICC members disclose their operational energy and water use and GHG emissions to EICC via any one of the following means: a spreadsheet tool developed by EICC, responding to a Carbon Disclosure Project (CDP) Questionnaire or a company’s Global Reporting Initiative (GRI) report. As companies gain an understanding of their energy use and GHG emissions, we believe they are more likely to take actions to improve their performance. EICC and its member companies have developed education modules to assist suppliers in developing their energy use and GHG emissions inventories. Companies in the electronics industry share many suppliers, and the EICC GHG emissions disclosure process is expected to provide efficiency associated with information disclosure.
  • Through the CDP’s Supply Chain program, IBM and other participating companies are focused on how suppliers are addressing climate change and working to reduce GHG emissions. As a participant in the program, IBM invited 107 of our suppliers to respond to the CDP’s Supplier Questionnaire in 2011 (reporting 2010 data). These 107 companies represent a cross-section of IBM’s supplier expenditures. They included service, general and production-related suppliers, as well as third-party data centers, logistic suppliers and rental car companies.

    Of the 107 IBM suppliers that received questionnaires, 93 responded. The 86 percent response rate exceeded the 44 percent average response rate for the companies participating in this CDP program. The following are highlights of the findings from the responding suppliers:

    • 93 percent report Scope 1 & 2 GHG emissions
    • 67 percent have a GHG emissions reduction target in place
    • 97 percent have undertaken emissions reductions initiatives

IBM concluded its participation in the CDP supply chain project in 2011. We remain committed to doing business with responsible suppliers, and we believe we can be more effective if we focus our resources through the EICC by leveraging its programs and network within the IT hardware, software and services sector. Participation in the EICC Carbon Reporting process allows us to more efficiently reach a broader set of companies, including medium-sized and smaller enterprises, to build their capabilities and improve and report their performance in energy and water conservation and GHG emissions reduction.

IBM’s Position on the Determination of Scope 3 GHG Emissions

Gross approximations of Scope 3 GHG emissions can help entities recognize where the greatest amounts of GHGs may occur during the lifecycle of a typical process, or general product or service on a macro level. This can be helpful when assessing, for example, what phases of a general product’s design, production, use and disposal are ripe for improved energy efficiency and innovation. However, IBM does not assert on a micro level what the Scope 3 GHG emissions are from the operations of our suppliers and external distribution partners in their work that is specific to IBM, or associated with the use of our products and services. The necessary estimating assumptions and corresponding variability simply do not allow for adequate credibility, let alone calculations that could be perceived as deterministic.

Like many manufacturers, IBM has thousands of suppliers around the world. They are in all types of businesses and very few, if any, work solely for IBM. Furthermore, the sources of energy used by these suppliers vary, and IBM does not believe we could determine a credible estimate or apportionment of the energy used by these suppliers that would be associated with the products or services provided to IBM versus that associated with products or services provided to other companies and customers. In addition, IBM’s specific scope of business with any given supplier remains dynamic, as it is driven by business need.

Moreover, one company’s asserted Scope 3 emissions are another company’s Scope 1 and Scope 2 emissions. Since the ultimate goal for climate protection is for global societies to achieve demonstrable reductions in actual GHG emissions, IBM believes real results in GHG emissions reduction are directly achieved when each enterprise takes responsibility to address its own emissions and improve its energy efficiency. This is reinforced by IBM’s announcement in 2010 that all of our first-tier suppliers will be expected to develop a management system, inventory their key environmental impacts, including GHG emissions, and develop reduction plans for those key impacts.