Responsibility at IBM

2012 Corporate Responsibility Report

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Overview

In this section, Chairman, President and Chief Executive Officer Ginni Rometty’s letter describes how IBM’s goal to unite its business and citizenship strategies is taking shape. We take a thoughtful, comprehensive approach to corporate responsibility and corporate citizenship at IBM, and we integrate that approach into many aspects of our company. In this section you will also find a high-level overview of some of our major activities.

Communities

It’s not enough to develop world-class technology, services and expertise—at IBM we realize we must directly apply these things to the communities in which we live and work in order to have a positive impact. In this section, you will find examples of the ways we practiced this approach over the course of 2012 and into 2013.

The IBMer

A great company is forever evolving and growing. At IBM, we make it a top priority to hire, support and retain the people who make us a great company. In this section, you will find examples of the ways we support both the personal and professional development of our employees.

Environment

IBM’s unwavering commitment to environmental protection is evidenced across all of our business activities, from our research, development, products and services to the solutions we provide our clients that help them be more protective of the environment. In this section of IBM’s Corporate Responsibility Report, you will find information on our environmental programs, performance and solutions during 2012.

Supply Chain

Social and environmental responsibility is an important part of our business relationships with our suppliers. We work closely with them to encourage sustained improvement throughout our global supply chain and across various aspects of corporate responsibility. In this section you will find examples of how we set requirements for the companies we do business with, grow the global diversity of our supply base and collaborate with industry groups and stakeholders.

Governance

IBM’s culture of ethics and integrity is guided by a rigorous system of corporate governance. In this section, you will find examples of the many ways we govern the conduct of the company, manage risk and contribute our expertise to public discourse.

Awards & Metrics

Many of our corporate responsibility efforts received recognition from others in 2012. The most significant of these are listed in “Awards and Recognition.” We rely on a number of metrics to measure our corporate responsibility efforts. Our Key Performance Indicators and other significant metrics can be found in “Performance Summary.”

Development in Communities

The communities in which IBMers live and work span the globe, and are the building blocks of a Smarter Planet. The following programs represent a few of the ways in which we work together with local and national organizations to improve the quality of life in communities around the world.

Smarter Cities Challenge

Perhaps no program exemplifies IBM’s integrated approach to corporate citizenship better than the Smarter Cities Challenge. Announced in November of 2010, this $50 million competitive grant program is providing teams of IBM experts to 100 cities around the world over a three-year period. In 2012—the second full year of the program—173 IBMers were deployed to 31 cities to advise city leaders on strategies to help improve efficiency, spur economic growth, engage citizens and more.

Though this is a philanthropic endeavor, it draws on the expertise and knowledge we’ve gained through our work. For the last four years, IBM has been building a substantial business in helping cities in both developed and developing countries to collect and analyze critical data, gaining a clearer understanding of how these complex systems of systems really work, and how they can work better. With this understanding, IBM team members work alongside leaders from the public, private and volunteer sectors and immerse themselves in issues critical to each city, such as the administration of healthcare, education, public safety, social services, transportation, communications, sustainability, budget management and energy and utilities. Smarter Cities Challenge grants are valued at approximately $400,000 on average.

“The truth is some serious work has been done, very complete work,” said Mayor Francisco de la Torre of Málaga, Spain, which used a Smarter Cities Challenge grant to help develop a sustainable, integrated economic plan based on an expanded culture of entrepreneurship. “Many people have been interviewed, many hours have been spent studying Málaga’s reality and I believe they have found a series of key proposals to advance our technological development, drive entrepreneurship and therefore, create jobs.” Echoed Mayor Mónica Fein of Rosario, Argentina: “The Smarter Cities Challenge has been extremely valuable; [the IBM team] has left us with a roadmap to work on innovation, integration of information and greater citizen participation, all fundamental tools of good government…We are committed to making Rosario a smarter city.”

$50 million

The value of IBM grants to 100 cities around the world over 3 years.

Over the course of each Smarter Cities Challenge project, a carefully selected team of IBM executives and senior subject matter experts from across the business helps the municipality analyze and prioritize its needs, review strengths and weaknesses and learn from the successful strategies used by other cities. The team also studies the role that intelligent technology might play in uniting and advancing different aspects of city life. The team ultimately delivers to the city a roadmap that identifies ideas and opportunities designed to help make regions healthier, safer, smarter, more prosperous and attractive to current and prospective residents and businesses. In 2012 several cities used ideas and opportunities outlined in these roadmaps and began implementing changes accordingly. For example:

  • The City of Cheongju, South Korea, merged with nearby Cheongwon County to become a significantly larger city, and the mayor has set aside $3 million to roll out the Smarter Cities Challenge team’s recommended bus rapid transit system. Cheongju also received the national government Minister's Citation of Public Administration and Security for the best practice of budget efficiency. The city shared the IBM Smarter Cities Challenge experience with the national government and explained how it helped to save their budget through leveraging global IBM specialists.
  • In Durham, North Carolina, the mayor, county manager and superintendent established a leadership taskforce to oversee the Durham Connecting Youth Initiative, appointing a staff person to drive implementation of the Smarter Cities Challenge team's recommendations. The city, county and Durham Public Schools have also approved joint funding for staff positions to oversee and coordinate the Durham Connecting Youth Initiative. A technical advisory committee has been established, including representatives from various organizations. The Durham Workforce Development Board Youth Task Force is charged with implementing the workforce development and opportunity components.
  • The Council Leader of Glasgow, Scotland established an Affordable Warmth Executive Team, with IBM representation, and announced a new £1 million fuel subsidy for elderly Glaswegians, linked to the Smarter Cities Challenge team’s work and regional priorities.
  • Following significant leadership and operational changes implemented by city officials in St. Louis, Missouri, voters passed Proposition A, returning control of the police department to City Hall after 151 years of state control.
  • The City of Jacksonville, Florida named an Economic Development Officer in November 2012, based on the Smarter Cities Challenge team’s recommendations, and has proceeded with planning more activities in downtown, proposed legislation for residential and retail investments and mixed-use of old library facilities, and streamlined processes for collaboration with companies.

Smarter Cities Challenge engagements in growth markets are staffed through the Executive Service Corps, an initiative which grew out of the Corporate Service Corps in 2010.

$400,000

Average value of a Smarter Cities Challenge grant.

Smarter Cities Challenge Summit 2012

In November 2012, IBM welcomed more than 150 Smarter Cities Challenge city leaders—including nearly 20 mayors representing every inhabited continent, as well as urban thought leaders and IBM’s Smarter Cities Challenge experts—to the Smarter Cities Challenge Summit in Palisades, New York. Key themes included the importance of reliable and accessible data, clear governance and meaningful civic engagement. The event was hosted with Living Cities, EUROCITIES, the Urban Institute, Regional Plan Association, AVINA Foundation and Center for an Urban Future. Following the Summit, IBM Citizenship published a white paper, “How to Reinvent a City: Mayors' lessons from the Smarter Cities Challenge,” sharing the insights mayors learned from their participation in this IBM Citizenship initiative.

Cities interested in researching, and potentially applying for, a Smarter Cities Challenge grant can visit the website.

The Smarter Cities Challenge is sponsored by the international philanthropic foundation at IBM, which has been a leader in corporate social responsibility and corporate citizenship for nearly 100 years. IBM implements a range of initiatives to address specific vital issues such as the environment, community economic development, education, health, literacy, language and culture. IBM employs its most valuable resources—technology and talent—to bring these programs to fruition.

Watch some perspectives from city leaders on IBM’s Smarter Cities Challenge in 2012.

See how Málaga, Spain is building a smarter city.

Corporate Service Corps

In 2013 IBM will celebrate the fifth anniversary of the Corporate Service Corps (CSC). Through CSC, IBM blends social responsibility and business expertise to produce a triple benefit: premier leadership development for IBM employees, pro bono problem solving for governments and communities and a greater understanding of new markets for IBM.

CSC teams comprise eight to fifteen IBMers who spend approximately six months on a CSC engagement—three months in preparation, one month full-time in the local community and two months in post-service work. On location, these teams collaborate with government agencies, educational institutions and nonprofit organizations in areas where business, technology and society intersect to develop sustainable economic solutions.

In 2012, CSC sent over 100 teams of IBM top talent to 32 communities in 20 countries, delivering 100 vitally important projects. Some recent host countries include Mexico, Nigeria, the United Arab Emirates, Senegal, Argentina, Chile, India, Peru and Greater China, which received its eighteenth CSC team.

“Kunming SME Financial Transaction’s service platform provides small and micro businesses with a more secure financial management model. This model is a global innovation, so we have faced many unexpected challenges. During this critical period, the IBM CSC team provided us with a clear vision and plan so that we could more effectively manage and reduce our risks,” says Zhang Zhi, deputy president of Kunming SME Financial Transaction in Kunming, China.

CSC is a terrific example of the strength of public and private collaboration. For example, through IBM’s work with the United States Agency for International Development (USAID) and CDC Development Solutions, CSC teams have made significant contributions in Kenya, Kazakhstan, Senegal and Ghana. Additionally, IBM is working with many other companies to guide them in the development of their own global corporate service programs and expand the contributions made to communities.

The work of CSC teams helped IBM reach No.1 in The Civic 50, a ranking of America’s most community-minded businesses published by BusinessWeek in November 2012. The Civic 50 measures how companies use their time, talent and financial resources to improve their communities. The award recognizes the continuing and growing impact and leadership of our global corporate service work.

Below are some examples of work done by CSC teams in 2012:

  • Cervical cancer is a leading cause of cancer-related deaths in women in Kenya and is a major public health concern in many East African countries. Recently the Kenyan government, with support from the US government and the President's Emergency Fund for AIDS Relief (PEPFAR), took strategic action in the fight against cervical cancer. IBM CSC worked to solve the information management challenges that arise from collaboration between more than 4,000 clinics and six levels of healthcare facilities spread over a large geographical area serving 15 million women. With the CSC team’s help, the program will collect more reliable data to improve screening rates, which have already jumped from almost none to 70 percent in five years.
  • Since 1999, Casa da Criança (CdC) has remodeled the physical structures and improved the management of 33 youth centers and children's hospitals in 15 states across Brazil, benefitting more than 20,000 children. An IBM CSC team helped CdC to resolve information, communication and storage problems by designing a collaborative portal using IBM’s SmartCloud Engage.
  • Economic growth is hampered in many regions in Africa due to the cost and unreliability of energy. The East Africa Power Pool (EAPP) is an intergovernmental organization established in 2005 to facilitate cross-border trade in energy resources among seven Eastern African countries. The mission of the EAPP is to make affordable, sustainable and reliable electricity available for the Eastern African region by pooling electrical energy resources, promoting regional integration, poverty reduction and economic development. An IBM CSC team designed the framework for an EAPP-wide information systems network to allow interaction and data sharing between members and with the trading platforms.
20

The number of countries that received IBM CSC teams during 2012.

SME Toolkit

IBM and the International Finance Corporation (IFC) have worked together to create a small and medium enterprise toolkit, or SME Toolkit, which provides entrepreneurs and small businesses with free information in areas critical to growing businesses such as finance, accounting, international business, marketing and human resources. IBM supports SME Toolkit in order to accelerate economic development and job growth in geographies and communities that are striving to grow their engagement in the market economy, as well as to help spur development of women- and minority-owned businesses in the United States.

The Toolkit is available in 40 countries and 18 languages. It is available in emerging markets such as the Philippines and Bangladesh. In the United States, SME Toolkit focuses on businesses owned by underserved communities such as women, African Americans, Hispanics, Native Americans and Asians. The Toolkit delivers interactive tools, online collaboration and educational content to help small businesses learn and implement sustainable management practices. These tools are often only available to Fortune 1000 companies.

Organizations working with the IFC in each of the countries hosting the site are responsible for localizing, customizing and translating content so that it speaks to the local markets. These organizations, such as EDC Pan-African University in Nigeria, can also help nurture local businesses and improve their chances of survival.

40

Number of countries with the SME Toolkit.

IBM has dedicated more than $6 million to improve the usability and performance of the SME Toolkit, providing enhanced functionality and creating a resource hub, learning location and meeting place for small and medium businesses. SME Toolkit is a leading example of IBM’s commitment to collaborating with significant outside organizations and contributing IBM’s technical expertise and solutions to help address pressing social issues.

$6 million

The amount IBM has dedicated to improving SME Toolkit.

Supplier Connection

Supplier Connection was launched by IBM and US Small Business Administration (SBA) Administrator Karen Mills to promote job growth by helping small businesses more easily access opportunities with large companies. The program’s web-based portal was created and is maintained by IBM through a $10 million grant from the IBM International Foundation. Supplier Connection was recognized with the 2012 Distinction Award for Best Collaboration by the Supply Chain Distinction Awards North America, which celebrates excellence across the most important disciplines in supply chain management. Specifically, the award recognized IBM and Supplier Connection for improving business performance based upon a mutually beneficial collaborative effort between many buying corporations and small business suppliers in the United States.

Small businesses are crucial to the vitality of the US economy, as they employ half of all private sector employees. However, it can be challenging for small businesses to sign up new, large accounts, especially with global companies. Without this source of sustained and sufficient demand, small businesses have little incentive to expand their operations or hire new employees. With the goal of fueling economic growth and job creation in the United States, IBM and a consortium of large corporations are collaborating to make it easier for small businesses to potentially become suppliers to large companies.

Supplier Connection provides small companies with a standardized and streamlined way to register basic information, share business practices and potentially connect with both large and small businesses to enhance their opportunity for growth. In turn, large companies are able to quickly find registered suppliers, communicate with them and forge stronger relationships with new and existing suppliers. Since its inception, Supplier Connection has provided growth to many small businesses across multiple industries. Participating members have increased their spending with small businesses on average by 3 percent, totaling more than $10 billion.

$10 billion

Amount that participating members spent with small businesses.

A small business owner on Supplier Connection:

Puritan Press

Puritan Press is a printing and publishing business based in Hollis, New Hampshire. In an effort to create new business opportunities, Puritan Press joined Supplier Connection in 2011 after learning of the consortium through its local industry network. Within six months, the organization secured a contract with IBM to produce more than 30,000 copies of the 2011 IBM CEO Study. That initial contract opened Puritan Press’s opportunities with IBM, and it has secured several more contracts in 2012.

Supplier Connection: Connecting small businesses to enterprise supply chains.

“Supplier Connection has allowed Puritan Press to make connections with large corporations that otherwise might never be possible—and has directly impacted our business for the best. Once IBM took the initiative to get us involved, they followed up with significant job awards. We produced several large print projects in 2012, and have been awarded additional jobs in 2013 as well as opportunities to bid. It is this level of action as well as the corporate commitment to support and engage with small businesses that has made us believers in this process,” says Kurt Peterson, president of Puritan Press. “Our involvement with the Supplier Connection portal has provided additional value and benefits to us through increased visibility in our market. As we expand our reach we count on the support of this small business tool for marketing our services to those corporations who are truly supporting small businesses. We know our products and services are leaders in our industry and now with the added advantage of the Supplier Connection we can get the word out on the street to more and more potential buyers.”

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