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.”

Audits and Compliance

IBM measures our environmental performance against both external and internal requirements.

Every year, and more frequently for some, IBM’s manufacturing, hardware development and research sites and organizations— such as Product Development, Global Real Estate Operations, Global Asset Recovery Services, Global Logistics, Global Services Environmental Compliance and Integrated Supply Chain—complete a comprehensive self assessment. In addition, IBM’s Corporate Internal Audit staff may conduct environmental, health and safety compliance audits. Audit results are communicated to top management. Follow-up, accountability and actions are clearly delineated.

In addition, as part of IBM’s single, global registration to ISO 14001, approximately 25 sites or registered entities are audited annually by an independent ISO 14001 registrar. The company’s manufacturing, hardware development and chemical-using research sites are audited by either the Corporate Internal Audit team or the external ISO 14001 registrar every 18 to 30 months.

Accidental Releases

IBM sites around the world report environmental incidents and accidental releases to IBM management through the company’s Environmental Incident Reporting System (EIRS). IBM’s environmental incident reporting criteria are equal to or exceed legal reporting requirements and every event meeting IBM’s reporting criteria must be reported through EIRS. Each IBM location must have a documented incident prevention program (including provisions for preventing environmental incidents or their recurrence) and reporting procedure.

In 2012, a total of 26 accidental releases of substances to the environment related to IBM operations were reported through EIRS. Of these, 12 were to air, seven to land, five to water, and two to both land and water.

Emissions to the air included 10 releases of refrigerants. One emission was smoke resulting from a chemical reaction that took place during cleaning activities (mixing of epoxy resin and hardener) and there was one release of particulate matter.

Releases to land included one each of reclaimed water, fuel oil, cooling tower water, hydraulic fluid, sanitary wastewater, potable water and chilled water.

Releases to water included one each of cooling tower water, chilled water, hot water, water containing a cleaning agent and one lubricant oil.

Releases to both land and water include two releases from treated groundwater.

The root cause was investigated for all releases and corrective actions were taken as appropriate. None of the releases was of a duration or concentration to cause long-term environmental impact.

Fines and Penalties

One significant measure of a company’s environmental performance is its record of fines and penalties.

IBM was the subject of 89 successful environmental regulatory agency inspections and visits worldwide in 2012 with no fines or enforcement measures being assessed associated with those inspections.

IBM did receive three fines, however, related to inspections in previous years. Relating to a 2009 Notice of Violation issued by the Connecticut Department of Environment and Energy Protection, IBM received two fines in 2012 totaling $36,814. The citations were for exceeding the permitted time limit for operating an emergency power generator at a data center and for failure to timely complete the scheduled emissions testing on the emergency generators. The emissions testing was completed after the notification in 2009 and we have since updated our processes to prevent recurrence.

In addition, a fine of $38,000 was paid to the Environment Authority of Portugal related to a 2010 shipment of used electronic products from Portugal to IBM’s product reutilization facility in France. Shipments of used electronic products for recycling within the European Union require permits from both the shipping and receiving countries. In this particular case, the permit for the shipping country (Portugal) had expired the month prior to the shipment and had not yet been renewed. IBM has addressed the issue with its contracted logistics supplier to ensure that proper permits are in place in both shipping and receiving countries prior to any future shipments.

Over the past five years, IBM has paid five fines for a total amount of $104,814.

Fines and Penalties Worldwide

($ in thousands)
20082009201020112012
Number 0 2 0 0 3
Fines $0.0 $30.0 $0.0 $0.0 $74.8
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