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.”

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 our energy conservation and climate protection programs for decades. 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 Six-Part Strategy

We have a six-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 it makes business and environmental sense
  3. Minimizing the use and emissions of perfluorocompounds (PFCs—a family of GHGs) in semiconductor manufacturing
  4. Requiring our suppliers to maintain an Environmental Management System which includes energy use and GHG emissions inventory and reduction plans
  5. Reducing employee commuting and business travel
  6. 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 considers energy and material conservation to be the cornerstone of our climate protection efforts. IBM does not have plans to use emissions offsets to become “carbon neutral” for all or part of our 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 ever since. 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 2012, IBM’s energy conservation projects across the company delivered savings equal to 6.5 percent of our total energy use versus the corporate goal of 3.5 percent. These projects avoided the consumption of 336,000 megawatt-hours (MWh) of electricity and 215,000 million British thermal units (Btu) of fuel oil and natural gas, representing the avoidance of 155,000 metric tons of CO2 emissions. The conservation projects also saved $35 million in energy expense. While the quantity of energy avoided through conservation projects is slightly (0.9 percent) lower than in 2011, the 6.5 percent avoidance is consistent with the 2008-2012 average of 6.4 percent per year. These strong results are due to our 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 completed 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 conservation results discussed above 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.

Energy Conservation

3.5%

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

6.5%

Result
In 2012, IBM’s energy conservation projects across the company delivered savings equal to 6.5 percent of our total energy use

155,000 metric tons

of CO2 emissions avoided through IBM’s energy conservation projects in 2012

Electricity and Fuel Use and Related CO2 Emissions

Scope 1 and Scope 2 CO2 Emissions
YearElectricity and Fuel Use
(thousand MMBtu)
CO2 (estimated)
(metric tons x 1,000)
200822,443 2,502
200921,507 2,436
201021,622 2,156
201121,758 2,182
201221,613 2,195
IBM uses the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard developed by the World Resources Institute and the World Business Council for Sustainable Development for estimating and reporting its CO2 emissions.
CO2 emissions data includes the CO2 avoidance associated with IBM’s purchases of renewable energy.

Between 1990 and 2012, IBM saved 6.1 billion kWh of electricity consumption, avoided 3.9 million metric tons of CO2 emissions (equal to 57 percent of the company’s 1990 global CO2 emissions) and saved $477 million through our annual energy conservation actions.

Managing IBM’s energy program

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 (heating, ventilating and air conditioning), 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 four years. The program is buttressed by several enterprise-level databases that collect, store and analyze energy-use data, conservation project results, completed checklists, and relevant key performance indicators. These analyses enable monthly metrics reporting to the management team and the identification of opportunities for improvement. The continuous review of energy use and conservation performance has driven the strong results noted above.

More than 2,670 energy conservation projects involving a full range of energy efficiency initiatives delivered savings at over 400 IBM locations globally in 2012. Examples include:

  • Projects to match building lighting and occupancy schedules or install more efficient lighting systems were implemented at 208 locations, reducing electricity use by 12,700 MWh while saving $1.7 million.
  • HVAC systems or operating schedules were modified at over 150 locations reducing 48,500 MWh of electricity use and 99,000 MMBtu of fuel use, saving $5.3 million.
  • Central utility plant projects were implemented at 92 locations:
    • Boiler and chiller operation optimization helped reduce 19,300 MWh of electricity and 21,000 MMBtu of natural gas consumption at a savings of $1.4 million.
    • Free cooling reduced 8,200 MWh of electricity consumption saving $0.8 million.
    • Equipment upgrades and maintenance improvements reduced 17,200 MWh of electricity and 25,000 MMBtu of natural gas consumption while saving $0.9 million.
  • Manufacturing energy efficiency projects:
    • IBM’s microelectronics locations derived energy savings from nearly 220 efficiency improvement projects in their manufacturing and test areas. These projects saved 33,800 MWh of electricity, 69,000 MMBtu of fuel and $2.9 million.

      The projects focused on increasing the capacity and throughput of manufacturing equipment through process optimization, improved HVAC management and relaxed space temperature and humidity specifications where appropriate, as well as upgrades to more efficient equipment such as variable-speed vacuum pumps on semiconductor manufacturing tools.

Leveraging analytics for further efficiencies

As opportunities for incremental savings from typical energy conservation projects diminish due to IBM’s decades-long focus on energy efficiency, we are increasingly leveraging analytics to uncover less obvious, embedded opportunities to achieve continual improvement in operational energy efficiency.

  • Smarter Buildings technologies such as IBM TRIRIGA® Energy Optimization (ITEO) are being deployed in IBM facilities to increase energy efficiency. IBM locations are updating and connecting existing sensor networks to analytics-based control systems to collect data and analyze individual events and system trends. This information is then used to optimize building energy consumption. Through March 2013, IBM deployed ITEO at 23 of our highest energy consuming sites, with deployment underway at eight more locations in 2013. Twelve sites reported reductions of 8,400 MWh of electricity and 29,000 MMBtu of fuel use, with a net savings of $500,000 in 2012.
  • Chilled water optimization software and supporting sensor systems are being installed at IBM locations with large chiller plants. Three sites recorded 13,500 MWh and $980,000 of savings in 2012. Four other locations installed the system in 2012; savings from those sites will be reported in 2013. Six additional US locations plan to install the software and supporting sensor systems in 2013.

Data centers

IBM manages a diverse portfolio of data centers, consisting of both IBM and IBM-managed customer facilities all over the world. IBM operates additional raised-floor space to support 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 initiatives that include the following:

  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 (Power Usage Effectiveness) measurements of 1.4 to 1.6 when the data center is fully populated. PUE 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 data centers to optimize cooling delivery and minimize energy use and cost.
  3. Consolidating and virtualizing workloads for our internal operations and our customers’ operations, and utilizing cloud computing.

New data center construction

IBM’s most recent data center expansion, constructed in 2012 in Canada, 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 is designed to operate at 60 percent less energy than existing data centers through the inclusion of 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 commensurate with demand.
  • Free-flow cooling: Energy consumption is reduced by taking advantage of free cooling—using the outside air to cool the data center. The data center is located in a favorable climate zone; we will gain an estimated 200 days of full “free” cooling annually, and 120 days of partial free cooling.
  • Variable speed fans and chiller systems: The data center cooling system uses energy efficient mechanical equipment, including motors, variable frequency pumps and chillers that will deliver a return on investment in three years or less.
  • Higher chilled water operating temperatures: The cooling water delivered from the chillers to the raised-floor has been increased from 48 degrees in a data center built just four years ago to 55 degrees at this site.
  • Modular data center design: Our new leadership data center in Canada uses the same innovative modular design as IBM’s leadership data center in Raleigh, NC. It was built in smaller increments—or modules—allowing it to respond to business growth while adapting to IT changes in a way that permits upgrades without disrupting operations.

1990-2012

6.1 billion kWh

of electricity conserved

3.9 million

metric tons of CO2 emissions avoided

$477 million

saved through IBM’s annual energy conservation actions

Existing data centers

In 2012, we completed nearly 400 projects at over 120 existing data center locations that reduced energy use by over 49,700 MWh, and saved more than $5.5 million. Total savings from these projects are equivalent to the energy use of a 4,000 to 6,000 square meter IBM strategic data center.

The IBM Measurement and Management Technology (MMT) thermal management system has been installed at IBM’s major data centers representing more than 60 percent of the global raised-floor energy consumption for IBM’s internal and client IT operations. 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. Using the information provided by MMT, IBM has been able to take the following actions over the past three years:

  • Install thousands of blanking panels and cable cutout plugs, reducing the short circuiting of cooling air in the data center
  • Shut down more than 20 percent of the total installed CRAC units and improve average CRAC utilization to greater than 60 percent
  • Increase the average raised-floor temperature by 1.6ºC, with work continuing to further raise temperatures toward an average of 24ºC

MMT offers the additional benefit of rebalancing a data center’s thermal profile as equipment is removed and installed, enabling the early identification of developing problems to proactively mitigate their impacts.

System virtualization and cloud computing

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

IBM is utilizing virtualization to consolidate multiple workloads from servers and storage systems with low utilization onto single systems, reducing energy use and cost by more than 104,300 MWh and $10 million in 2012. IBM virtualized more than 22,000 applications in our owned/leased data centers in 2012 and plans to continue these projects in 2013 and beyond to continually improve utilization of IBM and client hardware assets and reduce data center operation energy use and space requirements.

We continued to expand IBM’s cloud computing programs through 2012, offering cloud services from seven IBM data centers around the globe. Cloud computing is an efficient model for providing IT services that optimize the use of virtualization technologies. It allows us to further improve utilization of IT equipment assets, better balance workloads, adjust power consumption and virtualize infrastructure in data centers to align processing and storage needs with power consumption.

$5.5 million

saved by nearly 400 energy conservation projects at more than 120 existing data center locations that reduced energy use by a total of over 49,700 MWh

Data center power usage performance

IBM measures, calculates or uses estimating protocols to determine the PUE of the data centers we manage. These data centers include recently constructed Leadership Data Centers as well as large legacy data centers. The average PUE for this raised-floor space is 1.73.

Because the majority of the data centers in IBM’s facility portfolio consist of spaces that are 10 to 30 years old and contain IT equipment varying in age from new to 10 years, improving the energy efficiency of these data centers requires thoughtful planning and execution to ensure that we meet both our operational objectives and our commitments to our customers.

The overall performance of these IBM data centers compares favorably with the average PUE of 1.8 to 1.89 as reported in the Uptime Institute 2012 Data Center Industry Survey of 1,100 data center users and with an average PUE of 2.9 as reported by a Digital Realty Trust 2012 survey of 300 IT decision makers. The results from both surveys were reported in an April 15, 2013, Techworld article. IBM has made – and will continue to make – significant investments and improvements to reduce energy demand and improve energy efficiency in our data centers. Our results speak to the success of our efforts.

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 EU countries with “Participant” status in Data Center Energy Efficiency, based on the EU Code of Conduct (CoC) for Energy Efficient Data Centers.

An additional 16 IBM data centers were awarded “Participant” status later in 2012 under the EU CoC. The registered data centers represent more than 70 percent of IBM’s IT delivery and business recovery data center space in the EU. This honor represents the largest portfolio of data centers from a single company to receive the recognition to date. The EU CoC for Energy Efficient Data Centers is a voluntary initiative that aims to promote energy efficiency performance standards for data centers.

IBM maintains energy efficiency leadership in data centers by deploying uniform practices across our global data center portfolio. In addition, IBM applies innovative solutions such as Measurement & Management Technologies (MMT) 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 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.

43

IBM data centers across

19

countries were awarded "Participant" status in Data Center Energy Efficiency, based on the EU Code of Conduct for Energy Efficient Data Centers

An additional significant energy conservation goal

In 2009, amid business growth and continued increases in global energy prices, IBM set an additional goal to conserve 1,100,000 MWh of energy by year-end 2012. This was a substantial undertaking—1,100,000 MWh represents more than 20 percent of the total electricity IBM consumed in 2008.

Over the last four years, an integrated team from IBM’s environmental and finance staffs, real estate organization and business units saved 1,246,000 MWh of energy through conservation and efficiency, exceeding our target by 13.3 percent. Over 6,000 individual projects were completed across more than 500 facilities in 56 countries. The projects involved the deployment of unique IBM technologies and know-how, as well as a strong management system supported by senior executives.

The following provides a summary of the accomplishments achieved over the period of this initiative:

  • Server and storage virtualization and consolidation projects reduced or avoided 375,000 MWh/year of energy use and enabled the closure and consolidation of 20 data center spaces into larger, more efficient data center space. Over 100,000 images were consolidated onto multi-image servers across IBM’s data center and lab operations.
  • Data center best practices were implemented across our data center portfolio and MMT was implemented at 47 data centers, reducing or avoiding 92,300 MWh/year of electricity use and $8.9 million per year.
  • Forty-two locations in the United States, Canada and Europe implemented or improved free cooling systems, reducing energy use by over 34,000 MWh/year.
  • Building systems operations were improved through the use of chiller plant and building analytics and continuous commissioning projects, conserving 88,000 MWh of electricity and 305,000 MMBtu of fuel and purchased commodity consumption.
  • At IBM’s semiconductor manufacturing locations, conservation projects involving equipment and process optimization, optimizing clean room temperature and humidity specifications and the installation of higher efficiency equipment saved 110,000 MWh in energy use.

This additional goal augmented IBM’s already strong company-wide energy conservation focus and enabled us to increase our average annual energy conservation savings rate as a percentage of our annual energy consumption from the 5 percent we achieved between 2005 to 2008 to 6.3 percent from 2009 to 2012.

Executing this additional goal also revealed several keys to achieving continual improvement in energy conservation and efficiency, including:

  • Integration of diverse skills, knowledge of interrelated activities and collaboration across business units are essential to capture the full energy conservation opportunity in integrated systems like data centers and manufacturing facilities.
  • Use of IT-based monitoring, measurement and control technologies and analytics provide powerful insights into system performance and identify significant efficiency improvement opportunities, even in previously optimized systems.
1.246 million MWh

of energy avoided through conservation and efficiency actions from 2008-2012

13.3%

Percentage by which we exceeded our target

Renewable Energy

In 2012, IBM contracted with its utility suppliers to purchase 499 million kWh of renewable energy over and above the quantity of renewable energy provided as part of the mix of electricity that we purchased from the grid. The 499 million kWh represented 9.8 percent of our global electricity usage and resulted in the avoidance of 212,000 metric tons of CO2 emissions. In addition, more than 5 percent of IBM’s electricity purchases from the grid were electricity generated from renewable sources – bringing our total renewable energy purchases to approximately 15 percent of our consumption in 2012.

IBM continued to contract for defined renewable energy purchases in Australia, Austria, Belgium, Denmark, Finland, Germany, Italy, Japan, Netherlands, Sweden, Switzerland, the United Kingdom and the United States in 2012. We have at least two data center facilities located in each of these countries and these data centers receive some or all of their electricity from renewable energy purchases.

Our procurement of renewable energy must meet our business needs. Not only should the cost be competitive with market prices over time, but the energy must also be consistently reliable to ensure uninterrupted power for our critical operations. IBM’s strategy of contracting for defined renewable energy has been successful in Europe and we continue to request the inclusion of electricity generated from renewable sources as an option in our contracts in all geographies.

Currently, due to limitations in the market regulatory and procurement structures and in the distribution infrastructure, there is limited renewable energy available through the grid in most areas of the world. These restrictions limit the total quantity of renewable energy available for purchase directly from the grid for consumption at a facility. Continued advances are needed in renewable electricity generation, distribution and storage technologies to increase the availability of economically viable renewable electricity in the marketplace to supply electricity directly to consuming locations. IBM is working with industry peers, utilities, NGOs and other renewable energy industry participants to identify, develop and capture opportunities to procure electricity generated from renewable sources where it makes business sense.

IBM also endeavors to incorporate on-site solar energy, co-generation or tri-generation systems or geothermal systems on an individual location basis. Some recent examples:

  • In 2012, we contracted with the landlord of a leased location in Massachusetts to purchase electricity from a 780-kilowatt rooftop solar panel array at this location. The system supplies electricity directly to the facility and is estimated to deliver 5 to 10 percent of the location’s annual electricity use. The system became fully operational in April 2013.
  • Three IBM facilities in Europe have co-generation/tri-generation systems which provide 10 to 20 percent of our electricity use at these facilities, as well as heating and cooling to support building operations.
  • IBM’s Zurich Research Center has a geothermal heating system.

We are continuing to pursue additional opportunities to install on-site electricity generation systems at our facilities. These systems offer a means to diversify our electricity supply and increase our purchases of renewable energy, though they typically only generate 10 to 20 percent of our site energy demand because the majority of the energy consumed by IBM occurs at locations with energy-dense activities, such as data centers and semiconductor manufacturing sites.

Research to advance renewable energy

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

  • IBM scientists have developed a method of dramatically improving the overall efficiency of concentrated solar power systems up to 80 percent. The prototype High Concentration Photovoltaic Thermal system uses a large parabolic dish, made from a multitude of mirror facets, which are attached to a sun tracking system that positions the dish at the best angle to concentrate the sunlight onto several microchannel-liquid cooled receivers with specialty photovoltaic chips. Hundreds of the photovoltaic chips are mounted on micro-structured layers that pipe liquid coolants within a few tenths of a micrometer off the surface of the chip to absorb the heat and draw it away 10 times more effectively than can be achieved with passive air cooling. The entire receiver combines hundreds of chips and provides 25 kilowatts of electrical power.
  • IBM has demonstrated a light-weight, ultra-high-density lithium-air battery with the maximum energy density theorized to be 15 times greater than lithium-ion batteries. Most importantly, continued advancement of the technology may achieve energy density comparable to that of gasoline, which would markedly improve the economics of electric vehicles.
  • IBM is working with a range of partners to deliver smart grid capability to improve the integration of distributed generating assets—including wind and solar electricity generation systems and systems with energy storage capacity, such as electric cars and large refrigeration systems—into grid dispatching and planning processes. These projects are critical to enabling the smooth integration of renewable energy generation resources into the grid system.
499 million kWh

of renewable energy purchased by IBM from our utility suppliers

9.8%

The amount of IBM’s global electricity usage represented by purchased renewable energy

CO2 Emissions Reduction

IBM met its second-generation climate protection goal in 2012, reducing our operational CO2 emissions by 15.7 percent against the 2005 baseline and exceeding our commitment to achieve a 12 percent reduction over the period. Operational CO2 emissions increased slightly from 2011 to 2012 primarily due to an increase in the average CO2 factor of IBM’s purchased electricity.

IBM’s CO2 emissions reductions have been achieved through:

  • IBM’s energy conservation efforts that have reduced or avoided a total of 1.83 million MWh of electricity and 2.9 million MMBtu of fuel use (based on one-year savings associated with conservation projects) from 2006 to 2012, which resulted in a reduction in IBM’s electricity and fuel use by 2.3 percent and 25.9 percent, respectively, against the 2005 baseline use adjusted for acquisitions and divestitures.
  • IBM’s direct purchases of electricity generated from renewable sources, i.e., beyond that supplied through grid-purchased electricity, and the associated CO2 avoidance, increased by a factor of 3.8 from 2005 to 2012.
  • An increase in the amount of renewable energy IBM procured as part of the grid-supplied electricity between 2005 and 2012. This is evident as the average grid emissions factor for IBM electricity purchases reduced from 0.45 metric tons CO2/MWh in 2005 to 0.43 metric tons CO2/MWh in 2012, as reported by the International Energy Administration and the US EPA. This increase is the result of higher percentages of wind, solar and natural gas generation and lower levels of coal (in some jurisdictions) in the mix of grid generation.
co2 emissions reduction

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 our 1990 emissions. To further extend this achievement, IBM set 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.

15.7%

Result
As of year-end 2012, IBM’s energy conservation results and procurement of renewable energy achieved a 15.7 percent reduction in IBM’s energy-related CO2 emissions from 2005.

PFC Emissions Reduction

IBM releases some perfluorocompounds (PFCs) from our semiconductor manufacturing operations, with PFC emissions representing approximately 10 percent of IBM’s Scope 1 and 2 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 the end of 2010.

The Semiconductor Industry Association, of which IBM is a member, is currently working with the 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 the meantime, we continue to take actions to reduce our PFC emissions and monitor performance. Between 2010 and 2012, we reduced our PFC emissions by 2.9 percent. Two replacement projects at IBM’s semiconductor manufacturing plant in Vermont primarily drove these reductions:

  • Chamber cleans, which remove deposited material from manufacturing equipment parts, were originally performed using C2F6, a gas with low process utilization (20 to 40 percent). IBM is implementing replacement processes using NF3, which has a very high utilization rate (95 to 99 percent), significantly reducing the GHG emissions from the process.
  • In some other chamber clean processes where the NF3 substitution does not work, C2F6 was replaced with C4F8, a gas with a much higher utilization rate and much lower global warming potential, significantly reducing the GHG emissions from the process.

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

IBM continues to evaluate replacements for the HTFs that have lower volatility and global warming potential. IBM has achieved reductions in these emissions through the use of lower GHG emitting materials in some test operations and through the installation of solid state chillers on some semiconductor equipment.

Voluntary Climate Partnerships

IBM continued participation in the World Wildlife Fund’s Climate Savers program in 2012. We achieved our committed goal 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. This goal was over and above the 40 percent reduction and avoidance of CO2 emissions IBM had already achieved between 1990 and 2005. By the end of 2012, IBM had exceeded its Climate Savers commitment, achieving a 15.7 percent reduction in operational CO2 emissions against the 2005 baseline.

Under Climate Savers, IBM has also committed to improving the energy efficiency and energy utilization of our own and our 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.

Transportation and Logistics Initiatives

Employee commuting and leased/rental vehicles

IBM has been active in promoting programs that reduce employee work commutes for decades. 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 for a designated number of days each week

In 2012, 103,000 of our 430,000 global employees 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 5.8 million gallons of fuel and avoided more than 45,000 metric tons of CO2 emissions in 2012.

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 US 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 that they may use for both business and personal purposes. For these vehicles, we continue our effort to move to more fuel-efficient models 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 for business, we have worked with rental car companies to require and/or offer more fuel-efficient vehicles for employee rentals.

Reducing business travel

In 2012, IBM further expanded the use of collaboration tools, both internally and externally, which provide business efficiency and boost productivity by connecting our global workforce while reducing travel-related resource consumption and emissions.

We conducted more than 2.5 million minutes of online meetings and exchanged more than 50 million instant messages daily. We also have increased our use of video conferencing to help reduce travel and improve team interactions. In addition to video-equipped conference rooms around the globe, we completed work on an initial IBM Sametime® desktop video pilot to extend video capability to 6,000 employees’ desktops. Because of its success, we plan to continue growing this capability in 2013.

Another area of IBM’s focus on collaboration has been the use of social business technologies. The rapid adoption of the IBM Connections social business application has enabled approximately 60 percent of employees to further share plans, ideas and documents collaboratively. These knowledge-sharing capabilities bring employees together without travel through conversations on social networks regarding topics of business interest.

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. IBM has been an active participant of the US 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

As noted elsewhere in this report, IBM is committed to doing business with environmentally responsible suppliers. One of the supply chain areas on which we focus is our suppliers’ energy efficiency and climate protection programs.

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 and Scope 1 and Scope 2 GHG emissions. Our suppliers are also required to measure their performance, establish voluntary goals in these areas and publicly disclose their performance against those goals. We manage this requirement through two processes: our membership in the Electronic Industry Citizenship Coalition (EICC) and IBM’s own supplier environmental management system requirements.

IBM has been an active participant in the EICC Carbon Reporting System, which has completed its third year of operation. The EICC reporting process requests that selected suppliers providing components or products to EICC members disclose their operational energy and water use and GHG emissions through the EICC reporting tool.

We believe, as do the other EICC members, that as companies gain an understanding of their energy use and GHG emissions, 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 provides efficiency associated with information disclosure.

Through the EICC’s Carbon Reporting System, IBM and other participating companies gain insight 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 EICC reporting form in 2012 (reporting 2011 data). These 107 companies represent a cross-section of IBM’s procurement spend. They included services, general and production-related spend (including logistics), third-party-operated data centers and rental cars.

Of the 107 IBM suppliers that received questionnaires, 89 responded. This 83 percent response rate is above the typical response averages for the EICC survey. The majority of the responding suppliers report their Scope 1 and Scope 2 emissions, have a GHG emissions reduction target in place and are taking actions to achieve their targets.

In addition to EICC supplier reporting, IBM has continued to work with Tier 1 suppliers to further our company’s requirement that all IBM suppliers have an environmental and social management system in place and disclose on goals and performance. More information on this supplier program may be found in the Environmental Requirements in the Supply Chain.

IBM’s requirements for our suppliers rest on the foundational belief that real results in GHG emissions reduction are made possible by actionable information about a company’s energy use and GHG emissions, and that each company is best positioned to assess and implement actions to address its own emissions in a way that is meaningful and sustainable. In short, each enterprise must take responsibility to reduce its own energy use and GHG emissions.

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.

Our Smarter Planet® Solutions

IBM offers a variety of products, services and solutions that enable companies, governments and other entities to improve the efficiency of their operations and systems. Many of these Smarter Planet solutions also bring about environmental benefits or directly focus on managing environmental issues, ranging from operational energy management strategies and GHG inventory processes to solutions for optimizing the efficiencies of corporate business processes, logistics and transportation, water management and other operations. A sampling of the solutions related to climate and energy is provided below.

Smarter Building solutions

IBM TRIRIGA® Energy Optimization (ITEO) software is an advanced solution that optimizes the energy and environmental performance of buildings. It monitors energy-consuming equipment, manages maintenance activities and reports performance. The solution applies analytic rules to heating, cooling, lighting and power systems that identify sub-optimal conditions. It also identifies savings, takes immediate action to optimize performance and provides a performance dashboard.

Employing a smarter buildings strategy can help organizations reduce energy use by up to 40 percent, and sometimes more, and increase facility utilization by up to 85 percent.

Smart Grid solutions

IBM continues to develop our portfolio of Smart Grid solutions that integrate inventory, data collection, analytics and system management functionality into a holistic package that enables the monitoring and management of energy distribution grids and generation facilities. The objective is to improve system efficiency and reliability, reduce generating capacity requirements and integrate intermittent, distributed generation systems, such as those involving wind and solar generated power.

Many of today’s distribution systems have little or no intelligence to balance loads or monitor energy flows, resulting in losses equivalent to the annual electricity use of India, Germany and Canada combined. Making the US grid five percent more efficient would alone be roughly equivalent to permanently eliminating the annual fuel use and GHG emissions associated with 53 million cars.

In addition to IBM’s focus on the distribution grids and generation facilities, we also focus on other energy-related Smarter Solutions. A few examples:

Electric vehicle solutions

IBM is teaming with an electric vehicle (EV) charging network provider to implement a fully integrated EV charging IT system across Ireland to help manage approximately 1,000 public electric vehicle charging points. The companies will add a layer of intelligence and convenience to the charging process, allowing electric vehicle drivers to connect, charge and pay using an identification card. Additionally, this project will provide utilities with access to energy usage data that can help improve grid operations, reduce power strain during peak charging times and ensure reliable energy distribution to customers.

Smart Grid pilot based on renewable energy

IBM formed a consortium with several Swiss energy and retail companies to undertake a unique project called FlexLast that will use refrigerated warehouses as a buffer to help balance fluctuations driven by the availability of sun and wind energy on the energy grid.

Using software and algorithms developed by IBM scientists, the FlexLast pilot will integrate intermittent wind and solar generation with refrigerated warehouse energy consumption, maximizing air conditioning with high solar and wind production and initiating a lower refrigeration level or complete shut down when intermittent electricity production is minimal, in order to improve grid stability and increase the percentage of renewable energy sources that can be efficiently supported on the grid. IBM scientists have also successfully applied the same concept in Denmark for electric vehicles and appliances in the EDISON and EcoGrid EU projects.

Smarter Energy® research

IBM is a member of the Smarter Energy Research Institute, a new collaboration between IBM Research and the energy and utilities industry practice. The goal of this collaborative work is to transform the operations of leading energy companies through the use of predictive analytics, system optimization and advanced computation to deliver better services to their customers. The Institute has identified five core innovation tracks to pursue joint research: outage planning optimization, asset management optimization, integration of renewable and distributed energy resources, wide-area situational awareness, and the participatory network.

Smarter Computing/Data Center Solutions

IBM offers a range of data center energy efficiency solutions including planning, design and construction services for new, energy efficient facilities; measurement, management and assessment technologies to continually improve the efficiency of both existing and new facilities; and virtualization services to increase server and storage system utilization and the workload delivered per each unit of energy consumed. For example:

IBM worked with a major telecom and data services provider to design and build the largest data center facility in India to deliver new cloud and networking services. Covering more than 900,000 square feet with 20 enterprise modular data centers in a four-tower building, the new, highly efficient data center is designed to international “green” building standards and will easily scale to customers’ growing infrastructure needs while optimizing the energy use of current operations.

IBM also designed and built a 1,100-square-foot data center for a furniture retailer. The new data center, which has a modular design and uses 100 percent free cooling, reduces energy costs and use by 40 percent and supports the furniture company’s brand strategy and commitment to being an environmentally responsible company.

Smarter Transportation and Logistics solutions

IBM solutions for Supply Chain and Traffic Management enable companies and governments to anticipate, control and react to demand and supply volatility within the distribution or transportation network and track and manage fuel use within their fleets. With the IBM Supply Chain Management for Logistics solutions, firms can now solve complex planning, scheduling and logistics management problems while tying these operations to corporate objectives to reduce costs, improve operational efficiency and enhance the customer experience.

IBM worked with an international airline to develop a system to accurately calculate, track and report fuel use and aircraft emissions. The system uses advanced analytics to map the carrier’s carbon emissions and optimize its fuel usage through a detailed analysis of each flight. The system will enable the airline to reduce its overall fuel usage and its emissions profile.

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