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.”

Remediation

When groundwater contamination was first discovered at one of IBM’s sites in 1977, we initiated groundwater monitoring at all of our manufacturing and development locations worldwide. Today, IBM has 2,624 monitoring wells and 109 extraction wells.

In 2012, approximately 16,400 pounds of solvents from past contamination were extracted while remediating, controlling and containing groundwater at six currently operating sites and 11 former sites in three countries. At four of these sites, an additional 2,700 pounds of solvents were removed by soil vapor extraction or other methods. IBM also has financial responsibility for remediation at two additional former sites.

As a result of the US Superfund law, IBM is involved in cleanup operations at some non-IBM sites in the United States. The Superfund law creates retroactive responsibility for certain past actions, even though those actions may have been technically and legally acceptable at the time. As of year-end 2012, IBM had received notification (through federal, state or private party) of its potential liability at 112 sites, since the beginning of the Superfund program in 1980. Of these, 61 are on the US National Priority List. At the majority of the 112 sites, it has been determined that IBM either never had liability or has resolved its potential liability. As of now, IBM believes it may have potential liability at only 17 sites noticed through 2012.

When investigation and/or remediation at an IBM location or an off-site facility is probable, and its costs can be reasonably estimated, IBM establishes accruals for loss contingency. Estimated costs connected with closure activities (such as removing and restoring chemical storage facilities) are accrued when the decision to close a facility is made. As of December 31, 2012, the total accrual amount was $229 million.

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