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.”

Conflict Minerals

We understand the importance of achieving a supply chain that uses only responsibly sourced minerals. And so at IBM we continuously work toward this goal in the extended supply chain, and we communicate our efforts publically.

Last year, IBM and other members of the Electronic Industry Citizenship Coalition (EICC), in conjunction with the Global e-Sustainability Initiative (GeSI) Supply Chain Work Group and companies from other sectors outside electronics continued working to achieve a supply chain free of Democratic Republic of Congo (DRC) conflict region-originated minerals. Four minerals (tin, tantalum, tungsten and gold) originating in the DRC are considered conflict minerals, although these materials are often found in other parts of the world and from legitimate sources within the DRC that are not conflict-related. IBM has published its conflict minerals standard outlining our recognition of the importance of this issue and our plans to take definitive steps to ensure only responsibly sourced materials are in our extended supply chain. This standard is posted to the Global Supply website and has been brought to the attention of our upstream suppliers.

In 2012, EICC/GeSI updated its web-based list of Conflict Free Smelter (CFS) results for companies that successfully completed this rigorous assessment. The CFS assessment process was created for smelters and refiners that play a crucial role in the extended supply chain as they are the point at which concentrated ores are refined into the higher-level materials that cascade into technology products.

This year saw the updated release of the EICC/GeSI Conflict Minerals Reporting Template and Dashboard. This survey and consolidation software was developed to provide companies with a common format for their upstream suppliers to identify the use of the four materials, the smelters used in the extended supply chain and—where possible—the country of origin of the four minerals.

In the fourth quarter of 2012, IBM deployed this survey to 35 direct suppliers of subcomponents to our Microelectronics group. From this work, we learned the identities of 145 upstream tantalum, tin and tungsten smelters and gold refiners, located in 25 countries, currently used by our direct suppliers. We have shared a consolidated report of these survey results with more than 40 customers of the Microelectronics group in support of external interest in this topic. By comparing the smelters in the current EICC/GeSI CFS list we determined the vast majority of the upstream tantalum smelters in the IBM Microelectronics supply chain are indeed certified as conflict-free. In the fourth quarter we also deployed the conflict minerals survey with more than 300 direct suppliers to our Systems and Technology Group to gain similar insight to the smelters feeding into this portion of our extended supply chain, and we began compiling and analyzing this data during the second quarter of 2013.

Our upstream survey work is part of our preparation for reporting required by May 31, 2014 for the US Security and Exchange Commission’s Dodd-Frank Wall Street Reform and Consumer Protection Act, section 1502.

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