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Chairman’s Letter

A commitment to corporate responsibility pervades IBM, from new hires to the chairman’s office. In this year’s letter, Chairman, President and Chief Executive Officer Sam Palmisano describes IBM’s long-term approach to corporate responsibility, and the IBMers that make it possible.

IBM’s Approach

Through the years, IBM has consistently expanded the definition of corporate citizenship, pushing the boundaries of what is required to be considered a responsible enterprise. In this section of IBM’s 2010 Corporate Responsibility Report, you will find more detail on our approach to corporate responsibility, and some examples of how that approach manifested itself during the past year.

Communities

At IBM we engage with communities around the world by offering our technology, services and expertise to help solve some of the world’s most complex problems. While the monetary value of these contributions is great, we eschew checkbook philanthropy whenever possible. We believe that this approach is the most efficient, effective and sustainable way to practice good corporate citizenship. And we believe it is helping to make the world work better. In this section of IBM’s 2010 Corporate Responsibility Report, you will find examples of the contributions IBM made to the global community this past year.

The IBMer

For the last 100 years, IBM has pioneered innovative approaches to hiring, managing and retaining our work force. From some of the earliest thinking on work force diversity to progressive programs for employee well-being and leadership development, this ongoing commitment to our employees is critical to the success of IBM and IBMers. And as the nature of our business changes, we will continue to apply the same innovation and creativity we use to develop products and services to our relationship with employees. In this section of IBM’s 2010 Corporate Responsibility Report, you will find examples of the commitments IBM made to its work force this past year.

Environment

IBM has long maintained an unwavering commitment to environmental protection, which was formalized by a corporate environmental policy in 1971. The policy calls for IBM to be an environmental leader across all of our business activities, from our research, operations and products to the services and solutions we provide our clients to help them be more protective of the environment. Download this section of the report (2.2MB)

Supply Chain

IBM manages a supply chain of more than 27,000 suppliers in nearly 100 different countries. We understand that managing a supply chain of this size carries with it considerable social responsibility. Even so, we are continually expanding the definition of what it means to run a responsible supply chain, challenging ourselves and our suppliers to reach ever higher standards of social and environmental compliance. In this section of IBM’s 2010 Corporate Responsibility Report, you will find examples of IBM’s supply chain responsibility efforts over the past year.

Governance,
Ethics and Integrity

Both the size and nature of IBM’s business necessitate that it adhere to the highest standards of conduct. IBM employs more than 400,000 employees, and provides services and technology that support businesses, governments, schools, hospitals and highways. As such, integrity, transparency, privacy and risk management are all crucial parts of our business, and our commitment to making the world work better. In this section of IBM’s 2010 Corporate Responsibility Report, you will find examples of how IBM is setting the modern standard for business ethics.

Audits and Compliance

IBM measures its 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 and Global Service Environmental Compliance, complete a comprehensive self-assessment. Each year, certain sites are audited for environmental, health and safety compliance by IBM’s Corporate Internal Audit staff. 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 20 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, at least once every two years.

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). Every event meeting IBM’s environmental incident reporting criteria, which equals or surpasses legal reporting requirements, 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 2010, a total of 14 accidental releases related to IBM operations were reported through EIRS. Of these, four were to air, six to land, two to water, and two to both land and water.

The releases to the air included three refrigerants and one particulate matter, which was a wet residue left on fans after a cleaning activity.

The releases to land included one of treated industrial wastewater, one of untreated industrial wastewater, and one each of antifreeze, fuel oil, condensate water and oil.

The releases to water included one of turbid water and one of water containing food particles and grease from a kitchen.

The releases to both land and water included one of untreated sanitary wastewater and one of hydraulic fluid.

The root cause was investigated for all releases, and corrective actions were taken as appropriate. None of the releases were 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.

In 2010, IBM received 116 successful agency visits worldwide with no fines being assessed.

Over the past five years, IBM has paid three fines for a total amount of $31,000.

Fines and Penalties Worldwide
($ in thousands)
2006 2007 2008 2009 2010
Number 0 1 0 2 0
Fines $0.0 $1.0 $0.0 $30.0 $0.0
116

successful agency visits worldwide in 2010 with no fines being assessed.