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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.

Remediation

When groundwater contamination was first discovered at one of IBM’s sites in 1977, the company initiated groundwater monitoring at all of its manufacturing and development locations worldwide. Today, IBM has 2,755 monitoring and 110 extraction wells at various sites around the world.

In 2010, 14,706 pounds of solvents from past contamination were extracted while remediating, controlling and containing groundwater at seven currently operating sites and 10 former sites in three countries. At four of these sites, an additional 794 pounds of solvents were removed by soil vapor extraction or other methods. IBM also has financial responsibility for remediation at three other former sites.

As a result of the U.S. Superfund law, IBM is involved in cleanup operations at some non-IBM sites in the U.S. The Superfund law creates a retroactive responsibility for certain past actions even though they may have been technically and legally acceptable at the time.

As of year-end 2010, IBM had received notification (through federal, state or private party) of its potential liability at 110 sites, since the beginning of the U.S. Superfund program back in 1980. Of these, 57 are on the U.S. National Priority List. At the majority of the 110 sites, it has been determined that IBM either never had liability or has resolved liability. As a result, IBM believes it may presently have potential liability at only 14 sites.

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 down a facility is made. As of December 31, 2010, the total accrual amount was $262 million.