Position on Scope 3 GHG emissions

Determining the indirect greenhouse gas (GHG) emissions across an organization's value chain ("Scope 3" emissions) in a factual, reliable manner is quite challenging due to the lack of primary data that can be credibly attributed to the organization in question. As such, most numbers that are cited as Scope 3 emissions are mere estimates, regardless of whether they are communicated in a way that enables an audience to believe they are authentic numbers. Full value chain inventories are guesstimates at best. These guesstimates of indirect Scope 3 emissions can help us realize where many actual, direct Scope 1 emissions are likely to occur across society in a macroeconomic sense. However, their lack of factual basis, reliability, and dependability render most of them unsuitable for Scope 3 numerical goals against which real progress needs to be tracked. Likewise, these guesstimates are rarely suitable for comparing products, services or performance. There exist too many ways to manipulate estimates in order to end up with the numbers one may seek.

Of the fifteen Scope 3 emissions categories defined by the GHG Protocol's Corporate Value Chain Emissions Accounting and Reporting standard, IBM can deterministically calculate emissions in one specific situation under the "Purchased goods and services" category, namely, emissions associated with electricity IBM consumes in third-party operated spaces that IBM leases for data center operations (co-location data centers). We can do so because we know the actual quantity of electricity that we consume. In addition, because IBM has control over its consumption of electricity in co-location data centers, we include it and the associated emissions in our energy and climate goals. Otherwise, IBM does not employ contract manufacturers who perform a substantial amount of their work for IBM, nor does IBM have suppliers for whom IBM represents anywhere close to a majority of their revenue.

Nevertheless, recognizing that there exists an interest in the overall idea of indirect Scope 3 emissions, IBM also attempts broad approximations of some emissions in four additional Scope 3 categories. These broad approximations do not represent all of IBM's Scope 3 emissions in these categories but only those pertaining to aspects for which we have some relevant information. IBM does not guesstimate Scope 3 emissions in other categories because the assumptions that must be made lack requisite credibility.

Moreover, one organization's asserted indirect Scope 3 emissions are at a minimum a double count of another company's direct Scope 1 emissions. The double counting dilutes the necessary attention to the actual emissions that really do reach the atmosphere — Scope 1 — and which need to be reduced in order to actually combat climate change. IBM further believes that real reductions of emissions are directly and demonstrably achieved when the responsible organization takes action to do so. This requires each organization, including IBM's suppliers, to build its own capacity to succeed for the long term and regardless of whether IBM continues to procure from them or not. This capacity building is essential to address climate change across society-at-large.

We work with suppliers with that objective in mind. Since 2010 IBM has required all of its first-tier suppliers to implement an environmental management system, measure and set goals to reduce their GHG emissions, and publicly disclose their results. Building upon these requirements, in April 2021, IBM enhanced its supplier engagement by establishing a new goal requiring key suppliers in emissions-intensive business sectors to set a goal to reduce their Scope 1 and Scope 2 emissions that is aligned with scientific recommendations from the Intergovernmental Panel on Climate Change to limit Earth's warming to 1.5°C above pre-industrial levels (https://www.ibm.com/ibm/environment/annual/IBMEnvReport_2020.pdf, p.9).

IBM has long been committed to doing business with suppliers who conduct themselves with high standards of ethical, environmental, and social responsibility, no matter where they operate. We support this commitment not only by setting specific environmental requirements for our suppliers but also by partnering with them to help drive their continual improvement. Individual companies intimately know their business, operations, impacts and opportunities. They are best positioned to deliver measurable results and should be recognized for their achievements. IBM does not take credit for a supplier's accomplishment as our own, nor will we bundle large guesstimates of Scope 3 emissions in a way that reduces visibility of our Scope 1 and Scope 2 emissions.