Year in Review

Year in Review

At IBM, we believe that achieving the highest standards of corporate responsibility is beneficial for our clients and our employees, and strengthens the communities in which we live and work. That is why our business and citizenship strategies are aligned and integrated. In fact, they are one and the same. Our commitment to this approach is evidenced by the business we pursue, the partnerships we establish, the relationships we build with all of our stakeholders, and the achievements we are able to make.

There are four aspects of IBM’s corporate responsibility activities that are of particular interest to our stakeholders:

  1. The support of our employees and communities
  2. The impact of IBM’s products and operations on the environment
  3. The management of our global supply chain
  4. The governance, ethics, and integrity of our company

In this section, you’ll find highlights of our activity in 2013 in these four key aspects of corporate responsibility. For more detailed information, please visit our corporate responsibility website.


Communities

In 2013, IBM strived not only to address problem areas but to bring about transformation on many fronts, working closely with educators, local and national government leaders, nongovernmental organizations, and communities. We offer solutions grounded in our technology and our expertise that are focused on helping solve some of society’s most entrenched problems, and then implementing solutions that are sustainable and scalable. The following examples demonstrate our approach to corporate responsibility:

Replicating a model for success

Over the past few years, IBM has worked with educators in K-12 and higher education to create a new approach to high school designed to transform the learning process and facilitate the successful transition from school to career. Pathways in Technology Early College High Schools (P-TECH) are innovative public schools spanning grades 9 to 14 designed in collaboration with IBM that bring together the best elements of high school, college, and the workplace. P-TECH schools are public schools, open to students without grade or testing requirements. Students begin in grade nine and continue through a six-year sequence of high school and college coursework to earn a two-year, postsecondary degree awarded by the school’s college partner.

The goal of this approach is to empower students with the specific academic preparation, credentials, and workforce skills needed to be competitive in the job market, particularly—but not exclusively—in the areas of science, technology, engineering, and math. IBM and its partners designed the first 9-14 school (P-TECH) in September 2011, in Brooklyn, New York. It has been replicated in four Chicago schools in 2012 and two additional schools in New York in 2013. In 2014, three more schools based on the P-TECH model are slated to open in New York City, with 16 more planned throughout the state of New York during 2014, followed by 10 additional schools in 2015. With IBM’s assistance, the first P-TECH model high school in Connecticut is expected to open in Norwalk this year, and a half-dozen more are planned for next year.

President Barack Obama highlighted P-TECH in his State of the Union address and visited the Brooklyn P-TECH in 2013. The president also created a $100 million grant program, Youth CareerConnect, to better equip more high school students with the job skills they will need to compete more effectively in the global economy and expand P-TECH further. “This country should be doing everything in its power to give more kids the chance to go to schools like this one,” said President Obama during his visit to P-TECH. The grant program’s goal is to encourage the nation’s high schools to restructure their curricula, in partnership with industry, in ways that will make students—and the nation—more competitive and the goal more achievable.

Making our cities smarter

IBM’s Smarter Cities Challenge demonstrates our integrated approach to corporate citizenship and our commitment to transforming the communities in which we live and work. It began as a $50 million competitive grant program to provide consulting services led by teams of IBM employees to cities around the world over a three-year period. Today, Smarter Cities Challenge is transforming how companies, foundations, and think tanks engage with cities to make them smarter and improve city services.

These teams of IBM experts work closely with city leadership to help solve complex problems, make the cities more efficient, and improve the quality of life for residents. They focus on critical issues such as healthcare, education, public safety, social services, transportation, communications, sustainability, budget management, jobs, and economic opportunity.

In 2013 alone, IBM deployed 180 employees to 31 cities around the world as part of Smarter Cities Challenge. Though this is a philanthropic endeavor, it draws on the expertise and knowledge we’ve gained through building a substantial business in helping cities collect and analyze critical data, offering a clearer understanding of how these complex governmental systems of systems really work, and identifying how they can work better.

“The major benefit to Tucson Water from participating in the Smarter Cities Challenge was that it provided a rigorous and strategic evaluation of planned capital investments in technology improvements and helped staff identify a wide range of potential applications for the resulting ‘big data,’ [enabling us] to improve both customer service and management decision-making.” Jonathan Rothschild, mayor, Tucson

Also in 2013, we expanded our Impact Grants program both within the United States and abroad, utilizing more than 1,000 IBM consultants and making more than 350 grants worldwide with a combined market value of approximately $11 million.

Transforming foreign aid into citizen diplomacy

In 2008, IBM first launched a unique service program, which some refer to as a corporate version of the Peace Corps, designed to deliver deep benefits at the individual, corporate, and community levels. IBM’s Corporate Service Corps (CSC) sends IBMers to countries around the world to work collaboratively with governments, educational institutions, and nonprofit organizations to address critical community problems. The goal is to address local challenges found at the intersection of technology and society and develop sustainable economic solutions. CSC teams comprise eight to fifteen IBMers who spend approximately six months on a CSC engagement–three months in preparation, one month full-time in the local community, and two months in post-service work.

In 2013, CSC sent more than 100 teams of IBM top talent to more than 30 communities in 22 countries, delivering 100 vitally important projects designed to help communities succeed. IBM teams were deployed to new sites including Angola, Ethiopia, the Philippines, South Africa, and Chile. Since the start of the program, more than 2,400 IBMers from more than 50 countries have delivered in excess of 850 projects impacting 140,000 individuals—more service than any other company.

Additionally, IBM continues to work with other companies to help them explore similar programs of their own. One such example: In September 2013, we sent four JPMorgan Chase employees on assignment with our own CSC team to Uberlandia, Brazil. "It's definitely been a life-changing experience for me. I feel I've come back to my organization as a better manager," says Paul LaRusso, vice president, JPMorgan Chase, speaking about his CSC experience in Brazil.


The IBMer

Our 430,000-plus employees across the world personify IBM—they represent our brand, they embody our values, and they drive our success. And so we continuously strive to find new ways to support their growth, development, and satisfaction. To this end, we invested heavily in our employees’ personal and professional development in 2013.

Throughout the year, we launched or furthered a number of employee initiatives designed to give IBMers the tools they need to help them develop, learn, and grow. We introduced THINK40, a learning program of at least 40 hours of professional development that every IBMer participates in each year. Thanks in large part to this new program, last year IBMers completed more than 25 million learning hours, a 154 percent year-over-year increase from 2012. We also launched Think Academy, a new method of sharing and learning that the entire company experiences together. The two-hour, online courses take place on the first Friday of each month and are introduced by IBM CEO Ginni Rometty, who frames a given topic, its importance, and key concepts to explore.

Our leadership programs were also expanded in 2013 to include the Manager Champion Group, an experiential program founded to showcase IBM management at its best, honor the critical role of the IBM manager, and develop leaders to create a culture of exceptional IBMers and client experiences. In this program, a globally diverse team of 50 exemplary IBM managers are nominated and selected for a year-long term of service to serve as role models and teachers of IBM values while acting as solution advocates for managerial challenges.

Also in 2013, IBM celebrated the 10-year anniversary of our On Demand Community, an online portal that offers rich tools and resources to facilitate current and retired IBMers’ volunteer engagement and action. Since its inception in 2003, IBMers and retirees have logged 16.5 million hours of skills-based volunteer service through the portal.


Environment

IBM has long maintained an unwavering commitment to environmental protection, formalized in a corporate environmental policy in 1971. Our 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.

Our comprehensive environmental programs range from energy and climate protection to pollution prevention, chemical and waste management, resource conservation, and product design for the environment. IBM’s energy and climate programs are highlighted here because of the global interest in this topic. In 2013, we achieved outstanding operational results and continued to leverage our research, technologies, and solutions to help clients and the world grow in ways that are more energy efficient and protective of the planet. The following are highlights in the area of energy and climate.

Energy conservation across the enterprise

In 2013, IBM’s energy conservation projects delivered savings equal to 6.7 percent of our total energy use, significantly exceeding our annual goal of 3.5 percent. These projects avoided the consumption of 334,000 megawatt-hours (MWh) of electricity and 275,000 million Btu of fuel oil and natural gas, representing the avoidance of 152,000 metric tons of CO2 emissions. They also saved $35.8 million in energy expense. From 1990 through 2013, our annual energy conservation actions have avoided 6.4 billion kWh of electricity consumption, avoided 4.0 million metric tons of CO2 emissions (equal to 59 percent of the company’s 1990 global CO2 emissions), and saved $513 million.

Data center energy efficiency

IBM manages a diverse portfolio of data centers all over the world and deploys uniform practices for energy efficiency leadership across them all. In 2013, three additional IBM data centers were awarded “participant” status on data center energy efficiency, based on the EU Code of Conduct for Energy Efficient Data Centers, bringing our total to 46 registered data centers across 19 countries. The registered data centers represent more than 70 percent of IBM’s IT delivery and business recovery data center space in the European Union.

An additional significant energy conservation goal

Since 2009, an integrated team from IBM’s environmental and finance staffs, real estate organization and business units have collaborated to realize energy conservation savings through a multi-disciplinary assessment of demand side opportunities in manufacturing, data center, and IT test lab operations. The initial effort from 2009 to 2012 saved 1,246,000 MWh of energy through conservation and efficiency. The projects involved the deployment of unique IBM technologies and know-how, as well as a strong management system supported by senior executives.

The new goal—part of the 2013-15 Energy Conservation and Efficiency Plan—was set in early 2013. The goal is to save an additional 570,000 MWh of energy by year end 2015. By year end 2013, the team delivered 321,500 MWh of energy savings which exceeded the first year target of 207,200 MWh by 55 percent.

Research to advance the use of renewable energy

IBM announced an advanced power and weather modeling technology to help utilities increase the integration into and reliability of renewable energy sources on the electric grid. Named Hybrid Renewable Energy Forecasting (HyREF), the solution uses weather modeling capabilities, advanced cloud imaging, and turbine and solar photovoltaic (PV) sensors combined with advanced analytics technology to provide accurate estimates of energy output. The system has demonstrated a 10 percent increase in the quantity of energy dispatched to the grid and improves planning for and matching of conventional output with the renewable generation sources.

IBM Research is developing the Wind and Hydro Integrated Stochastic Engine (WhISE), an energy generation planning tool that forecasts renewable generation and matches it with expected demand and available hydro resources to manage and optimize the dispatching of committed power. The WhISE approach enables the grid to reduce reserve generation capacity while insuring that demand is met, reducing power costs on the system.


Supply Chain

IBM conducts business with suppliers located in nearly 100 countries, and has woven social and environmental responsibility into the fabric of our business relationships. We work closely with our suppliers to encourage them to achieve improvements throughout the global supply chain, across various aspects of corporate responsibility. This work begins with our requirement for suppliers to implement and sustain a Social and Environmental Management System, to embrace the elements of the Electronic Industry Citizenship Coalition (EICC) Code of Conduct, to set voluntary environmental performance goals, measure performance, and to report publicly in order to increase transparency across the entire supply chain.

In 2013, we grew our supply chain assessment activities by collaborating with our suppliers on 83 full-scope audits and 118 re-audits in 23 countries. These third-party audits measure compliance to the EICC Code, version 4.0. In 2013, IBM took action to standardize on this code for all of its suppliers—inclusive of its Services and General Procurement suppliers.

During 2013, IBM and other members of the Conflict-Free Sourcing Initiative (CFSI) continued working toward the goal of achieving a supply chain with socially responsible sources of tin, tantalum, tungsten, and gold. CFSI updated its web-based listing of conflict-free smelters, highlighting companies that successfully completed their rigorous assessment. Last year also saw the release of the updated CFSI Conflict Minerals Reporting Template and dashboard. This survey provides companies a common format for their upstream suppliers to identify the use of the four focus materials, the smelters used and—when known—the country of origin of the raw materials. IBM has deployed successive versions of this survey to account for its use of the four materials and is providing consolidated results to its clients. In 2013, our efforts focused on harnessing the work of the past three years in preparing the reporting documentation required to be filed by June 2, 2014, for the US Security and Exchange Commission’s Dodd-Frank Wall Street Reform and Consumer Protection Act, section 1502; specifically, the Specialized Declaration Form and related Conflict Minerals Report.

IBM also saw continued growth in its base of diverse suppliers, with purchases reaching $3.3 billion inclusive of first-tier and second-tier companies. In parallel, we maintained our support and engagement with organizations worldwide that are dedicated to the nurturing and development of this important element of the extended supply chain.


Governance

At IBM, a rigorous set of corporate governance systems facilitate our ability to achieve the highest standards of ethics, transparency, and integrity. One such system is our Corporate Responsibility Steering Committee, composed of senior executives who meet periodically to provide leadership and direction on key corporate responsibility issues. The Steering Committee is supported by our Corporate Responsibility Working Group, which includes representatives from 10 functional areas who meet monthly to manage IBM’s corporate responsibility activities and stakeholder engagement across the company.

Our Business Conduct Guidelines reflect our longstanding commitment to ethical conduct and decision-making. Every IBMer receives training in the Guidelines every year to promote the highest ethical standards in our work.

We have developed a consistent, systematic, and integrated approach to risk management to help determine how best to identify, manage, and mitigate significant risks throughout the company. In 2013 we worked toward including broader communication, increased education, and social collaboration to help support these efforts.

We take privacy and security very seriously at IBM, and we consider these issues in everything we do. We are aware that institutions of all types must work to earn the public’s trust in their ability to steward information, and in turn we as consumers must take educated steps to protect ourselves and our families. In 2013, IBM continued its work to promote privacy and security in a number of ways, including our collaboration with Asia-Pacific Economic Cooperation on its Cross-Border Privacy Rules system, updating our own data privacy assessment software tools, and getting involved in the development of the National Institute of Standards and Technology’s voluntary Framework for Improving Critical Infrastructure Cybersecurity.