2014 Corporate Responsibility Report

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Performance Summary

IBM relies on a series of metrics to measure our corporate responsibility efforts every year. Below is a summary of the data in several important areas. Our key performance indicators (KPIs) for various parts of the business are also noted, along with some explanation.

kpi Denotes Key Performance Indicator

Employees

Learning

We encourage IBMers to flourish by providing guidance and opportunities for career and expertise growth, with the intention of helping both the company and our employees succeed in this rapidly changing world. IBM blends traditional, virtual and work-enabling learning and development activities to accomplish this. This strategy allows us to provide timely, comprehensive and targeted learning through efficient, effective learning delivery mechanisms.

2010 2011 2012 2013 2014
Learning investments worldwide ($M) kpi 547 466 477 525 482*
Learning hours worldwide (M) 28.6 27.4 33 40 25.8
Learning hours per employee kpi 67 63 78 82 62.5

* IBM invested more than $482M in 2014, and employees spent more than 25 million hours on personal development. The per-capita spending on learning increased approximately 4.5% in 2014 over 2013.

Women in the workforce

For more than 100 years, IBM has been dedicated to addressing the specific needs of women in our workforce and to creating work-life and career development programs that address needs. We are committed to the progress and leadership development of women in our workforce and to providing opportunities across the more than 170 countries where we do business.

Women in the workforce % kpi 2010 2011 2012 2013 2014
Global workforce 28.1 28.1 30.0 30.1 31.1
Global executives 21.4 21.5 22.3 23.2 23.9
Managers 24.8 24.6 25.6 26.0 26.5

Global illness/injury rate

Global illness/injury rate 2010 2011 2012 2013 2014
Total number (per 100 employees) 0.27 0.33 0.29 0.30 0.42

Volunteering

IBM supports and encourages employees and retirees in skills-based volunteering in their local communities around the world.

Retiree and employee volunteer tours (K) 2010 2011* 2012* 2013 2014
Asia Pacific 111 663 116 117 121
Europe, Middle East, Africa 198 430 216 201 212
Latin America 44 152 39 48 67
North America 1,110 1,956 1,210 1,130 1,132

* IBM celebrated its Centennial in 2011-12 and the exceptionally high volunteer hours reflect the many special volunteer projects associated with the Centennial.

Giving

IBM tracks and reports global corporate contributions by issue, geography and type of grant. Giving by issue is important, as our goal is to maintain education as our primary focus by using IBM’s innovative skills and technology to improve student performance. Giving by geography is also important to help us understand the alignment of our resources with our global operations. But the type of our giving — a combination of services, technology (including software), and cash designed to transform approaches to societal challenge and achieve measureable outcomes — is what we believe distinguishes IBM.



While education is our highest priority, educational improvement cannot be achieved unless its connection to other issues is understood. Consequently we intend to maintain strategic investments in human services, culture, health and the environment. In addition, it is vitally important that we maintain the flexibility to address new initiatives and meet extraordinary external conditions such as disaster relief and recovery. We believe that our contributions in 2014 met these goals.

IBM operates in a global, fully integrated fashion. This is reflected in the distribution of our citizenship contributions by geography. Some of our contributions are given on a globally competitive basis, so geographical distribution may vary due to the number and quality of applications. By type of contribution, technology and services as a percentage of total contributions increased in 2014, consistent with our focus on providing transformative and effective solutions. We do not set goals for percentage change in contributions year over year, nor for giving by geography or by type of contribution. We focus instead on increasing the quality of our work with organizations on projects that successfully use our most innovative solutions and have a significant and measureable impact on key social issues. Current trends in contributions will not necessarily continue, but rather will be determined within the framework of our goal to increase the effectiveness of our contributions.

Global corporate contributions by issue ($M) kpi 2010 2011 2012 2013 2014
Education 151.5 141.8 143.0 147.1 149.2
Culture 3.2 3.8 3.7 3.0 3.6
Human Services 7.7 17.9 16.9 17.3 20.1
Health 4.3 4.5 3.5 3.5 3.7
Other 16.1 22.7 24.8 32.0 30.7
Environment 6.4 5.4 5.2 5.0 3.1
Total 189.2 196.1 197.1 207.9 210.4
Global corporate contributions by type ($M) kpi 2010 2011 2012 2013 2014
Cash 39.3 46.9 42.6 41.4 36.8
Technology 105.3 91.3 99.2 100.2 104.4
Services 44.6 57.9 55.3 66.3 69.2
Total 189.2 196.1 197.1 207.9 210.4
Global corporate contributions by geography ($M) kpi 2010 2011 2012 2013 2014
United States 75.8 70.8 69.9 75.7 77.8
Asia Pacific 34.8 36.3 35.9 37.5 40.3
Canada 6.8 6.8 7.1 7.8 6.9
Europe, Middle East, Africa 54.3 60.2 64.4 65.7 64.8
Latin America 17.5 22.0 19.8 21.2 20.6
Total 189.2 196.1 197.1 207.9 210.4

Environment

IBM maintains goals covering the range of its environmental programs, including climate protection, energy and water conservation, pollution prevention, waste management, and product stewardship. These goals and our performance against them are discussed in this report. The goals identified here as KPIs are based on stakeholder interest and materiality. IBM considers all of its goals to be important metrics of the company’s performance against its commitment to environmental protection.

Energy conservation

IBM’s goal is to achieve annual energy conservation savings equal to 3.5 percent of IBM’s total energy use. In 2014 IBM again achieved this goal, attaining a 6.7 percent savings from its energy conservation projects.

Energy conservation kpi 2010 2011 2012 2013 2014
As % of total electricity use 5.7 7.4 6.5 6.7 6.7

Product energy efficiency kpi

IBM’s product energy goal is to continually improve the computing power delivered for each kilowatt-hour of electricity used with each new generation or model of a product. Please see the product stewardship goals and performance table.

Recycled plastics

In 2014, 17.1 percent of the plastic resins procured by IBM and its suppliers through IBM’s corporate contracts for use in IBM’s products were resins that contained 50-100 percent recycled content. Comparing only the weight of the recycled fraction of these resins to the total weight of plastics (virgin and recycled) purchased, 12.1 percent of IBM’s total plastic purchases in 2014 were recycled plastic versus the corporate goal of 5 percent.

Recycled plastics 2010 2011 2012 2013 2014
% of total plastics procured through IBM contracts for use in its products that have been recycled 11.5 12.4 12.6 10.8 12.1

Product end-of-life management

IBM’s goal is to reuse or recycle end-of-life IT products such that the amount of product waste sent by IBM’s product end-of-life management (PELM) operations to landfills or incineration for treatment does not exceed a combined 3 percent of the total amount processed.

In 2014, IBM’s PELM operations sent only 0.5 percent of the total processed to landfill or incineration facilities for treatment.

Product end-of-life management kpi 2010 2011 2012 2013 2014
% of total processed sent by IBM's PELM operations to landfill or incineration for treatment 0.6 0.4 0.3 0.3 0.5

Hazardous waste management

IBM’s goal is to achieve year-to-year reduction in hazardous waste generated from IBM’s manufacturing processes, indexed to output. IBM’s hazardous waste generation indexed to output decreased by 1.7 percent in 2014. The primary factor for this decrease was a reduction in sludge containing fluoride and heavy metals from wastewater treatment at one manufacturing site.

Hazardous waste management 2010 2011 2012 2013 2014
% change in hazardous waste generated from manufacturing operations indexed to output -21.6 -3.5 +2.9 +4.2 -1.7

Nonhazardous waste recycling

Our voluntary environmental goal is to send an average of 75 percent of the nonhazardous waste generated at locations managed by IBM to be recycled. In 2014, we recovered and recycled 86 percent of our nonhazardous waste.

Nondazardous waste recycling 2010 2011 2012 2013 2014
% recycled of total generated 79 78 87 86 86

Water conservation

IBM’s goal is to achieve annual water savings equal to 2 percent of total annual water usage in microelectronics manufacturing operations, based on the water usage of the previous year and measured as an average over a rolling five-year period. In 2014, new water conservation and ongoing reuse and recycling initiatives in IBM’s microelectronics operations achieved an annual 3.3 percent savings in water use, resulting in a rolling five-year average of a 2.3 percent savings versus the 2 percent goal.

Water conservation 2010 2011 2012 2013 2014
% annual water savings in microelectronics manufacturing based on previous year usage and measured as an average over a rolling five-year period 2.8 2.6 2.2 2.3 2.3

Supply chain

2014 global supplier spend was down $2.5 billion, affected by decreased revenue across IBM’s product and services lines, the completed divestiture of our System x server business to Lenovo and from leveraging marketplace pricing opportunities. Geographic distribution of supplier spend remained consistent as our supply base is positioned to serve the needs of our customers on a global basis. Diverse supplier spend declined on account of the divestiture of System x business to Lenovo and by a change in classification of a major supplier when its diversity ownership changed.

Supplier spending by category 2010 2011 2012 2013 2014
Services and general procurement (%) 64 64 64 67 71
Production procurement (%) 33 33 33 30 26
Logistics procurement (%) 3 3 3 3 3
Services and general procurement ($B) 22.1 23.4 22.8 22.1 21.6
Production procurement ($B) 11.6 12 11.5 9.7 7.8
Logistics procurement ($B) 1 1.1 1 1 0.9
Supplier spending by location 2010 2011 2012 2013 2014
North America (%) 35 34 35 36 37
Asia Pacific (%) 35 34 35 35 33
Europe, Middle East, Africa (%) 22 23 21 21 23
Latin America (%) 8 9 9 8 7
North America ($B) 12.3 12.5 12.4 11.8 11.2
Asia Pacific ($B) 12.2 12.5 12.4 11.4 9.9
Europe, Middle East, Africa ($B) 7.5 8.3 7.4 7.0 6.9
Latin America ($B) 2.7 3.2 3.1 2.6 23

IBM’s supplier social responsibility assessment practice requires that all audited suppliers create and submit a Corrective Action Plan (CAP) for all non-compliance, with priority given to major non-compliances. The CAP forms a conduit, linking initial audit findings to supplier-generated improvements geared toward resolution of root causes with verification taking place through a re-audit scheduled following the completion of all improvement actions. The reduction in completed and accepted 2014 Corrective Action Plans was the result of the scheduling of 2014 full audits — the majority of which took place in 4Q14. The CAPs for many of these audits were not received until 1Q/2Q 2015, thus are not included in the 2014 figures and will be accounted for in the 2015 calendar year CAP tally.

Corrective action plans kpi 2010 2011 2012 2013 2014
Supplier corrective action plans completed and accepted 316 473 311 175 141