A Commitment to Environmental Leadership IBMʼs longstanding commitment to environmental leadership arises from two key aspects of its business: The intersection of the companyʼs operations and products with the environment, and The enabling aspects of IBMʼs innovation, technology and expertise. IBMʼs operations can affect the environment in a number of ways. For example, the chemicals needed for research, development and manufacturing must be properly managed from selection and purchase through storage, use and disposal. The companyʼs data center operations are generally energy- intensive, and some of its manufacturing processes use a considerable amount of energy, water or both. IBM continually looks for ways to reduce consumption of these and other resources. IBM designs its products to be energy-efficient, utilize environmentally preferable materials, and be capable of being reused, recycled or disposed of safely at the end of their useful lives. And as IBM incorporates more purchased parts and components into its products, the companyʼs requirements for its suppliersʼ overall environmental responsibility and the environmental attributes of the goods those suppliers provide to IBM are important as well. IBM applies its own innovative technology to develop solutions that can help our company and our clients be more efficient and protective of the environment. We also bring that technology to help the world discover leading edge solutions to some of the worldʼs most demanding scientific and environmental problems. This section of IBMʼs Corporate Responsibility Report describes IBMʼs programs and performance in the following environmental areas: Global Governance and Management System Global Environmental Management System Stakeholder Engagement Voluntary Partnerships and Initiatives Environmental Investment and Return Process Stewardship Environmentally Preferable Substances and Materials Nanotechnology Pollution Prevention Hazardous Waste Nonhazardous Waste Chemical Use and Management Water Conservation Product Stewardship Fundamentals Driving Product Design Managing Compliance Data Product Stewardship Goals and Performance Product Energy Efficiency Product Recycling and Reuse Product Packaging Product Safety Energy and Climate Programs A Five-Part Strategy Conserving Energy CO2 Emissions Reduction PFC Emissions Reduction Renewable Energy Voluntary Climate Partnerships Transportation and Logistics Initiatives Energy and Climate Protection in the Supply Chain Remediation Audits and Compliance Accidental Releases Fines and Penalties Awards and Recognition Internal Recognition External Recognition Summary of IBM Environmental Performance Global Governance and Management System Global Environmental Management System IBMʼs corporate environmental affairs policy calls for environmental affairs leadership in all of the companyʼs business activities. The policy objectives range from workplace safety, pollution prevention and energy conservation to product design for the environment, continual improvement and the application of IBMʼs expertise to help address some of the worldʼs most pressing environmental problems. The policy can be found at www.ibm.com/environment/policy. The policy is supported by corporate directives that govern IBMʼs conduct and operations worldwide. These directives cover areas such as pollution prevention, chemical and waste management, energy conservation and climate protection, environmental evaluation of suppliers, product stewardship, and incident prevention and reporting. IBMʼs commitment to environmental protection is implemented through its global environmental management system (EMS). Employee and Management Responsibility Every employee is expected to follow the corporate environmental affairs policy and its directives and report any environmental, health or safety concern to IBM management. Managers are expected to take prompt action when faced with a potential violation of the policy or directives. In addition, all employees are required by the companyʼs Business Conduct Guidelines to comply with environmental laws and with IBMʼs own environmental programs. IBM executives are responsible for the environmental performance of their organizations. Site location executives are responsible for the environmental performance of their sites. IBMʼs environmental programs and performance are reviewed annually by the Directors and Corporate Governance Committee of IBMʼs Board. Formed in 1993, the Charter for this committee established its responsibility for reviewing IBMʼs position and practices on significant issues of corporate public responsibility, including protection of the environment. Environmental Goals Environmental goals are an important part of IBMʼs EMS. The company maintains environmental 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 IBMʼs performance against them are discussed in their respective sections of this report, and are provided in the listing of IBMʼs environmental Key Performance Indicators. ISO 14001 Environmental Management System Standard Over a decade ago, IBM became the first major company in the world to earn a single global registration to ISO 14001. The company achieved this credential within just one year of the finalization of the standard. The initial registration covered IBMʼs manufacturing, product design and hardware development operations across its business units worldwide. IBM has since expanded its global ISO 14001 registration to include its research locations that use chemicals, several country organizations with their non- manufacturing locations, its product development function, and its Global Asset Recovery Services. As its business model evolves to include more services offerings, IBM updates its EMS to appropriately address environmental opportunities and challenges in the services area. More information about IBMʼs EMS and programs supporting its environmental objectives may be found at www.ibm.com/ibm/environment/. Public Disclosure IBMʼs Corporate Policy on Environmental Affairs also calls for the company to publicly disclose information on its environmental programs and performance. This report marks IBMʼs 21st consecutive year of annual corporate environmental reporting. IBM also participates in a number of other voluntary reporting programs, such as the Carbon Disclosure Project. More about IBMʼs environmental reporting may be found at www.ibm.com/ibm/environment/annual. Environmental Evaluations of Suppliers IBM has long been committed to doing business with environmentally Icon of Progress: Corporate Leadership in responsible suppliers and was an early leader in providing requirements Environmental addressing this topic in its global EMS. Responsibility Explore IBMʼs continued 1972 leadership IBM established a corporate directive requiring the environmental in protecting the environment. evaluation of suppliers of hazardous waste services. 1980 IBM expanded its environmental evaluations of suppliers by establishing a second corporate directive which required the environmental evaluation of certain production-related suppliers. 1991 IBM further expanded its environmental evaluations of suppliers, adding a requirement that its product recycling and product disposal suppliers be evaluated. 2002 Nongovernmental organizations raised a concern about electronic waste being exported to some non-OECD countries. Though IBM confirmed that it was not shipping electronic waste products to non- OECD countries, IBM added a requirement to assess its suppliers and certain subcontractors they may use to handle recycling and/or disposal operations in non-OECD countries. In 2010, IBM again expanded its supplier requirements. To help its suppliers build their own capability to succeed in this area, IBM established a requirement that all its first-tier suppliers establish a management system to address their social and environmental responsibilities. These suppliers are required to: Define, deploy and sustain a management system that addresses their intersections with their employees, society and the environment; Measure performance and establish voluntary, quantifiable environmental goals; Publicly disclose results associated with these voluntary environmental goals and other environmental aspects of their management systems; and Cascade these requirements to their suppliers who perform work that is material to the products, parts and/or services being supplied to IBM. More information on these new supplier requirements may be found in the Supply Chain section of this report and on IBMʼs supply chain environmental responsibility Web site. Stakeholder Engagement business executives, IBM has a variety of outreach programs through which it engages with various government officials, groups and individuals on the subject of the environment. The companyʼs nongovernmental community environmental outreach programs range from open houses and organization (NGO) leaders, journalists, emergency preparedness drills with local organizations to the support of and analysts and participation in local environmental projects and environmental education environmental experts efforts. from more than 60 countries took part in IBM also has ongoing dialogues with many stakeholders, including socially IBM’s Eco-Efficiency Jam. responsible investors and other shareholders, environmental nongovernmental organizations (eNGOs), governments, employees