2019 ibm cdp water security disclosure...international business machines (ibm) cdp water security...

International Business Machines (IBM) CDP Water Security Questionnaire 2019 Thursday, August 22, 2019

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Welcome to your CDP Water Security Questionnaire 2019

W0. Introduction

W0.1 (W0.1) Give a general description of and introduction to your organization.

IBM is the world's leading cognitive solutions and cloud platform company for enterprises. IBM’s mission is to help its clients transform their companies and lead in their industries. For years, IBM has focused on building the tools businesses need in the 21st century. Our investments have transformed IBM to lead in the emerging, high-value segments of the IT market, including analytics, artificial intelligence, cloud, security, blockchain and quantum computing. At the same time, we have deepened our longstanding commitment to the responsible stewardship of technology. The company creates value for clients by providing integrated solutions and products that leverage data, information technology, deep expertise in industries and business processes, with trust and security and a broad ecosystem of partners and alliances. IBM solutions typically create value by enabling new capabilities for clients that transform their businesses and help them engage with their customers and employees in new ways. These solutions draw from an industry-leading portfolio of consulting and IT implementation services, cloud, digital and cognitive offerings, and enterprise systems and software which are all bolstered by one of the world’s leading research organizations. IBM has a longstanding commitment to environmental leadership. IBM’s corporate environmental programs date back from the 1960s and were formalized under a Corporate Environmental Policy in 1971. IBM’s corporate environmental policy calls for environmental leadership in all of IBM’s business activities. The policy objectives cover workplace safety, pollution prevention, natural resource conservation, product design for the environment as well as a call for continual improvement and utilization of IBM products, services and expertise to assist in the development of solutions to environmental problems. More detailed information on our business is available from page 22 of the latest 2018 IBM Annual Report at: https://www.ibm.com/annualreport/

W0.2 (W0.2) State the start and end date of the year for which you are reporting data. Start date End date

Reporting year January 1, 2018 December 31, 2018


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W0.3 (W0.3) Select the countries/regions for which you will be supplying data.

W0.4 (W0.4) Select the currency used for all financial information disclosed throughout your response.

USD

W0.5 (W0.5) Select the option that best describes the reporting boundary for companies, entities, or groups for which water impacts on your business are being reported.

Companies, entities or groups over which operational control is exercised

W0.6 (W0.6) Within this boundary, are there any geographies, facilities, water aspects, or other exclusions from your disclosure?

Yes

W0.6a (W0.6a) Please report the exclusions. Exclusion Please explain

From the perspective of water use and conservation, information from IBM locations worldwide that are not subject to our Water Goal. Our Water Goal focuses on specified IBM locations in water stressed regions. In 2018 the goal covered 45 IBM locations, worldwide. Our process includes an ongoing review of all data centers and other large IBM locations over 25,000 square feet globally to ensure locations subject to the goal remain appropriate.

IBM's first water conservation goal was established in 2000, focusing on the significant use of water in our microelectronics manufacturing operations. With the divestiture of IBM’s semiconductor manufacturing operations in 2015, our water use decreased significantly. IBM’s current water use is primarily associated with cooling and humidity control of buildings, domestic consumption at the workplace, and building fire protection systems. Given the above IBM redirected its water conservation focus and resources to water-stressed regions of the world with a goal to continue to produce the greatest desired outcome from our efforts. In 2016, IBM established a new water conservation goal to achieve year-to-year reductions in water withdrawals at larger IBM locations and data centers in water-stressed regions. We used the


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World Resources Institute’s Aqueduct Water Risk Atlas, which highlights regions around the world where water resources are stressed to meet human and ecological demand, to identify IBM locations in areas of “high” or “extremely high” baseline water-stress. Our current water conservation goal covers 14% of IBM's total utilized real estate space encompassing 45 data centers and other large IBM locations in water-stressed regions, worldwide. IBM also monitors, measures and manage water use and wastewater discharges at other IBM locations not in water-stressed regions for maintaining operational conditions and compliance with discharge permits. This is a requirement of IBM’s global environmental management system.

W1. Current state

W1.1 (W1.1) Rate the importance (current and future) of water quality and water quantity to the success of your business. Direct use

importance rating

Indirect use importance rating

Please explain

Sufficient amounts of good quality freshwater available for use

Important Neutral Direct: Water is integrated into a comprehensive and global risk assessment process incorporating both direct and supply chain operations. The approach covers both our historic and potential practices to determine relevance of environmental aspects and impact and their associated significance across relevant business organizations. IBM utilizes sufficient amounts of potable water for providing employees and visitors safe drinking water and suitable sanitation services at IBM locations which is an important business criterion. Indirect: IBM requires all tier 1 suppliers to IBM to have a corporate responsibility and environmental


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management system of their own and that suppliers require the same of those upstream suppliers who perform work material to the goods and services provided to IBM. IBM's suppliers are to manage their responsibilities effectively, systematically, and sustainability over the long-term, including for water use and discharge as applicable to their operations.

Sufficient amounts of recycled, brackish and/or produced water available for use

Neutral Neutral Direct: IBM utilizes fresh water in support of its manufacturing, research, irrigation and building cooling systems operations (including data centers). Water is also used for building fire protection, cafeterias, irrigation, drinking and amenities. On-site reuse of process water and recycling of wastewater reduced reliance on withdrawals from a watershed helping to reduce demand on water sources from IBM locations in water stressed regions. If not available other water sources would be used, primarily from third party sources, such as municipal water supply utilities. Indirect: IBM requires all tier 1 suppliers to have a corporate responsibility and environmental management system of their own and that suppliers require the same of those upstream suppliers who perform work material to the goods and services provided to IBM. IBM's tier 1 suppliers are to manage their responsibilities effectively, systematically, and sustainability over the long-term, including for water use and discharge as applicable to their operations.

W1.2 (W1.2) Across all your operations, what proportion of the following water aspects are regularly measured and monitored? % of

sites/facilities/operations Please explain

Water withdrawals – total volumes

1-25 IBM's water goal is to achieve year-to-year reductions in water withdrawals at specified IBM locations in water-stressed regions. Water


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withdrawals data collected under the Water Goal comes from 45 data centers and other large IBM locations in water-stressed regions which is 14% of IBM's global utilized real estate space. IBM's average annual global water use was estimated at 12.359 million cubic meters for 2018. The water use at the 45 specified IBM locations in water-stressed regions was 13 % (1.602 million cubic meters) of IBM's estimated average annual global water use in 2018. IBM estimated the average annual global water use from the 2018 water use data collected by business activity (i.e., offices, data centers) from the 45 IBM locations in water-stressed regions. It is an estimate of the average annual water use by building square footage extrapolated to the total IBM utilized real estate space in 2018.

Water withdrawals – volumes from water stressed areas

76-99 IBM's water goal is to achieve year-to-year reductions in water withdrawals at specified IBM locations in water-stressed regions. We identified 45 data centers and other large IBM locations in water-stressed regions. These locations are identified using the World Resource Institute's Water Risk Atlas tool, which highlighted among other parameters, places around the globe with "high" to "extremely high" baseline water stress, and our location selection criteria to prioritize resources toward reducing the greatest impact of our withdrawals in water-stressed regions worldwide. IBM locations of less than 25,000 sqft that may be in water-stressed regions are not tracked under the water goal.

Water withdrawals – volumes by source

1-25 IBM's water goal is to achieve year-to-year reductions in water withdrawals at specified IBM locations in water-stressed regions. Water withdrawals data collected under the Water Goal comes from 45 data centers and other large IBM locations in water-stressed regions which is 14% of IBM's global utilized


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real estate space. IBM's average annual global water use was estimated at 12.359 million cubic meters for 2018. The water use at the 45 specified IBM locations in water-stressed regions was 13 % (1.602 million cubic meters) of IBM's estimated average annual global water use in 2018. IBM estimated the average annual global water use from the 2018 water use data collected by business activity (i.e., offices, data centers) from the 45 IBM locations in water-stressed regions. It is an estimate of the average annual water use by building square footage extrapolated to the total IBM utilized real estate space in 2018.

Water withdrawals quality

100% Water supplied for drinking at all IBM locations worldwide is periodically sampled for quality as part of our WASH services in the workplace.

Water discharges – total volumes

100% IBM complies with the requirements in its water discharge permits issued by applicable regulatory agencies, including submitting required discharge reports to the agencies. In addition, IBM establishes its own requirements for tracking, reporting and managing discharges at applicable locations including IBM locations in water-stressed regions that are included in our water conservation goal. IBM publishes its water management performance through its annual environmental report.

Water discharges – volumes by destination



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Water discharges – volumes by treatment method


Water discharge quality – by standard effluent parameters


Water discharge quality – temperature


Water consumption – total volume

1-25 IBM's total average annual consumption is internally measured, tracked and reported at the 45 IBM locations in water-stressed regions that are subject to our water conservation goal. In addition water consumption is measured, tracked and reported at IBM locations where water data, including water uses and waste water discharges, are managed by IBM.

Water recycled/reused

1-25 IBM's water goal is to achieve year-to-year reductions in water withdrawals at specified IBM


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locations in water stressed regions. In 2018, withdrawals at these locations decreased by 0.4% versus 2017. This was a smaller reduction than in previous years due to business activities that increased water demand at some locations. We avoided water withdrawals equivalent to 5.1 percent of total annual water use through process water reuse and wastewater recycling in cooling tower systems and for landscape irrigation activities.

The provision of fully-functioning, safely managed WASH services to all workers

100% IBM provides access to fresh drinking water, sanitation and hygiene services in the workplace at all IBM locations worldwide. This is an enterprise-wide precondition for selecting and for maintaining a safe and healthy workplace.

W1.2b (W1.2b) What are the total volumes of water withdrawn, discharged, and consumed across all your operations, and how do these volumes compare to the previous reporting year? Volume

(megaliters/year) Comparison with previous reporting year

Please explain

Total withdrawals

1,521.92 Lower The preservation of water resources is an important area of focus for IBM. IBM established its first water conservation goal in the year 2000, focusing on the significant use of water in our microelectronics manufacturing operations. From 2000 to 2015, IBM’s water conservation efforts avoided the accumulated use of 21.3 million cubic meters of water in those operations. With the divestiture of IBM’s semiconductor manufacturing operations in 2015, we reassessed the environmental impacts of our water use. In early 2016, IBM established a new goal to achieve year-to-year reductions in water withdrawals at specified IBM locations. The data represented here covers an identified 45 data centers and other large IBM locations in water-stressed regions. These locations are


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identified using the World Resource Institute's Water Risk Atlas tool, which highlighted among other parameters, places around the globe with "high" to "extremely high" baseline water stress, and our location selection criteria to prioritize resources toward reducing the greatest impact of our withdrawals in water-stressed regions. In 2018, withdrawals at these locations decreased by 0.4% versus 2017. This was a smaller reduction than in previous years due to business activities that increased water demand at some locations. IBM's average annual global water use was estimated at 12.359 million cubic meters for 2018. The water use at the 45 specified IBM locations in water-stressed regions was 13 % (1.602 million cubic meters) of IBM's estimated average annual global water use in 2018. IBM estimated the average annual global water use from the 2018 water use data collected by business activity (i.e., offices, data centers) from the 45 IBM locations in water-stressed regions. It is an estimate of the average annual water use by building square footage extrapolated to the total IBM utilized real estate space in 2018.

Total discharges

Water discharges are managed at a location level and discharge information is reported to regulatory agencies where required. IBM also internally tracks, reports and manages for the applicable IBM locations with site regulatory wastewater discharge permits, worldwide, as well as at IBM locations in water-stressed regions that are included in our water conservation goal. IBM measures and manages wastewater discharges at applicable IBM locations worldwide for maintaining operational


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conditions and compliance with discharge permits. IBM’s corporate program establishes treatment requirements applicable to IBM locations where they discharge directly to receiving waters. IBM locations with industrial or sanitary wastewater treatment plants on site that are processing industrial or sanitary waste water must adhere to these IBM corporate requirements. This is a requirement of IBM’s global environmental management system. IBM's global EMS is accredited to ISO14001: 2015 standard requirements, with the site's management of wastewater discharges being including in periodical internal and third party ISO 14001 EMS auditing programs.

Total consumption

1,604.1 Lower Water withdrawals data collected under the Water Goal comes from 14% of IBM's global utilized real estate space. The water data comes from 45 data centers and other large IBM locations in water-stressed regions worldwide. In 2016, IBM established a new water conservation goal to achieve year-to-year reductions in water withdrawals at larger IBM locations and data centers in water-stressed regions. We used the World Resources Institute’s Aqueduct Water Risk Atlas, which highlights regions around the world where water resources are stressed to meet human and ecological demand, to identify IBM locations in areas of “high” or “extremely high” baseline water-stress. IBM locations and business organizations are responsible for development of conservation action plans and execution and reporting of results. In 2018, we decreased water withdrawals at these IBM locations by 0.4% versus 2017. This was a smaller reduction than in previous years, due to business activities that increased water demand at some locations. We avoided water withdrawals equivalent to 5.1 percent of total annual water use through process water reuse and wastewater recycling in cooling tower


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systems and for landscape irrigation activities.

W1.2d (W1.2d) Provide the proportion of your total withdrawals sourced from water stressed areas. %

withdrawn from stressed areas

Comparison with previous reporting year

Identification tool

Please explain

Row 1

13 About the same WRI Aqueduct

Water withdrawal data is collected under the water conservation goal comes from 14% of IBM's globally utilized real estate space. IBM's water goal is to achieve year-to-year reductions in water withdrawals at specified IBM locations in water stressed regions. We identified 45 data centers and other large IBM locations in water-stressed regions. These locations are identified using the World Resource Institute's Water Risk Atlas tool, which highlighted among other parameters, places around the globe with "high" to "extremely high" baseline water stress, and our location selection criteria to prioritize resources toward reducing the greatest impact of our withdrawals in water-stressed regions worldwide. IBM locations of less than 25,000 sqft are not tracked under the water goal.

W1.2h (W1.2h) Provide total water withdrawal data by source. Relevance Volume


Please explain

Fresh surface water, including rainwater,

Relevant 0.38 Lower Almost 24 percent of the water used from IBM locations in water-stressed


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water from wetlands, rivers, and lakes

regions, worldwide. Water sources are from surface waters such as dams, snow melt storage and lakes - primarily in U.S.

Brackish surface water/Seawater

Not relevant

Brackish water is not used by the 45 IBM locations in water-stressed regions subject to our water conservation goal. Use of brackish surface water has not be identified to IBM by our tier 1 suppliers of products, parts and components.

Groundwater – renewable

Relevant 0.06 Lower Approximately 4 percent of the water used by the 45 IBM locations in water-stressed regions subject to our water goal. Water source was from on-site groundwater wells.

Groundwater – non-renewable

Not relevant

Non-renewable groundwater is not used at the 45 IBM locations in water- stressed regions subject to our water goal. Use of this groundwater is also not identified by our tier 1 suppliers to IBM.

Produced/Entrained water

Relevant 0.08 Lower Less than 1 percent (0.001 ML) of the water used at IBM locations in water- stressed regions was bottled water for provision of fresh drinking water for employees and visitors, most significantly used in India. Approximately 5 percent (0.0748 ML) of the water


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used from IBM locations in water stressed regions was recycled on-site from processed water or wastewater. Less than 1 percent (0.0072 ML) of the water used from IBM locations in water- stressed regions in our water conservation goal was reused from on-site process water.

Third party sources Relevant 1.08 Lower Approximately 67 percent of the water used from IBM locations in water-stressed regions subject to our water goal comes from municipal supply systems.

W1.2i (W1.2i) Provide total water discharge data by destination. Relevance Volume


Please explain

Fresh surface water

Relevant About the same

Water discharge is managed at a location level, where applicable and as subject to regulatory discharge permits. IBM does internal tracking, reporting and managing for the applicable IBM locations with site regulatory wastewater discharge permits, worldwide, as well as at IBM locations in water-stressed regions that are included in our water conservation goal. Approximately 2% of discharges from the 45 IBM locations in water-stressed regions is regulated with site discharge


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permits. Where a regulatory permit is not required, IBM’s corporate program establishes its own treatment requirements applicable to IBM locations where they discharge directly to receiving waters. This is a requirement of IBM’s global environmental management system.

Brackish surface water/seawater

Not relevant

IBM locations do not directly discharge wastewater to brackish surface water and seawater.

Groundwater Not relevant

IBM locations do not directly discharge wastewater to groundwater.

Third-party destinations

Relevant About the same

Approximately 85% of the water discharges from IBM locations in water-stressed regions subject to our water goal are to third-party destinations. IBM’s corporate program establishes treatment requirements applicable to IBM locations where they discharge directly to receiving waters. This is a requirement of IBM’s global environmental management system.

W1.2j (W1.2j) What proportion of your total water use do you recycle or reuse? %

recycled and reused

Comparison with previous reporting year

Please explain

Row 1

1-10 About the same IBM's water goal is to achieve year-to-year reductions in water withdrawals at specified IBM locations in water-stressed regions. In 2018, withdrawals at these locations decreased by


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0.4% versus 2017. This was a smaller reduction than in previous years due to business activities that increased water demand at some locations. We avoided water withdrawals equivalent to 5.1 percent of total annual water use through process water reuse and wastewater recycling in cooling tower systems and for landscape irrigation activities.

W1.4 (W1.4) Do you engage with your value chain on water-related issues?

Yes, our suppliers Yes, our customers or other value chain partners

W1.4a (W1.4a) What proportion of suppliers do you request to report on their water use, risks and/or management information and what proportion of your procurement spend does this represent?

Row 1

% of suppliers by number None and we do not plan to request this from suppliers

Rationale for this coverage IBM is committed to doing business with environmentally responsible suppliers. In 2010, IBM established a requirement that all first-tier suppliers establish a management system to address their social and environmental responsibilities. Our objective is to help suppliers build/enhance their capability to manage their responsibilities effectively, systematically, and sustainability over the long-term, regardless of who their clients are. We do not require suppliers directly report to IBM but rather, we require them to publicly disclose their information. Supporting information on supplier environmental responsibility is available at: https://www.ibm.com/procurement/semsSuppReq.wss

Comment The supplier environmental management requirements are not being implemented with a "one-size-fits-all" approach. Rather than requiring suppliers report to IBM its metrics and progress (including water-related), IBM expects each tier 1 supplier worldwide to deploy a management system, measure performance, set goals in a way that reflects


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their intersections with their social and environmental responsibilities, and publicly disclose their programs and results.

W1.4b (W1.4b) Provide details of any other water-related supplier engagement activity.

Type of engagement Other

Details of engagement Other, please specify

IBM requires tier 1 suppliers to implementation of management system to effectively manage their business's intersections with the environment and social responsibilities. Refer to https://www.ibm.com/procurement/semsSuppReq.wss

% of suppliers by number 76-100

% of total procurement spend 76-100

Rationale for the coverage of your engagement IBM is committed to doing business with environmentally responsible suppliers. Spending $25.8 billion with a global network of more than 13,000 suppliers, presents an opportunity to promote our values and help drive progress in our industry. In 2010, IBM established a requirement that all first-tier suppliers establish a management system to address their social and environmental responsibilities. Our objectives include helping our suppliers build their own capability to succeed in this area and compelling actions. IBM expects each supplier to deploy a management system, measure performance, set goals in a way that reflects their intersections with their social and environmental responsibilities, and publicly disclose their programs and results. Refer to https://www.ibm.com/procurement/semsSuppReq.wss

Impact of the engagement and measures of success IBM reserves the right to assess the supplier's conformance to the social and environmental management system supplier requirements any time during the term of a purchase order. IBM works with the 1 tier suppliers to meet our requirements. Failure to comply with all applicable requirements can ultimately result in termination. IBM requires all new suppliers without a social and environmental responsibility management system to create one during their first year of doing business with IBM. In 2018, 1,100 new suppliers were notified that they needed to fulfill this requirement. IBM works closely with suppliers and tracks their progress to build sustainable systems. Our objective is to help suppliers build/enhance their capability to manage their


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responsibilities effectively, systematically, and sustainability over the long-term.

Comment Specific details of supplier requirements are outlined on our website at: https://www.ibm.com/procurement/semsSuppReq.wss

Type of engagement Onboarding & compliance

Details of engagement Other, please specify

Where applicable, inclusion of IBM's owns water management requirements in supplier selection mechanisms.

% of suppliers by number 76-100

% of total procurement spend 76-100

Rationale for the coverage of your engagement IBM is a founding member of and requires full adherence by suppliers to the Responsible Business Alliance (RBA) Code of Conduct that is part of IBM's management system requirements for it's 1st tier suppliers worldwide. The RBA Code of Conduct is a set of standards on social, environmental and ethical issues in the electronics industry supply chain. Water management and stewardship is integrated into the supplier evaluation process which is included in supplier audits conducted by RBA. In 2010, IBM established a requirement that all first-tier suppliers establish a management system to address their social and environmental responsibilities. IBM reserves the right to assess the supplier's conformance to the social and environmental management system requirements any time during the term of a purchase order. IBM works with the 1 tier suppliers to achieve full compliance. Failure to comply with all applicable requirements can ultimately result in termination.

Impact of the engagement and measures of success IBM is committed to doing business with environmentally responsible suppliers. Spending $25.8 billion with a global network of more than 13,000 suppliers, presents an opportunity to promote our values and help drive progress in our industry. In 2010, IBM established a requirement that all first-tier suppliers establish a management system to address their social and environmental responsibilities. Our objectives include helping our suppliers build their own capability to succeed in this area and compelling actions. IBM expects each supplier to deploy a management system, measure performance, set goals in a way that reflects their intersections with their social and environmental


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responsibilities, and publicly disclose their programs and results. Refer to https://www.ibm.com/procurement/semsSuppReq.wss

Comment The Responsible Business Alliance (RBA) Code of Conduct can be referenced at their website at: http://www.responsiblebusiness.org/standards/code-of-conduct/

W1.4c (W1.4c) What is your organization’s rationale and strategy for prioritizing engagements with customers or other partners in its value chain?

IBM's corporate environmental policy provides the strategic framework for our global environmental management system (EMS). This policy calls for environmental leadership in all of the company’s business activities. Achieving leadership is enabled through the implementation of our EMS, which integrates corporate directives governing IBM’s conduct and operations worldwide. These directives cover areas such as energy conservation and climate protection, product stewardship, pollution prevention, water conservation, chemical and waste management, and environmental evaluation of suppliers — as well as incident prevention, preparedness, response and reporting. The two applicable environmental policy objectives for engagement of customers and other partners are to: ⦁ "Participate in efforts to improve environmental protection and understanding around the world and share appropriate pollution prevention technology, knowledge and methods. ⦁ Utilize IBM products, services and expertise around the world to assist in the development of solutions to environmental problems." IBM solutions provide the technical foundation to facilitate the flow of information across organizations and establish a shared, comprehensive view of our water resources. Our solutions also help the farming industry to improve crop yield while using less water. Refer to the water resource based projects outlined in the section on Supply Chain from page 16 in IBM's latest IBM Corporate Responsibility report at: https://www.ibm.org/static/responsibility/cr/pdfs/IBM-2018-CRR.pdf

W2. Business impacts

W2.1 (W2.1) Has your organization experienced any detrimental water-related impacts?

No

W2.2 (W2.2) In the reporting year, was your organization subject to any fines, enforcement orders, and/or other penalties for water-related regulatory violations?

No


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W3. Procedures

W3.3 (W3.3) Does your organization undertake a water-related risk assessment?

Yes, water-related risks are assessed

W3.3a (W3.3a) Select the options that best describe your procedures for identifying and assessing water-related risks.

Direct operations

Coverage Full

Risk assessment procedure Water risks are assessed as part of an enterprise risk management framework

Frequency of assessment Annually

How far into the future are risks considered? 3 to 6 years

Type of tools and methods used Tools on the market Enterprise Risk Management International methodologies

Tools and methods used WRI Aqueduct Environmental Impact Assessment Other, please specify

ISO 14001 2015 EMS standard requirements

Comment IBM’s enterprise risk management process considers relevant risks to our business including those related to the environmental and climate change, and helps ensure business continuity and asset protection. In addition, our global EMS includes a process for identifying and assessing significant environmental aspects of our business. Potential environmental (env'al) risks include extreme weather events, interruptions in the availability of energy, water and other critical materials, which could cause short-term disruptions to IBM’s operations or supply chain; inability to comply with env'al laws and regulations, which could impact manufacturing operations or product deliveries; liabilities associated with inadequate or improper disposal of wastes and other materials generated from operations, including end-of-life products; and impacts to our reputation


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associated with perceived failure to responsibly manage the env'al impacts of our operations. IBM manages its operations to meet business objectives while minimizing these potential risks. Our senior leaders assess and manage these risks and provide regular updates to the Directors and Corporate Governance Committee. Our EMS establishes responsibilities for identifying and complying with env'al laws and regulations — responsibilities that are also specified in our env'al requirements for suppliers, as well as the IBM Business Conduct Guidelines certification that all IBMers must complete annually.

Supply chain

Coverage Full

Risk assessment procedure Other, please specify

IBM's requirements for supplier social and environmental management systems.



Type of tools and methods used Other

Tools and methods used National-specific tools or standards Other, please specify

Responsible Business Alliance (RBA) Code of Conduct (formerly the Electronics Industry Code of Conduct).

Comment IBM is committed to doing business with environmentally responsible suppliers. In 2010, IBM established a new requirement that all first-tier suppliers establish a management system to address their social and environmental responsibilities. IBM expects each supplier to deploy a management system, measure performance, set goals that reflects their business intersections with social and environmental responsibilities, and publicly disclose their programs and results.

Other stages of the value chain

Coverage Full

Risk assessment procedure Water risks are assessed as part of other company-wide risk assessment system


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Type of tools and methods used Other

Tools and methods used Internal company methods

Comment IBM values innovation that matters, not just for our company, but also for our clients and the world and this commitment includes the application of our expertise and technologies to solve environmental challenges. Our products, services and solutions enable our clients to conserve natural resources, reduce the environmental impacts associated with their operations, and make informed decisions that drive improved sustainability. We are enabling water agencies to monitor and manage environmental stressors, cities to increase the accuracy of pollution forecasting, property managers to conserve energy in buildings, farmers to improve crop yield and food safety, and more. For example, with microscopes to monitor plankton, IBM researchers reprogrammed imaging sensors from cell phones and used them to create underwater microscopes that monitor plankton, the tiny organisms that are the foundation of the oceanic food chain and produce at least half of our planet’s oxygen. Since plankton health is an indicator of their environment, a global network of these devices could monitor aspects of water quality that existing sensors miss. Refer to page 12 of the IBM Corporate Responsibility report at: https://www.ibm.org/static/responsibility/cr/pdfs/IBM-2018-CRR.pdf

W3.3b (W3.3b) Which of the following contextual issues are considered in your organization’s water-related risk assessments? Relevance

& inclusion Please explain

Water availability at a basin/catchment level

Relevant, always included

Water availability is relevant for provision of WASH services in all IBM workplaces and in supply of water, for example, for cooling and humidity control in buildings, data centers and for water used in manufacturing, hardware development and research center processes. Water aspects are integrated into a comprehensive and global risk assessment process incorporating both direct and supply chain operations. This management approach is undertaken at least annually


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under the requirements of IBM's global environmental management system, and as part of our single global ISO 14001 EMS accreditation. These processes look at business risk comprehensively including, but not limited to, risks and impacts related to water source, water use and wastewater discharges, and the applicable external environmental issues that may negatively or positively impact on the achievement of the intended outcomes of IBM's global EMS. This includes likely consequences of climate change such as, more extreme weather or natural disasters, changing rainfall patterns and water availability.

Water quality at a basin/catchment level


Water quality is relevant for provision of WASH services in all IBM workplaces and in supply of water, for example, for cooling and humidity control in buildings, data centers and for water used in manufacturing, hardware development and research center processes. Water aspects are integrated into a comprehensive and global risk assessment process incorporating both direct and supply chain operations. This management approach is undertaken at least annually under the requirements of IBM's global environmental management system, and as part of our single global ISO 14001 EMS accreditation. These processes look at business risk comprehensively including, but not limited to, risks and impacts related to water source, water use and wastewater discharges, and the applicable external environmental issues that may negatively or positively impact on the achievement of the intended outcomes of IBM's global EMS. This includes likely consequences of climate change such as, more extreme weather or natural disasters, changing rainfall patterns and water availability and worsening quality.

Stakeholder conflicts concerning water resources at a basin/catchment level


Stakeholder conflicts over water resource will be considered for new sittings or relocation of IBM’s locations and for business activities, products and services that may be impacted, negatively or positively. The evaluation is integrated into a comprehensive and global risk assessment process incorporating both direct and supply chain operations.

Implications of water on your key commodities/raw materials


The implication of water resource is evaluated for provision of WASH services in IBM workplaces and in supply of water, for example, for cooling and humidity control in buildings, data centers and for water used for manufacturing, hardware development and research centers processes. The evaluation is integrated into a comprehensive and global risk assessment process incorporating both direct and supply chain operations.


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This management approach is undertaken at least annually under the requirements of IBM's global environmental management system, and as part of our single global ISO 14001 EMS accreditation. These processes look at business risk comprehensively including, but not limited to, risks and impacts related to water source, water use and wastewater discharges, and the applicable external environmental issues that may negatively or positively impact on the achievement of the intended outcomes of IBM's global EMS. This includes likely consequences of climate change such as, more extreme weather or natural disasters, changing rainfall patterns and water availability and worsening quality.

Water-related regulatory frameworks


The implication of water related regulatory frameworks is evaluated for provision of WASH services in IBM workplaces and in supply of water, for example, for cooling and humidity control in buildings, data centers and for water used for manufacturing, hardware development and research centers processes. Periodic review of country environmental laws relevant to IBM’s activities, products and services where it does business is integrated into a comprehensive and global risk assessment process incorporating both direct and supply chain operations. This planning cycle is undertaken at least annually under the requirements of IBM's global environmental management system, and as part of our single global ISO 14001 EMS accreditation.

Status of ecosystems and habitats


IBM uses the World Resources Institute’s Aqueduct Water Risk Atlas, which highlights regions around the world where water resources are stressed to meet human and ecological demand, to identify IBM locations in areas of “high” or “extremely high” baseline water-stress. IBM locations and business organizations are responsible for development of conservation action plans and execution and reporting of results. Based on analysis from this tool and on information from IBM locations in water stressed areas we have not identified any location that may adversely impact a sensitive aquatic ecosystem or habitat. This process is built into IBM's global Environmental Management System implemented at IBM locations and assessed during the annual contextual planning review cycling.

Access to fully-functioning, safely managed WASH services for all employees


All IBM locations worldwide are provided with 'WASH' ("water, sanitation and hygiene") services. IBM’s own corporate instructions on workplace and health matters require the company to provide potable/fresh water and sanitary facilities in the workplace. It is also a legal or regulatory requirement in


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some places where we operate.

Other contextual issues, please specify


IBM leverages relevant management systems and business processes when performing risk assessments and management, including IBM's global environmental management system which is integrated into our business operations. Our annual EMS review considers environmental conditions such as climate change and global warming implications on our business operations, including for water resource and wastewater discharge. Refer to: https://www.ibm.com/ibm/environment/ems/.

W3.3c (W3.3c) Which of the following stakeholders are considered in your organization’s water-related risk assessments? Relevance

& inclusion

Please explain

Customers Relevant, always included

For example, our clients in the beverage industry, agricultural industry, extractive industry, can all be uniquely and more directly impacted by water-related risk. IBM provides IT services and solutions that help clients be more efficient in their water consumption or managing business activities that intersect water management. Further, IBM is uniquely positioned to contribute to the 17 SDGs, including goal 6, across five key areas: products, services, and solutions; workplace diversity and inclusion; environmental programs; supply chain; and corporate citizenship initiatives. IBM values innovation that matters, not just for our company, but also for our clients and the world and this commitment includes the application of our expertise and technologies to solve environmental challenges. Our products, services and solutions enable our clients to conserve natural resources, reduce the environmental impacts associated with their operations, and make informed decisions that drive improved sustainability. We are enabling water agencies to monitor and manage environmental stressors, cities to increase the accuracy of pollution forecasting, property managers to conserve energy in buildings, farmers to improve crop yield and food safety, and more. Some recent examples are outlined in the latest IBM Corporate


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Responsibility Report from page 12 in the Environment Solutions section. The stakeholders engaged in 2018 are discussed on page 4 of the 2018 Corporate Responsibility Report at: https://www.ibm.org/static/responsibility/cr/pdfs/IBM-2018-CRR.pdf

Employees Relevant, always included

Applicable IBM business organization assess water risks per their environmental management system requirements. For example, providing suitable training and awareness of employees with operational responsibilities that may impact the environment. WASH services are provided at all IBM workplaces for employees and visitors.

Investors Relevant, always included

IBM publicly discloses its approach to environmental management and results of its programs. IBM publishes an annual IBM and the Environment report at: https://www.ibm.com/ibm/environment/annual/reporting.shtml

Local communities

Relevant, sometimes included

IBM completes a contextual planning review of its global environmental management system at least annually. IBM business organizations or IBM locations risk assessments are relevant as part of their environmental management system requirements and annual EMS contextual planning review. See additional comments for other stakeholders below.

NGOs Not relevant, explanation provided

IBM's water related-risks are not impacted by NGOs. IBM completes a contextual planning review of its global environmental management system at least annually. IBM business organizations and IBM locations are expected to do the same. This systematic process ensures that all relevant contextual issues are identified and addressed as required.

Other water users at a basin/catchment level

Not relevant, explanation provided

IBM's water related-risks are not impacted by NGOs. IBM completes a contextual planning review of its global environmental management system at least annually. IBM business organizations and IBM locations are expected to do the same. This systematic process ensures that all relevant contextual issues are identified and addressed as required.

Regulators Relevant, sometimes included

IBM's water related-risks may be impacted by applicable laws, standards and codes of practice. IBM completes a contextual planning review of its global environmental management system at least annually. IBM business organizations and IBM locations risk assessments are relevant as part of their environmental management system requirements and annual EMS contextual planning review that may include issues such as water sources, uses and direct water discharges to receiving waters.


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River basin management authorities


IBM's water related-risks may be impacted by applicable laws, standards and codes of practice. IBM completes a contextual planning review of its global environmental management system at least annually. IBM business organizations and IBM locations risk assessments are relevant as part of their environmental management system requirements and annual contextual planning review that may include water-related risk assessment of water sources, uses and direct water discharges.

Statutory special interest groups at a local level


IBM's water related-risks may be impacted by applicable laws, standards and codes of practice and voluntary agreements. IBM completes a contextual planning review of its global environmental management system at least annually. IBM business organizations and IBM locations risk assessments are relevant as part of their environmental management system requirements and annual contextual planning review.

Suppliers Relevant, always included

Spending $25.8 billion with a global network of more than 13,000 suppliers presents an opportunity to promote our values and help drive progress in our industry. We work with suppliers to maintain resiliency and our collective ability to serve clients. We collaborate with industry groups to improve our sector. In 2010, IBM set new requirements for our tier 1 suppliers to create their own systems for managing social and environmental responsibilities, with the goal of developing and sustaining their own capabilities to manage their responsibilities, including complying with the Responsible Business Alliance (RBA) Code of Conduct (formerly the Electronics Industry Code of Conduct). measuring performance and establishing voluntary, quantifiable environmental goals for, at a minimum waste, energy and greenhouse gas emissions, publicly disclosing these goals, results and other environmental aspects of their management systems. conducting self-assessments, audits and management reviews. cascading these actions of their next-tier suppliers. Our objective is to help suppliers build/enhance their capability to manage their responsibilities effectively, systematically, and sustainability over the long-term. Supporting information on supplier environmental responsibility is available at: https://www.ibm.com/ibm/environment/supply/

Water utilities at a local level


IBM's water related-risks may be impacted by applicable laws, standards and codes of practice and voluntary agreements. IBM completes a contextual planning review of its global environmental management system at least annually. IBM business organizations and IBM locations risk assessments are relevant as part of their environmental management system requirements and annual


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contextual planning review, including for supply, workplace use or water discharge.

Other stakeholder, please specify

Not relevant, explanation provided

All relevant stakeholders have already been identified in this section. IBM completes a contextual planning review for it global environmental management system at least annually. IBM business organizations and IBM locations risk assessments are relevant as part of their environmental management system requirements and annual EMS contextual planning review.

W3.3d (W3.3d) Describe your organization’s process for identifying, assessing, and responding to water-related risks within your direct operations and other stages of your value chain.

IBM’s enterprise risk management process considers relevant risks to our business including those related to the environmental and climate change and helps ensure business continuity and asset protection. In addition, our global EMS includes a process for identifying and assessing significant environmental aspects of our business. Potential environmental risks include extreme weather events, interruptions in the availability of energy, water and other critical materials, which could cause short-term disruptions to IBM’s operations or supply chain; inability to comply with environmental laws and regulations, which could impact manufacturing operations or product deliveries; liabilities associated with inadequate or improper disposal of wastes and other materials generated from operations, including end-of-life products; and impacts to our reputation associated with perceived failure to responsibly manage the environmental impacts of our operations. IBM manages its operations to meet business objectives while minimizing these potential risks. Our senior leaders assess and manage these risks and provide regular updates to the Directors and Corporate Governance Committee. Our EMS establishes responsibilities for identifying and complying with environmental laws and regulations — responsibilities that are also specified in our environmental requirements for suppliers, as well as the IBM Business Conduct Guidelines certification that all IBMers must complete annually. Spending $25.8 billion with a global network of more than 13,000 suppliers presents an opportunity to promote our values and help drive progress in our industry. We work with suppliers to maintain resiliency and our collective ability to serve clients. We collaborate with industry groups to improve our sector. In 2010, IBM set new requirements for our tier 1 suppliers to create their own systems for managing social and environmental responsibilities, with the goal of developing and sustaining their own capabilities to manage their responsibilities including complying with:

• the Responsible Business Alliance (RBA) Code of Conduct (formerly the Electronics Industry Code of Conduct),

• measuring performance and establishing voluntary, quantifiable environmental goals for, at a minimum waste, energy and greenhouse gas emissions,


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• publicly disclosing these goals, results and other environmental aspects of their management systems,

• conducting self-assessments, audits and management reviews, and • cascading these actions of their next-tier suppliers.

IBM requires all new suppliers without a systematic approach to manage social and environmental responsibilities applicable to their business to create one during their first year of doing business with IBM. In 2018, 1,100 new suppliers were notified that they needed to fulfill this requirement. IBM works closely with suppliers and tracks their progress to build sustainable systems. Our objective is to help suppliers build/enhance their capability to manage their responsibilities effectively, systematically, and sustainability over the long-term. Supporting information on supplier environmental responsibility is available at: https://www.ibm.com/procurement/semsSuppReq.wss

W4. Risks and opportunities

W4.1 (W4.1) Have you identified any inherent water-related risks with the potential to have a substantive financial or strategic impact on your business?

No

W4.1a (W4.1a) How does your organization define substantive financial or strategic impact on your business?

IBM’s enterprise risk management process considers relevant risks to our business including those related to the environmental and climate change and helps ensure business continuity and asset protection. In addition, our global EMS includes a process for identifying and assessing significant environmental aspects of our business. Potential environmental risks include extreme weather events, interruptions in the availability of energy, water and other critical materials, which could cause short-term disruptions to IBM’s operations or supply chain; inability to comply with environmental laws and regulations, which could impact manufacturing operations or product deliveries; liabilities associated with inadequate or improper disposal of wastes and other materials generated from operations, including end-of-life products; and impacts to our reputation associated with perceived failure to responsibly manage the environmental impacts of our operations. IBM manages its operations to meet business objectives while minimizing these potential risks. Our senior leaders assess and manage these risks and provide regular updates to the Directors and Corporate Governance Committee. Our EMS establishes responsibilities for identifying and complying with environmental laws and regulations — responsibilities that are also specified in our environmental requirements for suppliers, as well as the IBM Business Conduct Guidelines certification that all IBMers must complete annually.


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IBM manages its operations to meet business objectives while minimizing these potential risks. Our senior leaders assess and manage these risks and provide regular updates to the Directors and Corporate Governance Committee of our Board. Our EMS also addresses responsibilities for identifying and complying with environmental laws and regulations — responsibilities that are also addressed in our environmental requirements for suppliers, as well as the IBM Business Conduct Guidelines certification that all IBMers must complete annually. IBM does not perceive any unusual or substantive water-related impacts on our operations or the value chain outside of those risks we plan for as part of our ongoing business and risk management processes. These processes look at business risk comprehensively including, but not limited to, risks and impacts related to water use and wastewater discharges. We anticipate that the business model of both IBM's and our production and service suppliers' operations will enable those operations to anticipate and adapt to potential risks and mitigate the impacts without significant disruptions to our business. Refer to: https://www.ibm.com/ibm/environment/ems/

W4.2b (W4.2b) Why does your organization not consider itself exposed to water risks in its direct operations with the potential to have a substantive financial or strategic impact? Primary

reason Please explain

Row 1

Risks exist, but no substantive impact anticipated

Based on our assessment IBM does not perceive any unusual or substantive water-related impacts on our operations outside of those risks we plan for as part of our ongoing business and risk management processes. These processes look at business risk comprehensively including, but not limited to, risks and impacts related to water use and wastewater discharges. We anticipate that the business model of both IBM's and our production and service suppliers' operations will enable those operations to anticipate and adapt to potential risks and mitigate the impacts without significant disruptions to our business. Refer to: https://www.ibm.com/ibm/environment/ems/

W4.2c (W4.2c) Why does your organization not consider itself exposed to water risks in its value chain (beyond direct operations) with the potential to have a substantive financial or strategic impact? Primary

reason Please explain

Row 1

Risks exist, but no substantive

We conducted risk assessments in connection with the nature and scope of IBM's business operations and our supply chain. IBM does not perceive any unusual or substantive water-related impacts on our operations or the supply


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impact anticipated

chain outside of those risks we plan for as part of our ongoing business and risk management processes. These processes look at business risk comprehensively including, but not limited to, risks and impacts related to water use and wastewater discharges. We anticipate that the business model of both IBM's and our production and service suppliers' operations will enable those operations to anticipate and adapt to potential risks and mitigate the impacts without significant disruptions to our business. Refer to: https://www.ibm.com/ibm/environment/ems/

W4.3 (W4.3) Have you identified any water-related opportunities with the potential to have a substantive financial or strategic impact on your business?

Yes, we have identified opportunities, and some/all are being realized

W4.3a (W4.3a) Provide details of opportunities currently being realized that could have a substantive financial or strategic impact on your business.

Type of opportunity Efficiency

Primary water-related opportunity

Company-specific description & strategy to realize opportunity IBM has identified opportunities to enhance the efficiency of water use in our operations worldwide recognizing the importance for focusing on water stressed areas. Our water goal focuses on specified IBM locations in water-stressed regions. The goal covered 45 data centers and other large IBM locations in water-stressed regions. We used the World Resources Institute’s Aqueduct Water Risk Atlas, which highlights regions around the world where water resources are stressed to meet human and ecological demand, to identify IBM locations in areas of “high” or “extremely high” baseline water-stress. IBM’s current water use is primarily associated with cooling and humidity control of buildings, domestic consumption at the workplace, and building fire protection systems. Given the above IBM redirected its water conservation focus and resources to water-stressed regions of the world with a goal to continue to produce the greatest desired outcome from our efforts. In 2018, we decreased water withdrawals at these IBM locations by 0.4% versus 2017. We avoided water withdrawals equivalent to 5.1 percent of total annual water use through process water reuse and wastewater recycling in cooling tower systems and for landscape irrigation activities. Further information is outlined in the Water Conservation section of the latest 2018 IBM


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and the Environment report at: https://www.ibm.com/ibm/environment/annual/IBMEnvReport_2018.pdf.

Estimated timeframe for realization 1 to 3 years

Magnitude of potential financial impact Low-medium

Are you able to provide a potential financial impact figure? No, we do not have this figure

Potential financial impact figure (currency)

Potential financial impact figure – minimum (currency)

Potential financial impact figure – maximum (currency)

Explanation of financial impact IBM estimates savings it has realized from its environmental leadership practices. These include savings from energy, material and water conservation; recycling; and reductions in waste. Ongoing savings from previous years’ initiatives are not carried over in this calculation, yielding very conservative estimates.In addition, IBM estimates the avoidance of costs that likely would have occurred if its EMS were not in place. This cost avoidance is difficult to quantify, so a reasonable attempt has been made to estimate. In 2018, IBM’s combined, estimated environmental savings and cost avoidance totalled $105.9 million, includes for water use, wastewater treatment, and chemicals use for on-site wastewater treatment and treated wastewater discharges, avoidance of fines and penalties, pollution prevention and related environmental externalizes. Refer to the Environmental investment and Return section from page 20 of the latest annual 2018 IBM and the Environment Report at: https://www.ibm.com/ibm/environment/annual/IBMEnvReport_2018.pdf

Type of opportunity Products and services

Primary water-related opportunity Sales of new products/services

Company-specific description & strategy to realize opportunity Here are just a few current examples of how IBMers throughout our company are inventing and implementing IT solutions that can improve the quality and sustainability of water, energy, agriculture and more.


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For example, IBM Research-Africa has collaborated with local governments and private and public-sector partners, including the Millennium Water Alliance (MWA) as part of the Kenya Resilient Arid Lands Partnership for Integrated Development (Kenya RAPID). The MWA has created a water-management platform to address the local water needs of Kenyans and livestock in the remote regions where access to a reliable and safe drinking water supply is lacking. The IBM Research software being used in this effort, known as the Water Management as a Service Platform (WMaaSP), is accessible on both web and mobile apps, and assists local water officials’ decision making by predicting water demand based on population trends, ground and surface water supplies, climatic patterns, land use, and maintenance. Additional information is outlined at: https://www.ibm.com/blogs/think/2018/11/49707/ Examples are also included in the Solution section from page 43 of the latest IBM and The Environment report at: https://www.ibm.com/ibm/environment/annual/IBMEnvReport_2018.pdf


Magnitude of potential financial impact Unknown





Explanation of financial impact IBM considers this business confidential information, not appropriate to be disclosed.




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Company-specific description & strategy to realize opportunity IBM Research works with organizations around the world to develop creative solutions that address what is arguably one of today's greatest challenges: protecting the environment and our natural resources, including for water. For example: Microscopes in the ocean to monitor plankton: Plankton, the tiny organisms living in bodies of water, produce at least 50% of the oxygen we breathe. They are the food for practically every species of fish and are therefore critically important in the food chain. IBM researchers are building small, autonomous microscopes to be placed in bodies of water to monitor the health of plankton by observing their three-dimensional movement and shape. Since plankton are highly sensitive to even slight changes in water quality, their movement is a key indicator to their health. The data gathered from these seagoing microscopes will be used to better understand plankton behavior and ultimately predict threats to our food and water supply. See the associated YouTube video: https://www.youtube.com/watch?v=ynyjBlVWYWg











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Company-specific description & strategy to realize opportunity IBM Research works with organizations around the world to develop creative solutions that address what is arguably one of today's greatest challenges: protecting the environment and our natural resources, including for water. For example: Health-check soil and water with AI: The AgroPad enables real-time, on-location chemical analysis of a soil or water sample, using AI. Since the paper-based tests can be reliably performed by non-experts, public data collection with instant digitization in chemical sensing becomes a real possibility. Along with low cost, mass production of the paper-based device and large-scale deployment through mobile and cloud technologies, the exploratory prototype could revolutionize digital agriculture and environmental testing. Supporting information is available a IBM Research: https://www.ibm.com/blogs/research/2018/09/agropad/









Primary water-related opportunity

Company-specific description & strategy to realize opportunity IBM Research works with organizations around the world to develop creative solutions that address what is arguably one of today's greatest challenges: protecting the


35

environment and our natural resources, including for water. For example: The Jefferson Project at Lake George - Monitoring lake health with the IoT: Since 2013, the collaboration between IBM, Rensselaer Polytechnic Institute and The FUND for Lake George has built the world’s most advanced environmental monitoring system. The system has a sensor network that gathers more than nine terabytes of physical and chemical data annually, compIBM considers this business confidential information, not appropriate to be disclosed.uter models that depict the flow of water, nutrients and contaminants through the watershed and surveys aquatic animals that inhabit the lake and streams. The monitoring system also conducts ongoing experiments to test the impacts of human activities on the Lake George ecosystem. Supporting information is available at IBM Research: https://jeffersonproject.rpi.edu/









Primary water-related opportunity Increased sales of existing products/services

Company-specific description & strategy to realize opportunity IBM Research works with organizations around the world to develop creative solutions that address what is arguably one of today's greatest challenges: protecting the environment and our natural resources, including for water. For example: Smarter water management solution: IBM Water Management is a predictive analytics platform that helps make sense of data


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deluge and engage citizens to collaborate across water operations. The solution helps water operators reduce water losses, minimize network disruptions, make more informed decisions, and drive holistic leak management. It delivers insights into the infrastructure, assets, and operations of both public and private water and waste water organizations. All this can be accomplished according to your pace and needs. The offering is designed to be an open solution able to leverage your existing IT tools and data repositories. Supporting information is available at: https://www.ibm.com/us-en/marketplace/water-operations-management








W6. Governance

W6.1 (W6.1) Does your organization have a water policy?

Yes, we have a documented water policy that is publicly available

W6.1a (W6.1a) Select the options that best describe the scope and content of your water policy. Scope Content Please explain


37

Row 1

Company-wide

Company water targets and goals Commitments beyond regulatory compliance Commitment to water-related innovation Commitment to stakeholder awareness and education Commitment to water stewardship and/or collective action

IBM’s corporate-wide Environmental Affairs policy includes an objective to “conserve natural resources by reusing and recycling materials, purchasing recycled materials, and using recyclable packaging and other materials.” IBM’s environmental corporate directives set corporate-wide objectives and requirements for water conservation, and management of water discharges. IBM maintained a water conservation goal between 2000 – 2015 focusing on our water intensive microelectronics manufacturing operation. IBM divested its semiconductor manufacturing operation on July 1, 2015. The company has since refreshed the water goal, which aligns with its current business, calling for the company to achieve ongoing year-to-year reductions in water withdrawals at specified IBM locations in water stressed areas. IBM's Environmental Policy is publicly available, for example at: https://www.ibm.com/ibm/environment/policy/

W6.2 (W6.2) Is there board level oversight of water-related issues within your organization?

Yes

W6.2a (W6.2a) Identify the position(s) (do not include any names) of the individual(s) on the board with responsibility for water-related issues. Position of individual

Please explain

Other C-Suite Officer

IBM's top environmental executive, (our Chief Environmental Officer), VP for Corporate Environmental Affairs and Product Safety (CEAPS) reports on IBM's environmental programs and performance annually to the Directors and Governance Committee of IBM’s Board of Directors. IBM business unit executives are responsible for implementing within their operations and monitoring and reporting to IBM corporate staff. The requirements and responsible leaders are outlined in IBM's global Environmental Management System. See further information at: https://www.ibm.com/ibm/environment/ems/

W6.2b (W6.2b) Provide further details on the board’s oversight of water-related issues.


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Frequency that water-related issues are a scheduled agenda item

Governance mechanisms into which water-related issues are integrated

Please explain

Row 1

Scheduled - some meetings

Monitoring implementation and performance Reviewing and guiding strategy Reviewing and guiding corporate responsibility strategy Reviewing innovation/R&D priorities

IBM's environmental performance highlights are provided to IBM’s specified environmental executives, our VP for Environmental, Energy and Chemical Management Programs, Corporate Environmental Affairs, and VP for Corporate Environmental Affairs and Product Safety (CEAPS), on a monthly basis. IBM conducts an annual review of our global environmental management system with both these Vice Presidents. The VP of CEAPS reports on IBM's environmental programs and performance annually to the Directors and Governance Committee of IBM’s Board of Directors. Top executives of business unit are responsible for implementation within their operations. The frequency of annual review is appropriate considering IBM’s business, maturity and comprehensiveness of its environmental management system, and record of performance and accomplishments. As the top environmental executive of the company, the IBM VP of CEAPS is authorized with the responsibility to set IBM’s environmental strategy and direct IBM’s environmental programs across our business globally, to delivery desired results, including those pertaining to water resource.

W6.3 (W6.3) Provide the highest management-level position(s) or committee(s) with responsibility for water-related issues (do not include the names of individuals).

Name of the position(s) and/or committee(s) Other, please specify

Vice President of Corporate Environmental Affairs and Product Safety. The position is equivalent to "Chief Environmental Officer" .

Responsibility


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Both assessing and managing water-related risks and opportunities

Frequency of reporting to the board on water-related issues Annually

Please explain IBM's env'al performance highlights are provided to IBM’s specified environmental executives, our VP of Environmental, Energy and Chemical Management Programs (EECMP), Corporate Environmental Affairs (CEA), to the VP for Corporate Environmental Affairs and Product Safety (CEAPS), on a monthly basis. Also, IBM conducts an annual review of our global EMS with both these VPs. The VP CEAPS reports on IBM's environmental programs and performance annually to the Directors and Governance Committee of IBM’s Board of Directors. The VP EECMP and CEA staff are responsible for defining IBM's environmental strategy and setting requirements and goals. They're also responsible for developing and maintaining IBM's environmental corporate directives, internal standards and other guidance documents to support implementation of our environmental policy, and achievement of the intended outcomes of IBM’s WW EMS. Business organization executives are responsible for implementation within their operations.

W6.5 (W6.5) Do you engage in activities that could either directly or indirectly influence public policy on water through any of the following?

Yes, other

W6.5a (W6.5a) What processes do you have in place to ensure that all of your direct and indirect activities seeking to influence policy are consistent with your water policy/water commitments?

Roles, responsibilities and authorities are defined by IBM global environmental management system which is aligned to the international standard ISO 14001: 2015 for Environmental Management Systems. Refer to our website at: https://www.ibm.com/ibm/environment/ems/ IBM indirectly influence environmental policy and focus through industry associations by way of offering solutions to demonstrate the importance of achieving and promoting/enabling water efficiency and environmental resiliency. IBM Corporate Environmental Affairs executives have the responsibility for authorization of all external stakeholder communications of an environmental affairs nature, as well as new memberships and commitments of business and government organizations, NGOs and industry associations. IBM's agreement to any legal or voluntary commitments that may become an IBM compliance requirement must firstly align with IBM environmental policy and be consistent with the intended outcomes of IBM's global EMS and environmental programs.


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W6.6 (W6.6) Did your organization include information about its response to water-related risks in its most recent mainstream financial report?

No, and we have no plans to do so

W7. Business strategy

W7.1 (W7.1) Are water-related issues integrated into any aspects of your long-term strategic business plan, and if so how? Are water-

related issues integrated?

Long-term time horizon (years)

Please explain

Long-term business objectives

Yes, water-related issues are integrated

5-10 IBM’s enterprise risk management process considers relevant risks to our business including those related to the environmental and climate change and helps ensure business continuity and asset protection. In addition, our global EMS includes a process for identifying and assessing significant environmental aspects of our business. Potential environmental risks include extreme weather events, interruptions in the availability of energy, water and other critical materials, which could cause short-term disruptions to IBM’s operations or supply chain; inability to comply with environmental laws and regulations, which could impact manufacturing operations or product deliveries; liabilities associated with inadequate or improper disposal of wastes and other materials generated from operations, including end-of-life products; and impacts to our reputation associated with perceived failure to responsibly manage the environmental impacts of our operations. IBM manages its operations to meet business objectives while minimizing these potential risks. Our senior leaders assess and manage these risks and provide regular updates to the Directors and Corporate Governance Committee. Our EMS establishes responsibilities for identifying and complying with environmental laws and regulations — responsibilities that are also specified in our environmental requirements for suppliers, as well as the IBM Business Conduct Guidelines certification that all IBMers must complete annually.


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Strategy for achieving long-term objectives


5-10 Water is integrated into a comprehensive and global risk assessment process incorporating both direct and supply chain operations. The approach covers both our historic and potential practices to determine relevance of environmental aspects and impact and their associated significance across relevant business organizations. We anticipate that the business model of both IBM's and our production and service suppliers' operations will enable those operations to anticipate and adapt to potential risks and mitigate the impacts without significant disruptions to our business.

Financial planning


5-10 Assessment of risk is based on the nature and scope of IBM's business operations and our interaction with suppliers. IBM does not perceive any unusual water-related risk in our operations or the supply chain outside of those we plan for as part of our ongoing business and risk management processes. These processes look at business risk comprehensively including, but not limited to, risks and impacts related to water use and wastewater discharges. We anticipate that the business model of both IBM's and our production and service suppliers' operations will enable those operations to anticipate and adapt to potential risks and mitigate the impacts without significant disruptions to our business. Refer to: https://www.ibm.com/ibm/environment/ems/ .

W7.2 (W7.2) What is the trend in your organization’s water-related capital expenditure (CAPEX) and operating expenditure (OPEX) for the reporting year, and the anticipated trend for the next reporting year?

Row 1

Water-related CAPEX (+/- % change)

Anticipated forward trend for CAPEX (+/- % change)


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Water-related OPEX (+/- % change)

Anticipated forward trend for OPEX (+/- % change)

Please explain IBM considers this business confidential information, not appropriate to be disclosed.

W7.3 (W7.3) Does your organization use climate-related scenario analysis to inform its business strategy? Use of

climate-related scenario analysis

Comment

Row 1

Yes IBM’s enterprise risk management process considers relevant risks to our business including those related to the environment and climate change and helps ensure business continuity and asset protection. In addition, our global EMS includes a process for identifying and assessing significant env'al aspects of our business. Potential env'al risks include extreme weather events, interruptions in the availability of energy, water and other critical materials, which could cause short-term disruptions to IBM’s operations or supply chain; inability to comply with env'al laws and regulations, which could impact manufacturing or product deliveries; liabilities associated with unsound disposal of wastes and other materials generated from operations, including end-of-life products; and impacts to our reputation associated with perceived failure to responsibly manage the env'al impacts of our operations. IBM manages its operations to meet business objectives while minimizing these potential risks.

W7.3a (W7.3a) Has your organization identified any water-related outcomes from your climate-related scenario analysis?

Yes

W7.3b (W7.3b) What water-related outcomes were identified from the use of climate-related scenario analysis, and what was your organization’s response?


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Climate-related scenario(s)

Description of possible water-related outcomes

Company response to possible water-related outcomes

Row 1

Other, please specify

World Resources Institute’s Aqueduct Water Risk Atlas tool

Increased frequency of natural disasters and rainfall patterns impacting water supply and quality, particularly in Water Stressed Regions.

As part of IBM's global environmental management system an annual planning and assessment of the material environmental issues that may negatively or positively impact on the achievement of the intended outcomes of the EMS is undertaken. This includes likely consequences of climate change such as, more extreme weather or natural disasters, changing rainfall patterns and water availability. In 2016, IBM established a water conservation goal to achieve year-to-year reductions in water withdrawals at larger IBM locations and data centers in water-stressed regions. We used the WRI Aqueduct tool, which highlights regions around the world where water resources are stressed to meet human and ecological demand, to identify IBM locations in areas of “high” or “extremely high” baseline water-stress. IBM locations and business organizations are responsible for development of conservation action plans and execution and reporting of results.

W7.4 (W7.4) Does your company use an internal price on water?

Row 1

Does your company use an internal price on water? No, and we do not anticipate doing so within the next two years

Please explain IBM does not consider internal pricing on water to be a relevant or effective driver for our business. We rely on our corporate policy to drive resource conservation and where applicable, supplemented with corporate goals to minimize our demand. IBM's current goal is to achieve year on year reductions in water withdrawals at specified IBM locations in water stressed regions.


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W8. Targets

W8.1 (W8.1) Describe your approach to setting and monitoring water-related targets and/or goals. Levels

for targets and/or goals

Monitoring at corporate level

Approach to setting and monitoring targets and/or goals

Row 1

Company-wide targets and goals

Targets are monitored at the corporate level Goals are monitored at the corporate level

The preservation of water resources and the protection of watersheds are important areas of focus for IBM. IBM's first water conservation goal was established in 2000, focusing on the significant use of water in our microelectronics manufacturing operations. With the divestiture of IBM’s semiconductor manufacturing operations in 2015, our water use decreased significantly. IBM’s current water use is primarily associated with cooling and humidity control of buildings, domestic consumption at the workplace, and building fire protection systems. Given the above IBM redirected its water conservation focus and resources to water-stressed regions of the world with a goal to continue to produce the greatest desired outcome from our efforts. In 2016, IBM established a water conservation goal to achieve year-to-year reductions in water withdrawals at larger IBM locations and data centers in water-stressed regions. We used the World Resources Institute’s Aqueduct Water Risk Atlas, which highlights regions around the world where water resources are stressed to meet human and ecological demand, to identify IBM locations in areas of “high” or “extremely high” baseline water-stress. Given the above IBM redirected its water conservation focus and resources to water-stressed regions of the world with a goal to continue to produce the greatest desired outcome from our efforts. Our current water conservation goal covers 14% of IBM's total utilized real estate space encompassing 45 data centers and other large IBM locations in water-stressed regions, worldwide. In 2018, we decreased water withdrawals at these IBM locations by 0.4% versus 2017. We avoided water withdrawals equivalent to 5.1


45

percent of total annual water use through process water reuse and wastewater recycling in cooling tower systems and for landscape irrigation activities. IBM also monitors, measures and manage water use and wastewater discharges at other IBM locations not in water-stressed regions for maintaining operational conditions and compliance with discharge permits. This is a requirement of IBM’s global environmental management system. Further information is outlined in the Water Conservation section of the latest 2018 IBM and the Environment report at: https://www.ibm.com/ibm/environment/annual/IBMEnvReport_2018.pdf.

W8.1a (W8.1a) Provide details of your water targets that are monitored at the corporate level, and the progress made.

Target reference number Target 1

Category of target Water withdrawals

Level Other, please specify

IBM Locations in Water Stressed Regions worldwide.

Primary motivation Reduced environmental impact

Description of target IBM's water conservation goal is to achieve year-to-year reductions in water withdrawals at larger IBM locations and data centers in water-stressed regions.

Quantitative metric % reduction in total water withdrawals

Baseline year 2015

Start year


46

2016

Target year 2018

% achieved 100

Please explain Year on year percent reduction in withdrawals from IBM locations in water stressed regions as referenced in the WRI Aqueduct Water Risk Atlas tool.

W8.1b (W8.1b) Provide details of your water goal(s) that are monitored at the corporate level and the progress made.

Goal Other, please specify

Year on year reductions in water withdrawals in water-stressed regions.

Level Company-wide

Motivation Reduced environmental impact

Description of goal IBM's water goal is to achieve a year to year reduction in water withdrawals at specified IBM locations in water stressed regions. In 2016, IBM established a new water conservation goal to achieve year-to-year reductions in water withdrawals at larger IBM locations and data centers in water-stressed regions. We used the World Resources Institute’s Aqueduct Water Risk Atlas, which highlights regions around the world where water resources are stressed to meet human and ecological demand, to identify IBM locations in areas of “high” or “extremely high” baseline water-stress. IBM locations and business organizations are responsible for development of conservation action plans and execution and reporting of results. IBM location subject to the goal are assessed at least on an annual basis to ensure applicability to the needs of the business.

Baseline year 2015

Start year


47

2016

End year 2018

Progress In 2018, we decreased water withdrawals at these IBM locations by 0.4% versus 2017. This was a smaller reduction than in previous years, due to business activities that increased water demand at some locations. We avoided water withdrawals equivalent to 5.1 percent of total annual water use through process water reuse and wastewater recycling in cooling tower systems and for landscape irrigation activities. Annual reduction in water withdrawals in water-stressed regions 2016 2017 2018 Annual reduction in water withdrawals 6.6% 2.9% 0.4% (% of total withdrawals from previous year) IBM also continues to implement water conservation projects at manufacturing, hardware development and research locations that are not in water-stressed regions. Further information is accessible in the Water Conservation section on page 32 of the latest annual IBM and the Environment Report at: https://www.ibm.com/ibm/environment/annual/IBMEnvReport_2018.pdf

W9. Linkages and trade-offs

W9.1 (W9.1) Has your organization identified any linkages or tradeoffs between water and other environmental issues in its direct operations and/or other parts of its value chain?

Yes

W9.1a (W9.1a) Describe the linkages or tradeoffs and the related management policy or action.

Linkage or tradeoff Linkage

Type of linkage/tradeoff Other, please specify

Reduced energy use from moving water and treating water discharges, reduced chemical use for wastewater treatment and less wastewater discharges at IBM locations. Costs of procuring water supply and operations may also fall.


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Description of linkage/tradeoff Linkage between water used and energy consumed, for example, at our manufacturing operations, research laboratories and data centres worldwide. Energy is consumed to help transport, treat and use water for critical development and production processes; in operation of building heating, ventilation, and air conditioning systems; humidification of computer raised floor environments; to ensure access to potable water and other WASH services in the workplace; and for treatment of industrial and sanitary wastewater prior to discharge off-site. Less chemicals are required in treatment of cooling tower water and for on-site treatment of industrial wastewater discharges. Annual costs of operating these processes can decrease as a result. IBM outlines these types of savings from page 20 in the section on Environmental investment and returns in the latest IBM and the Environment report at: https://www.ibm.com/ibm/environment/annual/IBMEnvReport_2018.pdf

Policy or action IBM's global environmental management system requires an environmental impact assessment (EIA) for new, or significant modification to existing, hazardous chemical-using Research, Hardware Development or Manufacturing Processes or building Infrastructure activities. For new processes, an EIA is initiated during design. This EIA is addressed alongside the other critical business objectives / elements of a business case as part of the planning and management approval process. Significant modification to a process's original purpose, chemical use, equipment, utility energy or water requirements, air emissions, water discharges, waste generation, or engineering controls for environmental protection can trigger an EIA.

W10. Verification

W10.1 (W10.1) Do you verify any other water information reported in your CDP disclosure (not already covered by W5.1d)?

No, we do not currently verify any other water information reported in our CDP disclosure

W11. Sign off

W-FI (W-FI) Use this field to provide any additional information or context that you feel is relevant to your organization's response. Please note that this field is optional and is not scored.

IBM's environmental strategy and performance, including for water conservation is publicly disclosed from page 32 in our latest annual IBM and the Environment 2018 report on the website at: https://www.ibm.com/ibm/environment/annual/reporting.shtml


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Our water stewardship strategy and results are also publicly disclosed in the Environment section from page 5 of the latest annual 2018 Corporate Responsibility Report at: https://www.ibm.org/static/responsibility/cr/pdfs/IBM-2018-CRR.pdf Water conservation is a key performance indicator with results disclosed at our website: https://www.ibm.com/ibm/environment/annual/performance.shtml

W11.1 (W11.1) Provide details for the person that has signed off (approved) your CDP water response. Job title Corresponding job

category

Row 1

Vice President of Environment, Energy and Chemical Management Programs, Corporate Environmental Affairs

Other C-Suite Officer

W11.2 (W11.2) Please indicate whether your organization agrees for CDP to transfer your publicly disclosed data on your impact and risk response strategies to the CEO Water Mandate’s Water Action Hub [applies only to W2.1a (response to impacts), W4.2 and W4.2a (response to risks)].

Yes

SW. Supply chain module

SW0.1 (SW0.1) What is your organization’s annual revenue for the reporting period? Annual revenue

Row 1 79,600,000,000

SW0.2 (SW0.2) Do you have an ISIN for your organization that you are willing to share with CDP?

No


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SW1.1 (SW1.1) Have you identified if any of your facilities reported in W5.1 could have an impact on a requesting CDP supply chain member?

No facilities were reported in W5.1

SW1.2 (SW1.2) Are you able to provide geolocation data for your site facilities?

No, this is confidential data

SW2.1 (SW2.1) Please propose any mutually beneficial water-related projects you could collaborate on with specific CDP supply chain members.

SW2.2 (SW2.2) Have any water projects been implemented due to CDP supply chain member engagement?

No

SW3.1 (SW3.1) Provide any available water intensity values for your organization’s products or services across its operations.

Submit your response In which language are you submitting your response?

English

Please confirm how your response should be handled by CDP Public or Non-Public

Submission I am submitting to

Are you ready to submit the additional Supply Chain Questions?

I am submitting my response

Public Investors Customers

Yes, submit Supply Chain Questions now

Please confirm below


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I have read and accept the applicable Terms

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