CDP. Module: Introduction. Page: W0. Introduction. CDP 2017 Water 2017 Information Request W0.1. Introduction

Transcription

1 CDP CDP 2017 Water 2017 Information Request International Business Machines (IBM) Module: Introduction Page: W0. Introduction W0.1 Introduction Please give a general description and introduction to your organization IBM is a cognitive solutions and cloud platform company. IBM sees cognitive and cloud as two dimensions of a single model cognitive to ingest and extract value from the new natural resource of data in all its forms, so that it can be turned into competitive advantage and societal value; and cloud as the platform on which these solutions are designed, built, tested and deployed in the world. IBM applies its cognitive and cloud capabilities, along with its full range of products, services and solutions to support two principal goals: helping clients to become more innovative, efficient and competitive through the application of business insight and information technology (IT) solutions; and providing long-term value to shareholders. The business model has been developed over time through strategic investments in capabilities and technologies that have superior long-term growth and profitability prospects based on the value they deliver to clients. The company's strategy is to focus on the high-growth, high-value segments of the IT industry. The company's global capabilities include services, software, systems, fundamental research and financing, and provides solutions to clients in all sectors of economy. The broad mix of businesses and capabilities are combined to provide business insight and solutions for the company's clients. The business model is dynamic, adapting to the continuous changing market and economic environment. W0.2 Reporting year Please state the start and end date of the year for which you are reporting data Period for which data is reported Fri 01 Jan Sat 31 Dec 2016

2 W0.3 Reporting boundary Please indicate the category that describes the reporting boundary for companies, entities, or groups for which water-related impacts are reported Companies, entities or groups over which operational control is exercised W0.4 Exclusions Are there any geographies, facilities or types of water inputs/outputs within this boundary which are not in your disclosure? Yes W0.4a Exclusions Please report the exclusions in the following table Exclusion why you have made the exclusion Information from IBM locations that are not subject to our Water Goal. Our new Water Goal focused on IBM identified locations in Water Stressed regions. At the time our goal was established, 45 IBM locations were identified to be subject to the goal. Our process calls for a re-evaluation of all large IBM locations once every three years to ensure locations subject to our goal remain appropriate. IBM divested its most water intensive operation, semiconductor manufacturing operation, on July 1, Rather than setting a new goal based on waterintensity, we have determined that, considering IBM s current business operations, it would be more meaningful and effective in protecting the environment for IBM to prioritize its focus on preserving water resources in water stress regions. IBM set a new Water Goal in Year This water goal is currently applicable to 45 IBM locations residing in Water Stress regions, as identified by the World Business Council for Sustainable Development s Global Water Tool (WBCSD), Global Water Tool We identified these 45 locations

3 Exclusion why you have made the exclusion upon completing an assessment of all large IBM locations and data centers residing in Water Stressed regions. Apart from the goal and as a part of IBM's corporate water management program we continue to collect information on water use, water conservation and water discharges from IBM chemical using research, development and manufacturing locations around the world. Water use at IBM s other facilities is generally for cafeterias, amenities, and building cooling systems. Moreover, the majority of these facilities are leased spaces where IBM does not control building / facilities operations Further Information Please see the IBM and Environment Report.: 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 July 2015, we substantially reduced our direct water use. IBM s current water use is primarily associated with cooling at our large facilities and data centers, and for irrigation and domestic purposes. Following IBM s divestiture of its semiconductor manufacturing operations during 2015, we reassessed the environmental impacts of our water use. Using the WBCSD s Global Water Tool, which highlighted places around the globe with highly stressed, or extremely highly stressed, water resources, we identified 45 data centers and other large IBM locations located in water-stressed regions. In early 2016, IBM established a new goal to achieve ongoing year-to-year reductions in water withdrawals at these locations, even though many of these locations had already undertaken projects to reduce water consumption. In 2016, IBM reduced water withdrawals at these locations in water-stressed regions by 6.6 percent against a 2015 baseline year. Module: Current State Page: W1. Context W1.1 Please rate the importance (current and future) of water quality and water quantity to the success of your organization

4 Water quality and quantity Direct use importance rating Indirect use importance rating Sufficient amounts of good quality freshwater available for use Sufficient amounts of recycled, brackish and/or produced water available for use Vital for operations Neutral IBM utilizes fresh water in support of its manufacturing, research and building cooling system operations. Water use at IBM s other facilities is generally for cafeterias, amenities, and building cooling systems W1.2 For your total operations, please detail which of the following water aspects are regularly measured and monitored and provide an explanation as to why or why not Water aspect % of sites/facilities/operations Water withdrawals- total volumes Water withdrawalsvolume by sources Under its new Water Goal 2016, IBM identified the locations in high and extremely high Baseline Water Stress using the WBCSD Global Water Tool. IBM Locations : 1. All IBM locations located in water stressed regions with data centers with greater than 10,000 square feet of raised floor space. 2. All other IBM owned or managed locations in water stressed regions with greater than 25,000 total square feet. As a result of this new Water Goal, IBM identified 45 IBM locations that are in the Water stressed region.. More than 90% of IBM locations are in the assessment for identifying locations in water stressed region. Under its new Water Goal 2016, IBM identified the locations in high and extremely high Baseline Water Stress using the WBCSD Global Water Tool. IBM Locations : 1. All IBM locations located in water stressed regions with data centers with greater than 10,000 square feet of raised floor space. 2. All other IBM owned or managed locations in water stressed regions with greater than 25,000 total square feet. As a result of this new Water Goal, IBM identified 45 IBM locations that are in the Water stressed region. More than 90% of IBM locations are in the assessment for identifying locations in water stressed region.

5 Water aspect % of sites/facilities/operations Water discharges- total volumes Water discharges- volume by destination Water discharges- volume by treatment method Water discharge quality data- quality by standard effluent parameters Water consumption- total volume Facilities providing fullyfunctioning WASH services for all workers Under its new Water Goal 2016, IBM identified the locations in high and extremely high Baseline Water Stress using the WBCSD Global Water Tool. IBM Locations : 1. All IBM locations located in water stressed regions with data centers with greater than 10,000 square feet of raised floor space. 2. All other IBM owned or managed locations in water stressed regions with greater than 25,000 total square feet. As a result of this new Water Goal, IBM identified 45 IBM locations that are in the Water stressed region. More than 90% of IBM locations are in the assessment for identifying locations in water stressed region. IBM does not track Water discharge, Volume by destination. IBM does not track the Water discharge volume by treatment method IBM measures and manages our wastewater discharges at relevant locations for maintaining operational conditions and compliance with discharge permits. This is also a part of our global EMS. Water discharge parameters are being tracked for the manufacturing operations and chemical using research laboratories. Under its new Water Goal 2016, IBM identified the locations in high and extremely high Baseline Water Stress using the WBCSD Global Water Tool. IBM Locations : 1. All IBM locations located in water stressed regions with data centers with greater than 10,000 square feet of raised floor space. 2. All other IBM owned or managed locations in water stressed regions with greater than 25,000 total square feet. As a result of this new Water Goal, IBM identified 45 IBM locations that are in the Water stress region. More than 90% of IBM locations are in the assessment for identifying locations in water stress region. All IBM locations are provided with WASH facilities. IBM s own corporate instructions on health matters require the company to provide potable/fresh water in the workplace. It is also a legal or regulatory requirement in some places where we operate. W1.2a Water withdrawals: for the reporting year, please provide total water withdrawal data by source, across your operations

6 Source Quantity (megaliters/year) How does total water withdrawals for this source compare to the last reporting year? Comment Fresh surface water Brackish surface water/seawater Rainwater 0 Groundwater - renewable Groundwater - nonrenewable Produced/process water Municipal supply Wastewater from another organization Total This is our first year of measurement This is our first year of measurement This is our first year of measurement This is our first year of measurement This is our first year of measurement This is our first year of measurement This is our first year of measurement This is our first year of measurement This is our first year of measurement This volume represents the 45 IBM focus locations in the Water Stress regions subject to IBM's new Water Goal. This volume represents the 45 IBM focus locations in the Water Stress regions subject to IBM's new Water Goal. This volume represents the 45 IBM focus locations in the Water Stress regions subject to IBM's new Water Goal. This volume represents the 45 IBM focus locations in the Water Stress regions subject to IBM's new Water Goal. This volume represents the 45 IBM focus locations in the Water Stress regions subject to IBM's new Water Goal. W1.2b Water discharges: for the reporting year, please provide total water discharge data by destination, across your operations Destination Quantity (megaliters/year) How does total water discharged to this destination compare to the last reporting year? Comment

7 Destination Quantity (megaliters/year) How does total water discharged to this destination compare to the last reporting year? Comment Fresh surface water Brackish surface water/seawater Groundwater Municipal/industrial wastewater treatment plant IBM does not track the Water discharge, Volume by destination. Wastewater for another organization Total W1.2c Water consumption: for the reporting year, please provide total water consumption data, across your operations Consumption (megaliters/year) How does this consumption figure compare to the last reporting year? Comment This is our first year of measurement This is the Water Use in the 45 focus locations in the Water Stress regions according to IBM's new Water Goal. W1.3 Do you request your suppliers to report on their water use, risks and/or management? Yes

8 W1.3a Please provide the proportion of suppliers you request to report on their water use, risks and/or management and the proportion of your procurement spend this represents Proportion of suppliers % Total procurement spend % Rationale for this coverage IBM requires suppliers with whom IBM has a commercial relationship to meet IBM s Social and Environmental Management System requirements which include defining, deploying and sustaining a management system that addresses the intersections of the supplier s operations with employees, society and the environment. These suppliers are required to measure their environmental performance, establish environmental goals, publicly disclose their environmental performance results, and conduct self-assessments and management reviews of their management system. The suppliers are required to cascade these requirements to their suppliers who perform work that is material to products, parts and/or services supplied to IBM. See IBM Global Procurement website for full requirements: Depending on the nature of a supplier s business and its locations these intersections may include water source, water use, water management, and water-related risk. For those suppliers that have identified water use as a significant aspect of their business, our expectation is for them to recognize that and take action to also measure, set goals and publicly disclose their water conservation efforts and results. W1.3b Please choose the option that best explains why you do not request your suppliers to report on their water use, risks and/or management Primary reason W1.4

9 Has your organization experienced any detrimental impacts related to water in the reporting year? No W1.4a Please describe the detrimental impacts experienced by your organization related to water in the reporting year Country River basin Impact driver Impact Description of impact Length of impact Overall financial impact Response strategy Description of response strategy W1.4b Please choose the option below that best explains why you do not know if your organization experienced any detrimental impacts related to water in the reporting year and any plans you have to investigate this in the future Primary reason Future plans Further Information Please refer link: As a significant amount of IBM's procurement spend is with non-production suppliers, in most cases these suppliers are not significant water users. By requiring suppliers to implement a management system and cascade the same requirements to their suppliers our intent is for suppliers to identify their businesses significant environmental aspect, including but not limited to energy, waste and GHG emissions, and to establish programs and objectives to manage them and reduce their

10 business impact on the environment. IBM is leveraging its purchasing power toward advancing environmental sustainability across its supply chain. Through requiring suppliers to implement a social and environmental management system, IBM s objectives include helping suppliers build their capability to effectively manage their environmental responsibilities; acknowledge their own accountability; and make managing these responsibilities systemic, integral, long term, and sustainable. The eight requirements for IBM suppliers, applicable from April 2010 are: 1. Define, deploy, and sustain a corporate responsibility and environmental management system that identifies significant aspects of the supplier's intersections with these matters, including those articulated in IBM's Supplier Conduct Principles and the Electronic Industry Citizenship Coalition Code of Conduct. 2. Establish programs (within the management system) to control operations that intersect with these matters and confirm compliance with applicable law, regulation and any particular contractual requirements. 3. Measure performance associated with supplier's significant environmental aspects where applicable and include at a minimum each of the following aspects common to virtually all businesses: energy conservation; scope 1 and scope 2 greenhouse gas emissions; waste management and recycling. 4. Set voluntary environmental goals to achieve positive results associated with significant aspects where applicable, and include at a minimum, one goal for each of the three aspects cited in item 3 above. 5. Publicly disclose results associated with these voluntary environmental goals and other environmental aspects from the management system, including any regulatory fines or penalties that may have occurred. 6. Train employees who are responsible for performing this work. 7. Conduct self-assessments and audits as well as management reviews. 8. Cascade this set of requirements to the supplier's suppliers who perform work that is material to the products, parts and/or services being supplied to IBM. IBM is committed to conducting business with environmentally responsible suppliers. IBM believes, based on our own experience, that sound environmental management is sound business. By requiring suppliers systematize environmental management we are extending the practice and reducing environmental risk exposures across our supply chain. Refer to this link for further details on our global EMS and IBM single global ISO EMS accreditation program: Module: Risk Assessment Page: W2. Procedures and Requirements W2.1 Does your organization undertake a water-related risk assessment? Water risks are assessed W2.2 Please select the options that best describe your procedures with regard to assessing water risks

11 Risk assessment procedure Coverage Scale Comprehensive company-wide risk assessment Direct operations and supply chain Some facilities and some suppliers Water is integrated into a comprehensive, company-wide risk assessment process incorporating both direct and supply chain operations W2.3 Please state how frequently you undertake water risk assessments, at what geographical scale and how far into the future you consider risks for each assessment Frequency Geographic scale How far into the future are risks considered? Comment Annually Country >6 years Annually Business unit >6 years Annually Facility >6 years Six-monthly or more frequently Six-monthly or more frequently Six-monthly or more frequently Country Facility >6 years >6 years Business unit >6 years Historic and looking into the year ahead to determine relevance of environmental aspects and their associated significance across relevant business activities globally. At least annually, under the requirements of IBM s global Environmental Management System (EMS) and as part of ISO EMS accreditation. Historic and looking into the year ahead to determine relevance of environmental aspects and their associated significance across relevant business functions globally. At least annually, under the requirements of IBM s global EMS and as part of ISO EMS accreditation. Historic and looking into the year ahead to determine relevance of environmental aspects and their associated significance across relevant locations globally. At least annually, under the requirements of IBM s global EMS and as part of ISO EMS accreditation. IBM executes a defined and comprehensive environmental due diligence process for acquisitions, divestitures, real estate and/or other business transactions worldwide. This process is executed on demand. IBM executes a defined and comprehensive environmental due diligence process for acquisitions, divestitures, real estate and/or other business transactions worldwide. This process is executed on demand. IBM executes a defined and comprehensive process for the identification of emerging and new environmental and chemicals management laws worldwide affecting the design and marketing of our products. This process is executed on an ongoing basis.

12 Frequency Geographic scale How far into the future are risks considered? Comment Annually Business unit >6 years Annually Facility >6 years IBM executes a defined and comprehensive Environmental Impact Assessment process which evaluates key impact stages of the life cycle of a proposed or modified major facility infrastructure process that is owned or managed by IBM. Triggered on demand based on the proposed or modified processes. IBM uses the WBCSD Global Water Tool (2015) periodically but at least annually, to help identify IBM locations worldwide that may be located in water stressed regions globally and consider opportunities and future risk exposure. W2.4 Have you evaluated how water risks could affect the success (viability, constraints) of your organization's growth strategy? Yes, evaluated over the next 1 year W2.4a how your organization evaluated the effects of water risks on the success (viability, constraints) of your organization's growth strategy? Based on the nature and scope of our business operations and our interaction with suppliers, IBM does not perceive any unusual water-related risks in our operations or the supply chain outside of those we plan for as part of our ongoing business and risk management processes. These risk management processes look at business risk comprehensively including, but not limited to, risks and impacts related to water use and discharge. We anticipate that the business models 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. This risk management approach is primarily achieved through implementation of the IBM global Environmental Management System, established for over 40 years, which is integrated into our business operations.

13 W2.4b What is the main reason for not having evaluated how water risks could affect the success (viability, constraints) of your organization's growth strategy, and are there any plans in place to do so in the future? Main reason Current plans Timeframe until evaluation Comment W2.5 Please state the methods used to assess water risks Method how these methods are used in your risk assessment WBCSD Global Water Tool WBCSD Global Water Tool. Other: IBM Environmental Management System. Other: IBM s requirements on Social and Environmental Management System for its suppliers. Other: IBM Smarter Water Management Solutions 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 July 2015, we substantially reduced our direct water use. IBM s current water use is primarily associated with cooling at our large facilities and data centers, and for irrigation and domestic purposes. Following IBM s divestiture of its semiconductor manufacturing operations during 2015, we reassessed the environmental impacts of our water use. From this assessment we determined that our most significant environmental impacts associated with our water consumption were those related to the identified 45 data centers and other large IBM locations located in water-stressed regions. We did this by using the World Business Council for Sustainable Development s Global Water Tool, which highlighted places around the globe with highly stressed, or extremely highly stressed, water resources. Then, in early 2016, IBM established a new goal to achieve ongoing year-to-year reductions in water withdrawals at these locations, even though many of these locations had already undertaken projects to reduce water consumption. In 2016, IBM reduced water withdrawals at these locations in water-stressed regions by 6.6 percent against a 2015 baseline year. W2.6

14 Which of the following contextual issues are always factored into your organization's water risk assessments? Issues Choose option Current water availability and quality parameters at a local level Current water regulatory frameworks and tariffs at a local level Current stakeholder conflicts concerning water resources at a local level Current implications of water on your key commodities/raw materials Current status of ecosystems and habitats at a local level Current river basin management plans Current access to fully-functioning WASH services for all employees Estimates of future changes in water availability at a local level Estimates of future potential regulatory changes at a local level Estimates of future potential stakeholder conflicts at a local level IBM's global Environmental Management System (EMS) and IBM s requirements on Social and Environmental Management System for its suppliers. IBM's global EMS and facility management and operations. IBM does not have stakeholder conflicts in places where it operates. IBM requires its suppliers to establish a Social and Environmental Management System, and identify and manage their significant business intersections with the environment. This topic is also managed through the annual context assessment as required in IBM's global EMS (and as per the new ISO standard). IBM assesses and reduces its water impact at its manufacturing operations and research laboratories worldwide through our global EMS. IBM also requires its suppliers to establish a Social and Environmental Management System, and identify and manage their significant business intersections with the environment. IBM assesses and reduces its water impact at its manufacturing operations and research laboratories worldwide through our global EMS. IBM also requires its suppliers to establish a Social and Environmental Management System, and identify and manage their significant business intersections with the environment. Part of IBM global ISO EMS accreditation where water use has been identified as a significant environmental aspect. IBM also requires its suppliers to establish a Social and Environmental Management System, and identify and manage their significant business intersections with the environment. IBM s own corporate instructions on health matters require the company to provide potable/fresh water in the workplace. It is also often a regulatory requirement in some places where we operate. Through the IBM's global EMS for the manufacturing operations and research laboratories worldwide. IBM uses indicators as provided in the WBCSD Global Water Tool (2015) to help identify water resource related risks for our manufacturing operations and research laboratories worldwide. IBM global EMS and supply chain Social and Environmental Management System. As required by our global EMS IBM s owned or managed locations identify and comply with applicable regulatory requirements. Execution is reviewed by management and / or periodic EMS internal audits program and external ISO audits. Through IBM s annual context assessment of our global EMS for IBM owned or managed locations worldwide and through the IBM supply chain Social and Environmental Management System requirement for suppliers. IBM also uses the WBCSD Global Water Tool (2015) to help identify water

15 Issues Choose option Estimates of future implications of water on your key commodities/raw materials Estimates of future potential changes in the status of ecosystems and habitats at a local level Scenario analysis of availability of sufficient quantity and quality of water relevant for your operations at a local level Scenario analysis of regulatory and/or tariff changes at a local level Scenario analysis of stakeholder conflicts concerning water resources at a local level Scenario analysis of implications of water on your key commodities/raw materials Scenario analysis of potential changes in the status of ecosystems and habitats at a local level Other Not evaluated Not evaluated resource related risks for our managed facilities worldwide. In early 2016, IBM established a new goal to achieve ongoing year-to-year reductions in water withdrawals at these locations in water-stressed regions. IBM s Product Stewardship program which is part of IBM s global EMS covers assessment of key life cycle elements using the product environmental profile (PEP) for the development of new IBM hardware products. Also addressed through our global Environmental Management System for IBM owned or managed locations, and our supply chain Social and Environmental Management System requirement for our suppliers. Covered as required by an IBM location EMS and periodic analysis which includes the use of the WBCSD Global Water Tool which identifies biodiversity hotspots for watersheds where our manufacturing operations and research laboratories are located worldwide. Covered as part of the planning process for applicable real estate projects and in accordance with IBM s global EMS for identification of relevant environmental laws. Covered as part of the planning process for applicable real estate projects and in accordance with IBM s global EMS for identification of relevant environmental laws. Covered by IBM s global EMS. This is conducted for manufacturing process tools and lines as part of the initial design and planning process. With the divestiture of IBM s semiconductor manufacturing operation in 2015, IBM set out to better quantify and understand the environmental impacts of our water use after the divestiture. Through this assessment, we identified 45 data centers and other IBM locations in water-stressed regions that were to be under the scope of our new water goal. The goal is to achieve a year to year reduction in water withdrawals at these locations. W2.7

16 Which of the following stakeholders are always factored into your organization's water risk assessments? Stakeholder Choose option Customers Employees Investors Local communities NGOs Other water users at a local level Regulators River basin management authorities Statutory special interest groups at a local level Suppliers Water utilities at a local level Other IBM Smarter Water management services and solutions. Top line growth and Leadership Access to clean drinking water and suitable sanitation. Employee satisfaction. Environmental Services and Smarter Water management solutions. Through IBM s global EMS to achieve leadership results and continual improvement. IBM owned or managed locations worldwide where water is identified as a significant environmental aspect or the location has direct water discharges, executed under our global EMS. Brand value. Leadership. Effectiveness of IBM global EMS, executed under our global EMS. IBM owned or managed locations worldwide where water is identified as a significant environmental aspect or the location has direct water discharges, executed under our global EMS. IBM locations subject to regulatory requirements on water management and / or discharges, executed under our global EMS. IBM locations subject to requirements on water management and / or discharges from regulating authorities, executed under our global EMS. IBM locations subject to relevant requirements, executed under our global EMS. Covered through the IBM Supplier Responsibility and Environmental Management System requirement and where the suppliers with whom IBM holds a commercial contract have identified water as a significant environmental aspect. W2.8 Please choose the option that best explains why your organisation does not undertake a water-related risk assessment

17 Primary reason Further Information Module: Implications Page: W3. Water Risks W3.1 Is your organization exposed to water risks, either current and/or future, that could generate a substantive change in your business, operations, revenue or expenditure? No W3.2 Please provide details as to how your organization defines substantive change in your business, operations, revenue or expenditure from water risk Based on the nature and scope of our business operations and our interaction with suppliers, IBM does not perceive any unusual water-related risks in our operations or the supply chain outside of those we plan for as part of our ongoing business and risk management processes. These risk management processes look at business risk comprehensively including, but not limited to, risks and impacts related to water use and discharge. We anticipate that the business models 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. This risk management approach is primarily achieved through implementation of the IBM global Environmental Management System, established for over 40 years, which is integrated into our business operations.

18 W3.2a Please provide the number of facilities* per river basin exposed to water risks that could generate a substantive change in your business, operations, revenue or expenditure; and the proportion of company-widefacilities this represents Country River basin Number of facilities exposed to water risk Proportion of companywide facilities that this represents (%) Comment W3.2b For each river basin mentioned in W3.2a, please provide the proportion of the company's total financial value that could be affected by water risks Country River basin Financial reporting metric Proportion of chosen metric that could be affected Comment W3.2c Please list the inherent water risks that could generate a substantive change in your business, operations, revenue or expenditure, the potential impact to your direct operations and the strategies to mitigate them

19 Country River basin Risk driver Potential impact Description of potential impact Timeframe Likelihood Magnitude of potential financial impact Response strategy Costs of response strategy Details of strategy and costs W3.2d Please list the inherent water risks that could generate a substantive change in your business operations, revenue or expenditure, the potential impact to your supply chain and the strategies to mitigate them Country River basin Risk driver Potential impact Description of potential impact Timeframe Likelihood Magnitude of potential financial impact Response strategy Costs of response strategy Details of strategy and costs W3.2e Please choose the option that best explains why you do not consider your organization to be exposed to water risks in your direct operations that could generate a substantive change in your business, operations, revenue or expenditure Primary reason Risks exist, but no substantive impact anticipated Based on our response in W2 (Risk Assessment) and W3.2, we expect our business model to enable IBM anticipate and adapt to potential risks and mitigate the impacts.

20 W3.2f Please choose the option that best explains why you do not consider your organization to be exposed to water risks in your supply chain that could generate a substantive change in your business, operations, revenue or expenditure Primary reason Risks exist, but no substantive impact anticipated Based on our response in W2 (Risk Assessment) and W3.2, we expect our business model to enable IBM anticipate and adapt to potential risks and mitigate the impacts. W3.2g Please choose the option that best explains why you do not know if your organization is exposed to water risks that could generate a substantive change in your business operations, revenue or expenditure and discuss any future plans you have to assess this Primary reason Future plans Further Information Please see the IBM and Environment Report.: 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 July 2015, we substantially reduced our direct water use. IBM s current water use is primarily associated with cooling at our large facilities and data centers, and for irrigation and domestic purposes. Following IBM s divestiture of its semiconductor manufacturing operations during 2015, we reassessed the environmental impacts of our water use. Using the WBCSD s Global Water Tool, which highlighted places around the globe with highly stressed, or extremely highly stressed, water resources, we identified 45 data centers and other large IBM locations located in water-stressed regions. In early 2016, IBM established a new goal to achieve ongoing year-to-year reductions in water withdrawals at these locations, even though many of these locations had already undertaken projects to reduce water consumption. In 2016, IBM reduced water withdrawals at these locations in water-stressed regions by 6.6 percent against a 2015 baseline year.

21 Page: W4. Water Opportunities W4.1 Does water present strategic, operational or market opportunities that substantively benefit/have the potential to benefit your organization? Yes W4.1a Please describe the opportunities water presents to your organization and your strategies to realize them Country or region Opportunity Strategy to realize opportunity Estimated timeframe Comment Companywide Competitive advantage Increased brand value Improved community relations Improved water efficiency Innovation Sales of new products/services Staff retention Other: IBM's Smarter Planet Strategy, to increse topline growth IBM Smarter water management is instrumented, interconnected and intelligent, using information and analytics to deliver improved outcomes across the water management lifecycle. Instrumented means fast, automated collation of information from varied sources to increase situational awareness IBM Intelligent Water Delivering insights from data to better manage water infrastructure, assets and operations. IBM Water Operations for Waternamics IBM Water Management is a predictive analytics platform that helps make sense of data deluge and engage citizens to collaborate across water operations. 4-6 years Refer to "Further Information" below. At IBM, we believe that our greatest opportunity to contribute to the sustainability of our planet comes from the application of our knowledge, technologies and solutions to address the sustainability challenges of our clients and the world. IBM s products and solutions have enabled our clients to improve their efficiency and reduce their environmental impact. Through a combination of cognitive technologies and an ever-more-instrumented planet what some call the Internet of Things (IoT) we are unlocking never-before-seen insights into, and solutions for, the relationships among business, society and our natural environment.

22 W4.1b Please choose the option that best explains why water does not present your organization with any opportunities that have the potential to provide substantive benefit Primary reason W4.1c Please choose the option that best explains why you do not know if water presents your organization with any opportunities that have the potential to provide substantive benefit Primary reason Further Information Some examples of our solutions. Reducing water usage and combating drought with IBM Watson OmniEarth Inc., an environmental analytics company, is using IBM Watson cognitive capabilities to turn satellite and imagery data into actionable insight that is being used to help water conservation efforts in California and other drought-stricken areas. With IBM Watson Visual Recognition, OmniEarth can process data 40 times faster than it could before, sorting through an estimated 150,000 images on a parcel-by-parcel basis in 12 minutes. By pinpointing potential water-using activities at the granular, land-parcel level with Watson, OmniEarth is helping water authorities target areas where water may be wasted. Some of OmniEarth s customers have already identified areas where overwatering or leaks are occurring, and have reported a 15 percent reduction in water use since the service was implemented. The Watson-based OmniEarth solution has been used by over 90 agencies in California. Harnessing insights from big data for better water management ( ) IBM partnered with Veolia, the global leader in optimized resource management (water, waste and energy management solutions) to develop and promote a smart water solution with advanced analytics and cognitive computing capabilities. IBM Water Operations for Waternamics delivers a comprehensive solution to the challenges faced by cities, utilities, and commercial enterprises of all sizes by mining water-usage data for insights that help drive efficiencies, reduce costs, make better decisions and improve services. The solution helps water utilities integrate disparate data streams to enable a 360-degree view of water flow and leakages, water supply levels, wastewater operations, and possible performance alerts. In addition to enhancing

23 efficiency and reducing water losses, utilities can make proactive decisions to minimize the risk of network disruptions. IBM Global Business Services and Veolia have collaborated to deploy the solution in 10 cities including Lyon, Lille and La Baule in France, and Tidworth in the U.K., and they continue to expand to additional cities. Enhancing understanding of water networks through interactive visualization In September 2015, IBM Research Ireland released epanetreader, an open source package for EPANET analyzing water networks in the R environment for statistical analysis. EPANET is software from the U.S. Environmental Protection Agency that simulates water network behavior. The epanetreader solution helps users understand water efficiency by allowing rapid visualization and interactive analysis of EPANET simulation results for key environmental parameters such as water quality and quantity. The solution improves visualization by allowing users to track the evolution of water network variables through time, and display the results in a graphical representation. The solution also helps users further analyze water networks and reduce environmental impacts by better understanding their use of energy and chemicals. Since its release, epanetreader has been downloaded more than 4,500 times by water utilities, consultants, and universities in 97 countries. Attachments /Shared Documents/Attachments/Water2017/W4.WaterOpportunities/Waternamics.pdf Module: Accounting Page: W5. Facility Level Water Accounting (I) W5.1 Water withdrawals: for the reporting year, please complete the table below with water accounting data for all facilities in your answer to W3.2a Facility reference number Country River basin Facility name Total water withdrawals (megaliters/year) at this facility How does the total water withdrawals at this facility compare to the last reporting year? Further Information Page: W5. Facility Level Water Accounting (II)

24 W5.1a Water withdrawals: for the reporting year, please provide withdrawal data, in megaliters per year, for the water sources used for all facilities reported in W5.1 Facility reference number Fresh surface water Brackish surface water/seawater Rainwater Groundwater (renewable) Groundwater (nonrenewable) Produced/process water Municipal water Wastewater from another organization Comment W5.2 Water discharge: for the reporting year, please complete the table below with water accounting data for all facilities in your answer to W3.2a Facility reference number Total water discharged (megaliters/year) at this facility How does the total water discharged at this facility compare to the last reporting year? W5.2a Water discharge: for the reporting year, please provide water discharge data, in megaliters per year, by destination for all facilities reported in W5.2 Facility reference number Fresh surface water Municipal/industrial wastewater treatment plant Seawater Groundwater Wastewater for another organization Comment

25 W5.3 Water consumption: for the reporting year, please provide water consumption data for all facilities reported in W3.2a Facility reference number Consumption (megaliters/year) How does this compare to the last reporting year? W5.4 For all facilities reported in W3.2a what proportion of their water accounting data has been externally verified? Water aspect % verification What standard and methodology was used? Further Information Module: Response Page: W6. Governance and Strategy W6.1 Who has the highest level of direct responsibility for water within your organization and how frequently are they briefed?

26 Highest level of direct responsibility for water issues Frequency of briefings on water issues Comment Other: Vice President for Corporate Environmental Affairs and Product Safety (CEA&PS) Scheduled - monthly Our environmental performance highlights are provided to IBM s designated environmental executive (VP for Corporate Environmental Affairs and Product Safety, CEA&PS) on a monthly basis. We conduct an annual review of our global EMS with VP of CEA&PS. VP of CEA&PS reports on IBM's environmental programs and performance annually to the Directors and Governance Committee of IBM s Board of Directors. Business Unit executives are responsible for implementation within their operations. W6.2 Is water management integrated into your business strategy? Yes W6.2a Please choose the option(s) below that best explains how water has positively influenced your business strategy Influence of water on business strategy Establishment of sustainability goals 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 July 2015, we substantially reduced our direct water use. IBM s current water use is primarily associated with cooling at our large facilities and data centers, and for irrigation and domestic purposes. In early 2016, IBM established a new goal to achieve ongoing year-to-

27 Influence of water on business strategy Greater due diligence Other: Operational performance standards Publicly demonstrated our commitment to water Other: Water Resoruce Considerations are factored into new offerings Greater supplier engagement year reductions in water withdrawals at water stressed locations, even though many of these locations had already undertaken projects to reduce water consumption. In 2016, IBM reduced water withdrawals at these locations in water-stressed regions by 6.6 percent against a 2015 baseline year. Corporate requirement for environmental impact assessment affecting new and significantly modified facility infrastructure and manufacturing processes; for acquisitions, divestitures, real estate projects and other business transactions and for the evaluation of the environmental aspects and impacts of key stages of a product's life cycle to develop a product environmental profile prior to a new product being introduced. IBM sets water discharge limits for designated water quality parameters applicable to its locations with direct discharges to receiving waters. IBM established its first water conservation goal in the year 2000, focusing on the significant use of water in our microelectronics manufacturing operations and our performance has been disclosed publicly annually since then in the annual IBM and the Environment reports and via OneReport for the Global Reporting Initiative (GRI). Reference link: 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 July 2015, we substantially reduced our direct water use. IBM s current water use is primarily associated with cooling at our large facilities and data centers, and for irrigation and domestic purposes. In early 2016, IBM established a new goal to achieve ongoing year-to-year reductions in water withdrawals at these locations, even though many of these locations had already undertaken projects to reduce water consumption. In 2016, IBM reduced water withdrawals at these locations in water-stressed regions by 6.6 percent against a 2015 baseline year. We develop solutions such as Smarter Water Management to help our clients in both the public and private sectors improve their operational efficiency and reduce demand on water. IBM Water Operations for Waternamics IBM Water Management is a predictive analytics platform that helps make sense of data deluge and engage citizens to collaborate across water operations. IBM Intelligent Water Delivering insights from data to better manage water infrastructure, assets and operations. IBM requires its suppliers to implement a corporate social and environmental management system. At a minimum, these suppliers are required to measure, set voluntary environmental goals and publicly disclose results. By requiring suppliers to implement a management system and cascade the same requirements to their suppliers who perform work that is material to the goods or services being supplied IBM. A significant amount of IBM's procurement spend is with non-production suppliers. In most cases these suppliers are not significant water users. Our intent is for suppliers to identify their businesses significant environmental aspects, including but not limited to energy, waste and GHG emissions, and to establish programs and objectives to manage them and reduce their business impact on the environment. W6.2b Please choose the option(s) below that best explains how water has negatively influenced your business strategy