IBM s Social & Environmental Management System Requirements for Suppliers

Transcription

1 ISC Procurement IBM s Social & Environmental Management System Requirements for Suppliers - Supplier Guidance Supplement Alexis Fields (GS) and Diana Lyon Little (CEA) 12-Apr-2011 Release v1.0

2 Table of Contents Document Purpose & Overview S&EMS Requirements S&EMS Reference Material Additional Informational Resources 2 2

3 S&EMS Guidance Module Purpose & Overview 3 3

4 Purpose of this Guidance Module IBM has a wide range of suppliers both across and within the many procured commodity families. Some suppliers may not understand how IBM s S&EMS supplier requirements apply to them and, accordingly, may not clearly understand what they need to do to comply with these requirements. This module provides IBM s suppliers with additional and supplemental information to assist them in the following: Identifying the applicability of requirements to IBM suppliers, and Helping suppliers understand what IBM expects of them 4 4

5 Overview of IBM s S&EMS Requirements for Suppliers IBM s suppliers provide a wide range of services and products to IBM and their operations range from those working out of their homes to those with major manufacturing operations Our suppliers are required to define, deploy, and sustain a corporate social responsibility and environmental management system that identifies significant aspects of the supplier's intersections with these matters. Our suppliers Intersections between their workforce, their environment and society will, thus, vary widely. The Management System and programs by which we expect our suppliers to manage these intersections will, thus, vary as well. 5 5

6 Overview cont d IBM s management system requirements are relevant to ALL suppliers (including small or large services suppliers who do not manufacture anything) and all suppliers need to identify their intersections with the environment and have programs to properly manage, measure and disclose information about them For example, all suppliers use energy, create waste, pay salaries/benefits, etc. Thus, the need for suppliers to respond to all eight requirements, positively or negatively However the degree to which these management system requirements insect suppliers vary depending on the supplier's business. For example, energy use and associated greenhouse gas emissions from a service provider occupying one floor of an office building would be very different than a supplier involving in manufacturing or transportation 6 6

7 S&EMS IBM Requirements for a Social & Environmental Management System -- Supplier Conformance

8 Social elements of IBM s S&EMS Supplier Requirements Our Supply Chain Social Responsibility (SCSR) program employs a comprehensive plan across our global network of suppliers that includes the requirement that: IBM Suppliers shall have within their management policies & practices elements that ensure working conditions in their facilities are safe, workers are treated with respect and dignity, and business operations are environmentally responsible. The Electronic Industry Citizenship Coalition (EICC) Code of Conduct (CoC) contains provisions for such a corporate social responsibility (CSR) system and provides guidance in the five critical areas of CSR performance audited/reviewed by IBM: Labor (Treat employees with dignity & respect) Health and Safety (Evaluate & control exposure to hazards) Environment (Protect the environment) Management System (Implement management systems approach to drive solutions) Ethics (Uphold the highest ethical standards) IBM is adopting the EICC CoC in 2011 as its own supplier code of conduct and will eventually sunset its Supplier Conduct Principles (SCP), accordingly. IBM employs 3rd-party audit companies to audit a suppliers conformance to EICC & SCP standards. All IBM suppliers will be audited against CoC or SCP provisions, production and non-production alike. IBM suppliers should move to conform to the CoC provisions as IBM transitions away from its SCP. A fully-executed Supplier Conduct Principles Letter Agreement (SCPLA) means you meet this requirement 8 Ref: EICC here> and SCSR here> 03.ibm.com/procurement/proweb.nsf/ContentDocsByTitle/United+States~Supply+chain+social+responsibility

9 Environmental elements of IBM s S&EMS Supplier Requirements Suppliers shall define, deploy, and sustain a corporate Environmental Management System (EMS) that identifies significant aspects of the supplier's intersections with environmental matters. A management system is a structured framework of practices and procedures that enables an organization to execute its operations in a consistent and sustained manner, and includes the following components: 1. Policy (Formal statement of values and commitments) 2. Planning 3. Implementation and Operation 4. Monitoring, Checking and Corrective Action 5. Management Review IBM encourages its suppliers to align their EMS with the ISO model. A management system is intended to be system dependent, not people dependent. The system is built on the Plan, Do, Check and Act Model (see Next Page). 9 Ref. Designing, Developing and Implementing a Management System: An Overview at

10 Typical EMS Plan, Do, Check, Act Cycle Act Management Review Environmental Policy Checking/ Corrective Actions Measurement and Monitoring EMS Nonconformance and Corrective Actions Records EMS Audits Check Drive for Continuous Improvement Implementation Roles and Responsibilities Training and Communication EMS Document Control Emergency Preparedness and Response Do Planning Plan Environmental Aspects Compliance Objectives and Targets Environmental Mgmt. Programs Courtesy: ISO Framework 10

11 Designing, Developing and Implementing a Management System: An Overview podcast is available to suppliers via IBM web-site 11 Ref. Designing, Developing and Implementing a Management System: An Overview at

12 Basic Considerations for defining, deploying, sustaining an EMS Company s vision statement (formalized policy statement, commitment) -- what is it that the company wants to accomplish in protecting the environment? Identify the elements of the company s activities, products and services that intersect with its policy statement. What are the environmental legal requirements associated with the company s intersects? What is the process to identify applicable legal requirements? What documents and/or procedures are needed to control the intersects? How is performance against requirements and processes monitored and measured? Ensure management review, involvement and support is part of system. 12 Ref. Designing, Developing and Implementing a Management System: An Overview at

13 S&EMS Requirements for Suppliers The eight (8) new S&EMS requirements represent a continuum of prior communications to IBM Suppliers in the realm of IBM s Corporate Responsibility. 13 Social Responsibility Elements SCSR Supplier Letter Apr-2004 IBM Supplier Conduct Principles Supplier Conduct Principles Letter Agreement (SCPLA) Supplier Improvement Plans (SIPs) EICC Code of Conduct (CoC) Environmental Responsibility Elements + = Supplier Environmental Evaluation (1972) ISO14001 Supplier Letter Product Environmental Compliance (Engineering Specification 46G377, etc.) Carbon Disclosure Project (CDP) Supply Chain Program In summary, IBM Suppliers are now required to: * 1. Manage their corporate responsibility and environmental intersects in a systemic manner 2. Measure their environmental performance and establish voluntary improvement goals (numeric) 3. Disclose their environmental results publicly * Suppliers are to cascade these same requirements onto their own suppliers, where work performed is material (of consequence) to products/services provided to IBM Supply Base Social & Environmental Management System - Supplier Conformance Needs - IBM Requirements announced to Tier-1 Suppliers Feb Deployed Corporate Responsibility (CR) and Environmental Management System (EMS) 2.Programs controlling operations that intersect w/ CR and Environmental Aspects 3.Environmental Performance is Measured Energy, Scope 1 and Scope 2 GHG Emissions, Waste (at a minimum) 4.Numerical Environmental Targets are Set Energy, Scope 1 and Scope 2 GHG Emissions, Waste (at a minimum) 5.Results of Environmental Performance is Publicly Disclosed 6.Employees responsible for management of Mgmt System are trained & competent 7.Conducting Self-Assessments and Management Reviews are part of Mgmt System 8.Requirements cascaded onto suppliers that are material to goods/services provided IBM Note: IBM does not ask its suppliers to do anything IBM itself would not do, is not doing, or has not done itself already.

14 Conforming to IBM s S&EMS Management System Requirements IBM s Suppliers are required to define, deploy, and sustain a corporate-level social responsibility and environmental management system This requirement could be met in the form of a single management system that incorporates both the social and environmental aspects that IBM now requires. This requirement could also be met with the existence of two or more separate management systems within the supplier s organization, where the systems combined cover the IBM-required social and the environmental elements. A supplier s existing management system could be found under such headings as Corporate Responsibility (CR), Corporate Social Responsibility (CSR), Sustainability, EMS and/or some other variation of environmental, social & governance (ESG) programs. To implement a mgmt system that meets IBM s S&EMS requirements, the supplier should develop a management system inclusive of the following aspects: Social elements that conform to the EICC Code of Conduct (CoC) provisions Environmental elements that conform to the ISO Standard EMS provisions 14 14

15 Applicability of S&EMS Requirements IBM s S&EMS eight (8) Requirements, applicable to all of IBM s Tier-1 Suppliers, are to be cascaded by the Tier-1 suppliers onto their own suppliers (Tier-2 to IBM), if and where applicable * Global Procurement Production Sourcing Councils Services Sourcing Councils General Sourcing Councils IBM Corporation 8 Requirements To IBM s Tier-1 Tier-1 Supplier Goods & Services Tier-1 Suppliers Supply Base Tier 1 requires same of Tier-2 * Tier-2 Suppliers> Tier 2 requires same of Tier-3 * Tier-3 Suppliers> * If performing work material to the product or service being provided to IBM 15 Legend> Supplier of Goods Supplier of Services Contract Manufacturer Flow of Goods & Services

16 S&EMS Supplier Conformance Checklist IBM ss&ems Requirements (1/2)? IBM s S&EMS Requirements (2/2)? 1. Suppliers shall 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/or the EICC Code of Conduct. 2. Suppliers shall 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. Suppliers shall Measure Performance associated with supplier's significant environmental aspects and include, at a minimum, each of the following aspects common to virtually all businesses: a) Energy conservation, b) Scope 1 and Scope 2 greenhouse gas (GHG) emissions and c) Waste management and recycling. 4. Suppliers shall Set Targets to achieve positive results associated with their significant environmental aspects, including goals for each of the three aspects (a, b, and c) cited in Requirement #3 above. 5. Suppliers shall Publicly Disclose results associated with the voluntary environmental goals and other environmental aspects from the management system, including any regulatory fines or penalties that may have occurred. 6. Suppliers shall Train employees who are responsible for performing this work (monitoring, measuring, and/or reporting environmental performance). 7. Suppliers shall Conduct Self- Assessments/Audits, as well as Management Reviews of their management system. 8. Suppliers shall Cascade these same requirements onto their own suppliers who perform work material to the goods and/or services provided to IBM. What Suppliers have to do to meet IBM s 8 Requirements 16

17 S&EMS Reference Material ISO, EMS, GHG 17 17

18 IBM Suppliers must have an Environmental Management System Specifically, IBM will now requires all of its suppliers to define, deploy, and sustain a corporate-level Environmental Management System (EMS) that identifies significant aspects of the supplier's intersections with environmental matters. What is meant by Define, Deploy, and Sustain? Defined: a supplier has identified requirements of an EMS and the responsibilities to effectively implement, and maintain its S&EMS. Deployed: the responsibilities defined in the EMS are being executed and requirements are being met. This includes communicating S&EMS roles, responsibilities and authorities to, and made them understood by, all relevant personnel. Sustained: the EMS is maintained to ensure its relevancy to business and effectiveness and its implementation is ongoing. 18

19 What is ISO 14001? ISO is one of the most widely-used EMS standard. There are, however, other EMS frameworks ISO is a generic standard. Generic means that the same standards can be applied: to any organization, large or small, whatever its product or service, in any sector of activity, and whether it is a business enterprise, a public administration, a college or university, or a government department. Generic also signifies that no matter what the supplier s line of business or scope of activity, if it wants to establish an environmental management system, ISO gives the essential features needed to get started / get it done. 19 Adopted from:

20 Greenhouse Gases (GHG) Greenhouse Gases include the following: 1. carbon dioxide (CO 2 ) 2. methane (CH 4 ) 3. nitrous oxide (N 2 O) 4. hydrofluorocarbons (HFCs) 5. perfluorocarbons (PFCs) 6. sulfur hexafluoride (SF 6 ) To Measure/Manage Greenhouse Gases: Assign Resources Select measurement protocol/ghg accounting principles Define inventory boundaries organizational and operational Identify data sources needed for selected boundaries Calculate and report GHG emissions inventory Use compiled data to establish objectives & targets for GHG reduction 20 Courtesy> The Pacific Northwest National Laboratory>

21 What are Scope 1 and Scope 2 GHGs? GHG emissions generated directly and indirectly by an entity such as a supplier can be classified into scopes, based on the source of the emissions. Scope 1 emissions are direct GHG emissions of a reporting enterprise (e.g., supplier) from sources that are owned or controlled by that enterprise. Scope 2 emissions are indirect GHG emissions of a reporting enterprise. They account for emissions from the generation of electricity, heating and cooling, or steam generated off-site that is purchased and consumed by the enterprise. If a supplier purchases electricity, heating and cooling, or steam, then that supplier has Scope 2 GHG emissions and IBM requires that to be accounted for. Whether small or large, whether working in a home office or in a commercial office building, whether they have manufacturing facilities or not, whether they provide a product or service, virtually all suppliers use electricity. Electricity demand/generation/use is a major cause of CO2 GHG emissions Scope 3 emissions: Outside of IBM s requirements 21

22 Common Sources of GHG Emissions IBM requires only Scope 1 and Scope 2 emissions inventory & disclosure by its suppliers (mainly CO2). GHG Emission Symbol Common Source of emissions Carbon Dioxide CO 2 Electricity generation & electricity consumption, use of vehicles & small equipment Methane CH 4 Combusting fossil fuels, leaks in pipelines, landfills Nitrous Oxide N 2 O Combusting fossil fuels, reaction in chemical process Hydrofluoro-carbons HFCs Refrigerant or coolant leaks in HVAC, vehicles or compressors Perfluoro-carbons PFCs Chemical reactions in process e.g., manufacturing semiconductors Sulfur hexafluoride SF 6 Leaks from insulating canisters installed in electricity T&D systems Courtesy: The Climate Registry website> 22

23 Common Sources of Scope 1 and Scope 2 GHG Emissions GHG Scope Emission Category Common Emission Sources Calculation Data Sources/Needs Scope 1 Stationary combustion Decomposition of coal, wood, or solid waste- Backup Generators using diesel, boilers, furnaces, heaters, burners, etc. Fuel purchase records - natural gas, fuel oil, coal Mobile combustion Company Fleet using fuels: trucks, buses, cars, airplanes, boats, ships, barges, etc. Fuel purchase records or annual mileage and type of fuel Process combustion Manufacturing processes - Cement manufacture, aluminum production etc. Calculated annual emissions; requires knowledge of the process Fugitive emissions Equipment leaks- refrigeration, heating, ventilation, air conditioning, coal piles, onsite wastewater treatment, onsite landfills, electrical equipment losses, etc Typically estimated based on knowledge of the source of emissions Scope 2 Purchased energy Purchased electricity, steam, heating, cooling, chilled water Utility bills- organization's, landlord's, homeowner s 23 23

24 Environmental Aspects & Impacts The Environment is the surroundings within which an organization operates, including air, water, land, natural resources, plant life, animal life, humans, and their interrelationships (i.e., where they intersect). An Environmental Aspect or Intersect is that element of an organization's activities, products or services that can intersect/interact with or have an Impact (positive, negative or neutral) on the environment (e.g., air, water, land). Our suppliers are to define, deploy, and sustain a corporate social responsibility and environmental management system that identifies significant aspects of the supplier's intersections with these matters. Our suppliers Intersections between their workforce, their environment and society will, thus, vary widely. The Management System and programs by which we expect our suppliers to manage these intersections will, thus, vary as well (Definitions adopted from Environmental Management System Partnerships> and ISO 14001)

25 Examples of Environmental Aspects & Environmental Impacts Environmental Aspect Office use of electronic equipment Disposal of solvents, oil, fluorescent lamps, and excess furniture Heating of buildings Motor vehicle operations (e.g., use of gasoline, oil, rags, antifreeze, tires, and batteries) Custodial operations (e.g., use of cleaning products, paper, water, energy) Grounds maintenance ex. Facility Operations Environmental Impact (or Intersection) Use of energy, generation of waste (e.g., paper, batteries, toner cartridges) Land contamination and air pollution (e.g., landfill, incineration) Air pollution (e.g., greenhouse gases (GHG), other air pollutants) Generation of waste and air pollution Use of natural resources and contamination of land Use of natural resources and chemicals (e.g., use of water, fuel, pesticides, fertilizer) 25 Aspect: Cause or Input: Element of an organization s activities, products or services which can interact with the environment Impact: Effect or Output: Any change to the environment, whether adverse or beneficial, resulting from an organization s activities, products, or services 25

26 The GHG Protocol Corporate Standard: what is it? A widely-used standard for Corporate GHG accounting and reporting. The GHG Protocol Corporate Standard provides standards and guidance for any company or organization preparing a GHG emissions inventory. It covers the accounting and reporting of the six (6) greenhouse gases typically covered by existing regulations /protocols: carbon dioxide (CO 2 ) methane (CH 4 ), nitrous oxide (N 2 O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF 6 ). Source: 26 IBM follows this GHG Protocol for accounting its Scope 1 and Scope 2 emissions.

27 The GHG Protocol Corporate Standard: what s in it? Standards Organizational Boundaries Operational Boundaries Historic Datum Reporting GHG emissions Guidance Business goals and inventory design Accounting for GHG reductions Identifying GHG sources Managing inventory quality Verification of GHG emissions Calculation Tools Web-based, user-friendly, step-by-step guidance Build on IPCC methodologies Sector-specific tools developed in industry-led efforts (e.g. cement, pulp & paper, aluminum) 27

28 Scope 1 GHG Emissions: Sample Calculation (Summary) Fuel Annual Fuel Use (gallons) Emission Factor t CO 2 t CO 2 equivalent 1 boiler in Building 1: fuel is no. 2 fuel oil 500,000 X kg CO2/gallon = 5,075 2 company cars: fuel is gasoline X 8.91 kg CO2/gallon = 89.1 TOTAL Scope 1 GHG emissions 5,164.1 Raw Data Sources for emissions coefficients The Greenhouse Gas Protocol Initiative Calculation Tools ( EPA AP-42 emission factors ( Department of Energy Energy Information Administration ( Fuel Use GHG Emission Factor Scope 1 GHG Emissions For example, a company pays for and burns fuel oil no. 2 in a boiler to heat Buidling1 in the winter. The company also has two company cars. What are the company s scope 1 GHG emissions for the reporting year? Boiler: based on the company s purchase records to determine the amount of oil used. In this case, it was 500,000 gallons. Cars: based on the company s purchase records to determine the amount of gasoline used. In this case, it was 10,000 gallons. Multiply each fuel use amount by the respective emission factor to obtain GHG emissions in CO2-equivalents. Emission factors may be obtained from publicly available sources such as U.S. Energy Information Administration. 28 Adding Scope 1 GHG emissions from boiler and 2 cars you get the total Scope 1 emissions for the company

29 Scope 2 GHG Emissions: Sample Calculation (Summary) Electricity Annual electricity consumption (MWh) Emission Factor t CO 2 t CO 2equivalent Purchased Electricity for Building 1 1,000 X 0.924/MWh = 924 Electricity used by Building 2 1,500 X 0.289/MHw = TOTAL Scope 2 GHG emissions Raw Data Sources for emissions coefficients The Greenhouse Gas Protocol Initiative Calculation Tools ( EPA AP-42 emission factors ( Department of Energy Energy Information Administration ( Electricity Use GHG Emission Factor Scope 2 GHG Emissions 29 For example, a company operates out of two office buildings. Building 1 is owned and Building 2 is leased. Building 1: the company purchases electricity from a utility company and receives a month electricity bill. Building 2: the landlord charges the company for actual electricity used each month for building 2. What are the company s scope 2 emissions for the reporting year? First there is the electricity that the company purchases from the power utility. In this example, it is 1,000 MWh per year based on electric bills the company received. This is multiplied by the emission factor to obtain GHG emissions in CO2- equivalents. Emission factors may be obtained from your utility provider or other publicly available sources such as U.S. Energy Information Administration. Similarly, scope 2 GHG emissions can be calculated for Building 2. You may receive your electric usage from the landlord, in this case, 1,500 MWh per year Adding Scope 2 GHG emissions from the 2 buildings, you get the total emissions from electricity use by the company

30 Scope 2 GHG Emissions: Sample Calculation (Details) Step: Example calculation: 1. Identify sources a) Purchased electricity for Building 1 b) Electricity used by Building 2 2. Select calculation approach Use documented emission factors (most common). Obtain emission factors from any of the following: Your electricity provider; or Regional electric grid factor (usually publicly available from government or regulatory agencies); or National electric grid factor (usually publicly available from government or regulatory agencies); or U.S. and International emission factors for electricity consumption may be obtained from the U.S. Energy Information Administration at URL: 3. Collect data and choose emission factors Data a) Determine megawatt hour (MWh) of electricity purchased for the year. Obtain this from your electricity bill. For this example, let s say the company used 1,000 MWh and the building is located in Australia. b) Determine the megawatt hours of electricity your landlord billed you. This may be in the rent statement, a utility bill or a separate statement from your landlord. For this example, we will use 1,500 MWh and the location of the building is in Belgium. Emission Factor a) Use the emission factor you obtained from your electricity provider or other recognized source. In this example, let s use metric tons CO 2 /MWh. b) In this example, we will use the emission factor of metric tons CO 2 /MWh. 4. Calculate emissions Multiply the amount of electricity with the respective emission factor to obtain the amount of CO 2 emitted resulting electricity consumption during the year: a) Building 1: 1,000 MWh x metric tons CO 2 /MWh = 924 metric tons CO 2 b) Building 2: 1,500 MWh x metric tons CO 2 /MWh = metric tons CO 2 5. Roll-up data to company level Adding emissions from electricity used by both buildings to arrive at the total Scope 2 GHG emissions for the company: = metric tons CO 2. 30

31 Additional Resources Offices & Small Businesses A Model Environmental Management System for a Small Business Developing a Company-Wide GHG Inventory for a Small Business Working 9 to 5 on Climate Change: An Office Guide (for small, office-based organizations) Greenhouse Gas Emissions from a Typical Passenger Vehicle Oregon State University GHG Emissions Measurement & Reporting Calculating your GHG emissions from Company Flights Calculating your GHG emissions from Office Paper consumption Calculating your GHG emissions from Refrigerants Business Carbon Emissions Calculator 31

32 Additional Resources cont d Measuring Greenhouse Gas Emissions from Office Waste US Environmental Protection Agency (EPA) EMS Guidance Environmental Management Systems in China The ACUPCC Reporting System (American Colleges & Universities) Guidance on how UK organizations should measure and report GHG EMS: An Implementation Guide for Small and Medium-Sized Organizations Environmental Management Systems in the Private Sector Implementing EMS in the Hotel Industry ISO Step-by-Step Implementation Guide Toolkit (Sample Pages) 32

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