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Best Practices in Supplier Responsibility: IBM

As companies focus on future resource scarcity, many are embarking on initiatives to reduce emissions, cut waste and develop other sustainable business practices.

Posted by Joe Gerard on July 20th, 2010

IBM is committed to developing solutions to improve the transfer of information and providing businesses with solutions to simplify their business processes. In 2004, IBM became one of the founding members of the Electronic Industry Citizenship Coalition (EICC). IBM abides by- and helped to develop, the framework established by the EICC as guidance for their supply chain social responsibility program. In one of our previous posts, “The Importance of Supply Chain Ethics and Compliance,” I wrote about the importance of an ethical supply chain. As product parts are manufactured all over the world, it’s important that companies take responsibility to ensure all members of their supply chain act in a socially responsible manner. Companies are encouraged to review and implement their ethics, compliance and social responsibility policies within companies involved in the supply chain.

IBM and the Environment

Earlier this year, IBM announced plans to have all of their suppliers disclose information related to their sustainability efforts.
As companies focus on future resource scarcity, many are embarking on initiatives to reduce emissions, cut waste and develop other sustainable business practices. IBM has developed the IBM Supplier Conduct Principles: Guidelines, to provide suppliers with a better understanding of IBM’s Supplier Conduct Principles. The guidelines outline the evaluation criteria used to assess a suppliers ability to comply with IBM’s high standards for supplier conduct. The goal of this document is to ensure suppliers are compliant with IBM’s practices, but also to help companies improve their processes and reduce their environmental impact.

In previous posts, we’ve talked about ethics and compliance programs only being successful if they’re enforced and monitored- the same rule applies for socially responsible supplier relationships. Earlier this year, IBM announced plans to have all of their suppliers disclose information related to their sustainability efforts. In the Solve Climate article “IBM Orders 30,000+ Suppliers to Start Disclosing Their Environmental Impact,” they outline the specifics of the initiative launched by IBM:

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“All of the company’s 30,000+ suppliers are now required to define a management system around three areas: energy conservation, greenhouse gas emissions, and waste management/recycling. Suppliers are expected to create a system, set goals, measure their performance and publicly disclose their progress toward their goals. They’re also expected to set similar requirements for their suppliers. While IBM can’t audit all of its suppliers every year, it will be checking up on them, particularly those in industries with the most troubled histories. As with its supplier code of conduct, if suppliers fail to meet the new requirements, they’ll get a warning and IBM will try to work with them. If that still fails, their future in IBM’s supply chain will be in jeopardy.”

Clearly IBM understands the impact supplier actions have on their own reputation and has put these measures in place to mitigate related risks. When selecting suppliers, companies are now under more pressure than ever before to ensure ethics and compliance throughout the chain.

IBM’s Supply Chain

In the New York Times article “I.B.M. Suppliers Must Track Environmental Data,” IBM’s Vice President of Global Supply and Chief Procurement Officer John Paterson stated:

“In the long term, as the Earth’s resources get consumed, prices are going to go up. We’ve already seen large price increases and problems with water. Ultimately, if a supplier cannot be compliant with requirements on the environment and sustainability, we’ll stop doing business with them.”

Companies must use their knowledge to help businesses in developing countries implement socially responsible practices and reduce their environmental impact. The NY Times article mentions that one of the largest challenges faced by IBM is working with suppliers in countries where sustainability isn’t much of a concern. The article talks about a recent success at IBM and the impact the company has had on one of its suppliers:

“In a recent success in China, I.B.M. helped one of its suppliers, a shipping company, redesign its own supply chain to reduce its carbon footprint by 15 percent. “

As a founding member of the EICC, IBM helped develop a unified standard for suppliers within the electronics industry. The code of conduct governing the EICC consists of 5 areas of supply chain social responsibility. The 5 areas include ethics, labour, health and safety, the environment and management systems. The vision of the EICC is outlined below:

“Through the application of high standards, member companies can create better social, economic, and environmental outcomes for all those involved in the supply chain.”

IBM has published a number of informative resources on their website to provide additional guidance for current and potential suppliers. The programs and documents available from IBM can be used as great benchmarking tools to establish a best practices supply chain social responsibility program.

Joe Gerard
Joe Gerard

CEO, i-Sight

Spend my days showing off the i-Sight investigative case management software and finding ways to help clients improve their investigations. Usually working with corporate security, HR & employee relations, compliance and legal teams.

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