1. Why does IBM’s supply chain program have such a large impact on environmental health?

2. How do companies like Cisco ensure that their suppliers are complying with their supply chain programs?

3. How might IBM influence members of its supply chain to follow its environmental program?

In 2013, the U.S. Environmental Protection Agency (EPA) presented IBM with a Climate Leadership Award. IBM has served as an environmental steward “during periods when the environment was not always as popular a subject as it is today; during profound changes in the global economy, our industry, and our business model; and during periods of differing financial results,” notes Wayne S. IBM’s Vice President for Corporate Environmental Affairs and Product Safety. IBM is publicly committed to making its products environmentally friendly, energy efficient, reusable, recyclable, and safely disposable. As an IT giant, IBM significantly impacts environmental health by reducing its own environmental footprint. The EPA recognized IBM because of its ambitious emissions reduction goals and because it has become a supply chain leader, requiring that companies up and down its supply chain establish environmental sustainability programs. At first, this may not seem impressive, as many of IBM’s suppliers are much smaller companies with smaller carbon footprints. However, IBM has over 27,000 suppliers, ranging from third-party data centers to rental car companies, and a recent survey found that 45 percent of these companies have not only established programs to reduce their greenhouse gas emissions (GHG) but have also set specific targets to do so. As a heavyweight in the corporate world, IBM is well positioned to make a difference through supply chain leadership. IBM’s supply chain program was established the same year that IBM achieved a remarkable environmental success. It took over five years and extensive coordination with many suppliers, but in 2010, IBM became the first computer manufacturer to eliminate the use of perfluorooctane sulfonate and perfluorooctanoic acid compounds from its chip manufacturing processes. The two compounds are known to be toxic to both humans and animals. IBM set aggressive goals for emissions reduction, and the company requires all its suppliers to establish management programs to implement environmentally responsible programs, and to measure and report their performance toward meeting environmental goals. Moreover, all of the company’s“first-tier” suppliers must ensure that their own supplies meet or exceed these goals. These programs must at the very least track carbon emissions and waste management. IBM is not the only IT giant to receive the EPA’s Climate Leadership Award. Cisco Systems and SAP have both recently received the same award. Cisco uses its supply chain program to score its suppliers, and those scores impact which companies Cisco conducts business with. Cisco also conducts independent third-party audits of its suppliers to make sure they are accurately reporting on their progress. SAP has created technology for its supply chain environmental programs, which the company claims reduces carbon emissions by 2.5 million tons annually—saving approximately $500 million in energy costs. Both IBM and Cisco are members of the Carbon Disclosure Project (CDP). Funded by numerous institutions and governments around the world, CDP works with thousands of companies to reduce GHG emissions, create sustainable water use programs, reduce deforestation, and—most notably—create programs that cascade the environmental commitments of large companies down the supply chain.