Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation A Continuum of IBM Environmental Leadership: From 1990 to Tomorrow WEC Gold Medal Colloquium Washington, DC May 15, 2003 Wayne S. Balta

Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation A Continuum of IBM Environmental Leadership  Received the WEC Gold Medal for International Corporate Environmental Achievement in 1990  Proud of this prestigious recognition  Call to strengthen our efforts for the future

Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation Environmental Management System  System Framework Updated, expanded and consolidated corporate policies on safety, environmental protection and conservation into new, all-encompassing policy on environmental affairs Updated every major mandatory worldwide procedure supporting that policy at least twice - and added 11 new ones Developed a far-reaching strategic plan for IBM's environmental affairs. First released in 1990; updated in 1995 and 2003 Expanded management system to include Environmentally Conscious Products (ECP) program Instituted formal requirement to update the Board of Directors annually

Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation Environmental Management System (cont.)  Structure Created environmental affairs focal points in each major geography and countries and in its business units to complement the existing environmental staff Established ECP Strategy Owners in the product divisions  Registration Obtained single global registration to ISO Covering manufacturing and hardware development operations worldwide Expanded ISO registration to include research and country S&D organizations

Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation Sampling of Programs & Initiatives Supporting Environmental Policy  Produced thirteen annual environmental reports  Developed environmental guidelines & requirements for packaging  Established two internal environmental recognition programs Chairman's Environmental Affairs Trophy Environmental Affairs Excellence Awards Since inception: 64 awards to 358 IBM employees from 9 countries. Total award amount over $2.4M Winning projects alone have saved over $60M  Established Environmentally Conscious Products program & Engineering Center for Environmentally Conscious Products  Established and implemented IBM Environmental Research Program

Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation Sampling of Programs & Initiatives Supporting Environmental Policy (Cont.)  Established global materials recovery center network for product reutilization and recycling Expanding and coordinating previous individual country focus  Increased focus on environmental requirements for suppliers Strengthened program on Environmental Evaluation of Suppliers Developed Engineering Specification - Environmental Requirements for Materials, Parts & Products

Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation Participation in Voluntary Initiatives  Charter Member of ENERGY STAR Computers Program  US EPA 33/50 Program, Canada's ARET Program, DOE Voluntary Reporting of Greenhouse Gases  Achieved our CFC and MCF elimination goals  Eliminated Class I ozone-depleting substances  Partnerships and organizations for sharing best practices and assisting SMEs - i.e. the Electronic Environment Group (EEG) in Brazil  Climate Change Initiatives PFC emissions MOUs First semiconductor manufacturer to establish PFC emissions reduction goal (set in met in August of 2002) Climate Savers and Climate Leaders WRI's Green Power Market Development Group

Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation Results Since 1990 ( )  Hazardous waste worldwide: reduced 91.7 percent  Nonhazardous waste recycling worldwide: Recycled 48 percent in 1990 Recycled 78 percent in 2002  IBM Fujisawa & IBM Yasu achieved zero waste to landfill goal  Air emissions worldwide: reduced 86 percent  Total TRI chemical quantities worldwide: reduced 87 percent  TRI total chemicals or releases and waste transferred off-site worldwide: reduced 72 percent

Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation Results since 1990 ( )  Energy conservation: Conservation actions conserved 12.8 billion kWhrs of electricity Also saved $729 million Avoided more than 7.77 million tons of CO2 emissions Equivalent of taking 1.9 million cars driving 10,000 miles off the road  IBM reduced its CO2 emissions by an estimated 57 percent 33 percent due to energy conservation measures alone 24 percent due to restructurings

Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation Results since 1990  A Sampling of Product and Packaging Design Achievements First company to produce computer using 100% recycled resin for its major plastic parts Established the IBM Low-Power Computing Research Center for development of ultra low-power components and power- efficient I/T equipment. Use of powder coatings in the decorative metal finishing of IBM products has grown from 69.2% in 1998 to 93.4% in Product waste to landfill has been reduced from 7.3% of material processed in 1995 to 2.92% in Eliminated PVC, loose fill cushioning, and commingling from our product packaging Derive 94% (by weight) of IBM's packaging from renewable resources

Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation Looking Toward Tomorrow  Goals: Hazardous waste: continual reduction indexed to output Nonhazardous waste: recycle 67% of waste generated Energy conservation: achieve energy conservation savings each year equivalent to 4% of actual annual electricity and fuel Product energy efficiency: qualify 100% of ThinkPads, PCs, monitors and applicable printers to the ENERGY STAR criteria Use of recycled plastics: 5% of the volume of plastics purchased by IBM to be made with recycled content Product waste to landfill: not to exceed 3% of material processed Lead (Pb) reduction/elimination: meet technical and supply chain challenges and deliver products that meet customer and ROHS requirements.

Corporate Environmental Affairs & Product Safety © 2002 IBM Corporation Looking Toward Tomorrow  Our commitment to environmental leadership in all of our business activities Good for the environment and good for our business