Scope 3 greenhouse gas (GHG) emissions are the direct emissions of numerous other entities with whom a company interacts. These entities include, for example, all suppliers around the world across all tiers (e.g., from the origin of a raw material to a finished product to its disposition), all of a company's customers, and all of a company's employees as those employees commute to a workplace. These entities are collectively referred to as a company's “value chain.” Under a voluntary accounting standard named the Greenhouse Gas Protocol, the direct emissions of all the entities described above are also allocated and assigned to the company in question as that company's indirect, Scope 3 emissions. Determining Scope 3 emissions across a company’s value chain can be extremely challenging due to a lack of access to primary source data across multiple entities.

Nevertheless, we report Scope 3 GHG emissions in five of the fifteen categories defined by the GHG Protocol's Corporate Value Chain Emissions Accounting and Reporting standard. IBM calculates certain Scope 3 emissions related to the “Purchased Goods and Services" category — namely, emissions associated with electricity IBM consumes in third-party operated spaces that IBM leases for data center operations (referred to as co-location data centers), and we furthermore approximate emissions in four other Scope 3 categories. These approximations represent Scope 3 emissions pertaining to areas for which we have some relevant information upon which to make assumptions.

That said, IBM believes real reductions of emissions are directly and demonstrably achieved when the organization generating the emission takes action to do so. That’s why we are committed to achieve net-zero operational GHG emissions by 2030. This covers our Scope 1 and Scope 2 emissions, as well as Scope 3 emissions associated with IBM’s electricity consumption at co-location data centers.

At the same time, we remain closely engaged with our suppliers. Since 2010, IBM has required all of its first-tier suppliers to implement an environmental management system, measure and set goals to reduce their GHG emissions, and publicly disclose their results. Building upon these requirements, in April 2021, IBM enhanced its supplier engagement by establishing a new goal requiring key suppliers in emissions-intensive business sectors to set a goal to reduce their Scope 1 and Scope 2 emissions that is aligned with scientific recommendations from the Intergovernmental Panel on Climate Change to limit Earth's warming to 1.5°C above pre-industrial levels. We also convene an annual Sustainability Leadership Symposium with our suppliers during which they share innovations and best practices.

IBM has long been committed to doing business with suppliers who conduct themselves with high standards of ethical, environmental, and social responsibility, no matter where they operate. We support this commitment not only by setting specific environmental requirements for our suppliers but also by partnering with them to help drive their continual improvement.