NAME OF REGISTRANT: International Business
Machines Corporation
NAME OF PERSON RELYING ON EXEMPTION: Green Century Equity Fund
ADDRESS OF PERSON RELYING ON EXEMPTION: 114 State Street, Suite
200, Boston, MA 02109
Written materials are submitted pursuant to Rule
14a-6(g)(1) promulgated under the Securities Exchange Act of 1934. Submission is not required of this filer under the terms of the
Rule but is made voluntarily in the interest of public disclosure and consideration of these important issues.
Shareholder Proposal No. 8 on the International
Business Machines Corporation’s
2024 Proxy Statement:
Adoption of Greenhouse Gas Emissions Targets
International Business Machines Corporation
Symbol: (IBM)
Filed by: Green Century Equity Fund
Green Century Capital Management, Inc. is the investment advisor to
the Green Century Equity Fund and seeks your support for the climate-related proposal filed at the International Business Machines Corporation
(hereby referred to as “IBM” or the “Company”) in the 2024 proxy statement. The proposal asks the Company to adopt
independently verified short-, medium- and long-term science-based greenhouse gas emissions reduction targets, inclusive of emissions
from its full value chain, in order to achieve net-zero emissions by 2050, which is in line with the Paris Agreement’s goal of limiting
global temperature rise to 1.5 degrees Celsius.
The Proponent believes taking such action would serve the short- and
long-term interests of the Company by mitigating reputational risk while addressing shareholder concerns.
Resolved: Shareholders request that
IBM adopt independently verified short-, medium- and long-term science-based greenhouse gas emissions reduction targets, inclusive of
emissions from its full value chain, in order to achieve net-zero emissions by 2050 in line with the Paris Agreement’s goal of limiting
global temperature rise to 1.5 degrees Celsius.
RATIONALE FOR A “YES” VOTE
| 1. | Reputational risk – IBM’s stance against setting science-based emissions reduction targets verified by a third
party raises concerns because: |
| a. | The Company sells software that enables customers to quantify their Scope 3 greenhouse gas (GHG) emissions and to prepare for target-setting
with the Science Based Targets initiative (SBTi), an organization IBM has previously disparaged. IBM’s refusal to set targets with
a third-party validator such as SBTi sends the message that its GHG data collection products and services have little value. Potential
customers may seek out competitors who have firsthand experience navigating the target-setting process with SBTi. |
| b. | Industry peers including Accenture, Microsoft, Hewlett Packard Enterprise, Salesforce, and SAP have set or committed to set science-based
targets with SBTi, leaving IBM in a laggard position. |
| 2. | Failure to meet investor expectations - Investors expect companies to mitigate exposure to climate risk. Adoption of independently
verified GHG emission reduction targets helps assure investors that IBM’s targets are grounded in science. |
| a. | By setting third-party verified science-based GHG emission reduction targets that are aligned with the goals of the Paris Agreement,
IBM could demonstrate that it intends to address its material Scope 3 emissions. Third-party validation – even of IBM’s existing
targets – would provide transparency and assurance that the Company’s targets are factually based on science. |
This is not a solicitation of authority
to vote your proxy. Please DO NOT send us your proxy card; Green Century Equity Fund is not able to vote your proxies, nor does this communication
contemplate such an event. Green Century Equity Fund urges shareholders to vote for Proposal No. 8 following the instruction provided
on the management’s proxy mailing.
The shareholder proposal requests that IBM expand the scope of its
GHG emissions reduction targets and seek independent verification to assure investors that its targets are aligned with the latest climate
science. In so doing, the proposal does not negate the Company’s decades-long work advancing comprehensive climate policy nor does
it question the authenticity of IBM’s current carbon reduction goals. Rather, it identifies an area where IBM notably fails to demonstrate
climate leadership and, as a result, may subject itself to reputational risk and increased investor scrutiny.
The potential for reputational risk to IBM is non-trivial. The Company
sells sustainability solutions software designed to help its customers calculate and report their Scope 3 emissions. Additionally, IBM
markets its software as being valuable for customers who report GHG emissions data to CDP, a global data disclosure platform, or who have
committed to set targets with SBTi.
However, in its public-facing materials, IBM has both disparaged SBTi,
calling it a “self-appointed arbiter for judging a company’s goals” in its 2022 CDP Climate Change report and extolled
the virtues of SBTi on its website.1 IBM’s contradictory statements about the organization undermine the Company’s
credibility and relevance of its software solutions.
_____________________________
1 https://www.ibm.com/blog/science-based-targets-what-are-the-key-commitments-required/
As of March 11, 2024, 7,659 companies had set or committed to set science-based
GHG emissions targets verified by SBTi, including 3,009 companies that have committed to setting net-zero targets. All but the smallest
companies working through SBTi’s target-setting protocol must account for both their operational emissions and their material Scope
3 emissions. Yet, IBM has declined to take similar steps. In fact, of the total emissions IBM discloses for 2022, its target covers just
58% of its reported emissions.2
When raising issues investors have flagged as material, investors expect
board and management to clearly articulate why their current strategies sufficiently address that risk. IBM has not sufficiently explained
why independent verification of its existing targets and expansion of those targets are not a part of its climate stewardship.
Finally, although IBM contends that the proposal is “unnecessarily
prescriptive,” it has yet to provide an alternative approach that addresses the material risks identified in the proposal.
IBM’s opposition to setting a third party verified science-based
target creates reputational risk. As an example, the Company markets and sells end-to-end sustainability solutions including the cloud-based
software, Envizi ESG Suite, which helps customers calculate and report Scope 3 emissions and prepare for target-setting with SBTi. However,
the Company’s refusal to set its own science-based target with SBTi results in a “do as I say, not as I do” dynamic
which creates a credibility gap.
Potential customers would be right to question the value of IBM’s
sustainability solutions software when the Company itself fails to see value in setting targets with SBTi. Its opposition statement provides
an awkard defense of its inaction. For example, IBM writes that the most prevalent carbon accounting standard, i.e. the GHG Protocol,
establishes that a company’s Scope 3 emissions are simply the estimated Scope 1 and 2 emissions that belong to the companies in
their value chain, and as such, are typically counted multiple times. Thus, without explanation, IBM casts doubt about the accuracy
and thereby the validity of its ESG Envizi Suite software, which is designed to collect and organze this data.
As of March 11, 2024, 7,659 companies had set or committed to set science-based
GHG emissions reduction targets with SBTi including IBM peers. For example, Accenture,3 Microsoft,4 Hewlett Packard
Enterprise,5 Salesforce,6 and SAP7 have set or committed to set near-term science-based 1.5 degree Celsius-aligned
targets with SBTi inclusive of their full Scopes 1 – 3 emissions. Accenture,8 Hewlett Packard Enterprise,9
and Microsoft,10 have also committed to set ambitious long-term 1.5 degree Celsius-aligned net-zero by 2050 targets, also vetted
by SBTi.
IBM has refused to set comparably comprehensive targets or seek any
third-party validation for its existing targets, raising concerns about the credibility of its commitments. Rather, it has adopted a 2030
net-zero target focused on its operational emissions and a single category of Scope 3 emissions. Of the total emissions IBM discloses
for 2022, its existing target covers only 58% of its reported emissions.
_____________________________
2 Based on IBM’s published 2022 GHG emissions data.
2023 data were not available at time of publication.
3 https://sciencebasedtargets.org/companies-taking-action/
4 Ibid.
5 Ibid.
6 Ibid.
7 Ibid.
8 Ibid.
9 Ibid.
10 Ibid.
In its opposition statement, IBM writes that it does not include in
its operational goals estimates of its global suppliers’ and global clients’ emissions (i.e. Scope 3) that it does not control.
Yet, IBM does assert a level of control of its value chain by requiring “key suppliers in emissions-intensive business sectors
to set an emissions reduction goal by 2022, addressing their Scope 1 and Scope 2 GHG emissions, that is aligned with scientific recommendations
from the UN IPCC to limit Earth’s warming to 1.5 degrees Celsius...”11 Similarly, it has been working since 2021
with key distribution carriers and shipment suppliers to set fleet carbon intensity and/or absolute GHG emissions reduction targets that
cover the services they provide to IBM.12
Further, IBM acknowledges the importance of SBTi in its own publications,
stating on its website that, “While science-based targets are undoubtedly good for the environment, they are also good for the bottom
line, with business benefits including strong investor confidence, resilience against regulation, increased innovation, competitive advantage
and strengthened brand reputation.”13
The glaring contradictions found in the Company’s published materials
suggest a lack of alignment of company strategy, deficit in identifying reputational risk, and potential management entrenchment that
could damage long-term shareholder value as the Company seeks to continue its leadership position in the rapidly developing technology
sector.
| II. | FAILURE TO MEET INVESTOR EXPECTATIONS |
Environmentally-responsible companies are expected to mitigate their
exposure and contribution to climate risk. By that yardstick, IBM is an environmentally-responsible company. The shareholder proposal
simply highlights an area where IBM could further enhance the credibility of its efforts, such as by utilizing its own measurement and
disclosure software and submitting its proposed Scopes 1 – 3 targets to a trusted third party.
The proposal’s specific request of IBM – to broaden the
scope of the emissions it accounts for and to actively enfold them into its targets – is a request to identify the places within
its value chain where the Company is subject to climate risk and to ensure that it is effectively managing both internal and external
resources to limit its climate risk.
Investors appreciate transparency. Although IBM contends that its climate
change goals are “transparent, authentic, and factually based on science,” it appears that IBM is the sole verifier of this
information. Third party validation of IBM’s climate change goals would give investors assurance that at least one other entity
has reviewed the Company’s data. One credible third party that has reviewed thousands of companies’ GHG emissions reduction
targets is SBTi.
_____________________________
11 https://www.ibm.com/impact/files/reports-policies/2022/IBM_2022_ESG_Report_and_Addendum.pdf.
Pg 49.
12 Ibid.
13 https://www.ibm.com/blog/science-based-targets-what-are-the-key-commitments-required/
Given IBM’s historic and active involvement in addressing climate
change, it is inconsistent, disappointing, and hypocritical that the Company resists greater transparency as well as greater responsibility
for its value chain emissions.
While IBM has a net-zero by 2030 operational GHG emissions reduction
target, made notable progress toward its fulfillment, worked to advance effective climate policy, and created products and services to
help customers manage their ESG data, it is steadfast in its opposition to setting science-based, Paris-aligned short-, medium- and long-term
reduction targets, verified by an independent third party.
Given IBM’s history and attention to climate issues, its resources
and expertise, and investment in developing climate solutions, it is inexplicable why the Company will not adopt science-based targets
covering its full value chain of emissions or submit to third party validation of its targets. Thousands of companies, including its closest
peers, are currently engaged in calculating their Scopes 1 – 3 emissions, setting targets, and measuring their progress.
Further, setting science-based targets with SBTi or another independent
third party would reduce reputational risk, especially in light of the fact that IBM sells software meant to help customers collect data
to submit to third parties like SBTi and has stated publicly the importance of SBTi.14 It would also demonstrate that IBM is
able to nimbly pivot to expanding the scope of its current GHG emission reduction goals. Because IBM already works with upstream and downstream
partners to limit their emissions, this pivot is well within the Company’s capabilities.
Shareholders are urged to vote FOR the proposal asking IBM to adopt
independently verified science-based GHG gas emissions reductions targets from its direct operations and full value chain in order to
comprehensively address reputational risk and investor expectations.
For questions regarding this proposal, please contact Andrea Ranger,
Green Century Capital Management, aranger@greencentury.com.
This is not a solicitation of authority
to vote your proxy. Please DO NOT send us your proxy card; Green Century Equity Fund is not able to vote your proxies, nor does this communication
contemplate such an event. Green Century Equity Fund urges shareholders to vote for Proposal No. 8 following the instruction provided
on the management’s proxy mailing.
_____________________________
14 https://www.ibm.com/blog/science-based-targets-what-are-the-key-commitments-required/
International Business M... (NYSE:IBM)
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から 3 2024 まで 4 2024
International Business M... (NYSE:IBM)
過去 株価チャート
から 4 2023 まで 4 2024