Introduction

Coding Challenge Coding Live

Avoided the emissions of more than 334,000 metric tons of CO2 through its energy conservation efforts and procurement of renewable energy.

This Code defines the minimum standards of business conduct and business practices with which IBM expects you to comply in regards to your IBM business relationship. If local laws and regulations are more permissive than this Code you are expected to comply with the Code. If local laws and regulations are more restrictive, you must always comply with those legal requirements.

Even with a workforce this large and this diverse, union representation has not been a significant factor in management-labor relations. Traditionally, IBM has resisted labor union organizing, although unions do represent some IBM workers outside the United States, most notably in the United Kingdom. Perhaps this has not been problematic as IBM has a long record of rewarding its employees with benefits and bonuses and was one of the first corporations to provide group life insurance (1934), survivor benefits (1935), and paid vacations (1936) to its workforce. Additionally, employees have been encouraged to discuss their grievances and concerns with management through the companysOpen Doorprogram. This form of internal resolution dispute was first implemented by John J. Watson, Sr. (the companys first president) in the 1910s.TheOpen Doorprogram was a traditional company practice that granted employees with complaints hearings with senior executives, including the companys president.20

The dilemma facing the ever-expanding multinational corporation is the lack of absolute control over foreign subsidiaries and others who serve as potential agents for the company. While a company is generally not legally responsible for the criminal acts of its agents and employees (unless it knowingly authorizes or participates in such behavior), the FCPA does contain an accounting provision whereby the details of each foreign transaction must be reported to the Securities and Exchange Commission (SEC). In this manner, the parent can be held liable for its failure to ensure the accuracy of a subsidiarys books and records even if it has no knowledge or reason to know of the false information provided within.35The provisions of this Act are enforced by both the SEC and the U.S. Department of Justice (DOJ).

In an attempt to avoid the appearance of impropriety, IBM has voluntarily curtailed its involvement in foreign-based projects bidding. Additionally, it has prepared aCode of Conductwhich is incorporated in each of its contracts and expressly references the FCPA. The truncated language of the Code reads as follows:

Our industry and the markets we serve continue to undergo significant changes. As a whole, these changes make the ways in which we do business more complex and constantly present new regulatory, ethical and legal issues. You must observe the highest ethical principles in all your activities in your IBM business relationship, and avoid engaging in any activity that involves even the appearance of impropriety.

Founded on June 16, 1911, in Endicott, New York, IBM has always been a frontrunner in innovation. Some of its business practices, both past and more currently, have been controversial; others have developed responsibly and ingeniously in answer to customer and shareholder demands and to meet, and even exceed, government regulations.

With respect to civil rights, IBMs historical tendency has been to veer from the norm and act preemptively. For instance, in contravention to the U.S.s entrenched policy of segregation – in part legislated by judicial fiat inPlessy v. Ferguson21- and well before the enactment of the the Civil Rights Act of 196422and the Americans with Disabilities Act,23IBM had already begun to diversify its workforce. In 1899, the Computing Scale Company – one of three companies to later form IBM – employed African-American Richard MacGregor as well as three women, Lilly J. Philp, Nettie A. Moore and Emma K. Manske.24By 1914, IBM added a disabled employee to its workforce.25On September 21, 1953, IBMs second president, Thomas J. Watson, Jr., sent out a controversial letter to all IBM employees stating that IBM needed to hire the best people, regardless of their race, ethnic origin, or gender. He also publicized this policy so that in his negotiations to build new manufacturing plants with the governors of two states in the U.S. South, his message that IBM would neither construct nor maintain separate-but-equal workplaces would be unambiguous.26

With increasing interconnectivity between people worldwide, news of local, national, and global crises is communicated within seconds and populations are given the more time to react.However, with respect to the more rural areas of not just the U.S., but of emerging countries and markets, extending and expanding broadband services is what IBM is attempting to accomplish. Broadband over Power Line (BPL) has proven to be a cost-effective solution for providing high-speed Internet access in such underserved and remote ar

IBM is headquartered in Armonk, New York. As of 2009, IBM employed more than 399,409 worldwide.2Other relevant statistics from its 2009 annual report indicate increases in revenue by $95.75 billion, operating income by $17.01 billion, net income by $13.42 billion, and total equity by $22.63. However, the companys total assets declined by $109.02 billion in that same year.3

In response to this encroaching worldwide crisis, IBM has undertaken certain progressive steps in furthering sustainable business practices with respect to water conservation and monitoring by partnering with the Beacon Institute for River and Estuaries to provide real-time watershed data from the Hudson River that scientists, educators, and policymakers are able to access for public education and policy development.48IBMs monitoring of the Hudson River – often noted as the most instrumented river in the U.S. – is primarily done through solar-powered stations designed to gather and synthesize information regarding climate conditions, water flow rates, and water particle compositions. This data provides the necessary information to alert local communities with respect to toxic particle presence, to show rates of erosion which could possibly alter the course of the water source, and to monitor unusual flow rates which could lead to flooding.49

To further understand the breadth of this company, it is important to recognize that its commitment to innovation is reflected by the number of patents it holds. From 1993 to 2007, IBM was awarded over 38,000 U.S. patents and has invested approximately $5 billion a year in research, development, and engineering since 1996. IBMs current active portfolio contains approximately 26,000 patents in the U.S. and over 40,000 patents worldwide as a direct result of its investments.Business Standardreports that IBM shattered the patent record in 2008, becoming the first company to surpass 4,000 patents in a single year.4Ostensibly, IBM is a formidable organization, having effectively launched a campaign to create new assets, promote the optimization of existing assets, and analyze data to better lives in various ways.

Announced it had built a solar cell in which the key layer that absorbs most of the light for conversion into electricity is made entirely of readily available elements and is manufactured using a combination of solution and nanoparticle-based approaches. This solar cell set a new world record for efficiency and holds the potential for producing low-cost energy that can be used widely and commercially.

As the worlds businesses become more aligned to international trends and transactions, the temptation to gain an unfair advantage with foreign governments to secure potentially lucrative contracts through bribery, extortion, and other forms of corruption has become more pervasive. In response to this type of monopolistic – and often criminal – form of business dealing, the referred to as the anti-bribery statute – which is designed to prohibit any U.S. or foreign United States Congress enacted the Foreign Corrupt Practices Act (FCPA)34- more commonly corporation that has a class of securities registered or that is required to file reports pursuant to the provisions of the Securities and Exchange Act of 1934 from giving anything of value to a foreign official or to a foreign political candidate or party to gain an unfair business advantage against its competitors.

IBM was made some bold moves throughout the world, demonstrating a new, innovative type of leadership. It has specifically launched a panoply of new programs, of which only several will be highlighted. These examples include:

Purchased 560 million kWh of renewable energy, representing 11.3 percent of the companys global electricity usage and a CO2 emissions avoidance of 191,000 metric tons.

Internationalization, Shifting Demographics, and Unionization

Accurate and reliable financial and business records are of critical importance. You should not engage in any actions that could result in conveying false or inaccurate financial information to IBM or our clients. You must ensure that all submissions you make to IBM, for example, orders, sales reporting, special bid requests, rebates, reimbursement requests, are complete and accurate.

It might surprise the average reader to know that American giant International Business and Machines, better known as IBM, only dedicates about 20% of its services to the manufacture of its hardware. The remaining 80% is devoted to consulting in the computer and technology fields. IBMs consulting programs all share one common characteristic: the word- or a derivative thereof – typically precedes the name of the specific consulting program involved. What is readily apparent is that theseprograms have reignited a new phase of innovation and creativity in a world demanding an equitable balance of economic, social, and environmental concerns.

Established IBMs 2nd generation CO2 emissions reduction goal, building upon its results between 1990 and 2005. IBMs energy conservation actions conserved 4.3 billion kWh of energy, avoided 2.7 million metric tons of CO2 emissions (an amount equal to 40 percent of its 1990 emissions), and saved the company $273 million in energy expense.

Other negative environmental charges have specifically plagued IBM. For example, it has been reported that IBM used liquid cleaning agents in circuit board assembly operations for more than two decades. Six separate spills and leaks were recorded, including one leak in 1979 of 4,100 gallons from an underground tank. These oversights left volatile organic compounds behind in the soil and aquifers of Endicott, New York, the original home of IBMs world headquarters. Elements of toxic organic compounds were identified in the towns drinking water, albeit within regulatory limits. Additionally, from 1980, IBM has reportedly pumped out 78,000 gallons of chemicals – including trichloroethane, freon, benzene, and perchloroethene – directly into the air. IBM Endicott has been identified by the Department of Environmental Conservation as a major source of air and water pollution, however, state health officials have been unable to conclusively link the pollution to specific health problems.12

Bus, train, car, plane – the most common forms of transportation on land, air, and sea. With population, urbanization, and globalization increasing at unprecedented rates, there is a need now more than ever to predict consumer demand, enhance the customer experience, optimize current modes of transportation, and create new ways of traveling that are efficient and environmentally-friendly. This is especially important as the number of cities with populations in excess of one million have now topped 476 (up from 83 in 1950) and the current forms of movement are unproductive, inefficient, and ecologically unsustainable. For instance, in 2007 alone, U.S. road congestion wasted 2.8 billion gallons of fuel and 4.2 billion hours of commuting time. IBM has already explored solutions to this waste of resources by examining available alternatives. One such option would be to put more emphasis on rail transport as one ton of rail freight can be moved 423 miles using only one gallon of fuel while a single freight train can replace 280 trucks. The safe, secure, and clean movement of passengers and freight is critical to the uninterrupted provision and delivery of food, education, healthcare, retail, and manufactured goods and services and is one more program of IBMs challenge to build a smarter planet.50

At all times you are required to comply with all applicable US and local anti-bribery laws, such as the United States Foreign Corrupt Practices Act and similar local laws.[Emphasis added]. You must not, directly or indirectly, make or offer bribes, kickbacks, or other payments of money or anything of value to anyone, including officials, employees, or representatives of any government, company, or public or international organization, or to any other third party, for the purpose of wrongfully obtaining or retaining business related in any way to IBM Products or Services. This includes giving money or anything of value to any third party; where there is reason to believe it will be passed on to anyone involved in the business decision process for the purpose of influencing the decision. When dealing with others, including other IBM business associates, you must exercise reasonable due diligence to ensure that you are aware of any potential warning signals that may indicate potential issues.39

Was recognized by the EPA for its leading green power purchases in the U.S. and for its support and participation in the EPAs Fortune 500 Green Power Challenge. IBM purchased enough renewable energy in 2007 to meet 4% of its U.S. electricity use and 9% of its global electricity purchases.

In 2010, IBM employed approximately 105,000 workers in the U.S. – a decrease of 30,000 since 2003. In the first quarter of 2005, IBM eliminated 14,500 positions – predominantly in European countries. On June 8, 2005, IBM Canada Ltd. eliminated approximately 700 positions. However, in its determination to broaden its focus by engaging emerging markets, these figures are offset by IBMs employment of over 75,000 people in India – an increase of over 66,000 in 2003.19Additionally, IBM offices in China, the Philippines, and Costa Rica have been witnessing a recruitment boom due to lower wages, less regulatory controls, local revenue growth, and increasing percentages of educated and skilled technical and business workers. IBM has explained this reconstitution of its global workforce to be an integral part of an overall strategy to rebalance its portfolio of professional skills.

IBM has funneled its resources into building smarter transportation systems, cities, power grids, money, food systems, healthcare, telecommunications, and water – around the globe. And this smarter way of doing business is not just applied internally, but also to businesses, municipalities, governments, and countries.

Another FCPA incident occurred in South Korea in 2003, the facts of which were very similar to the Argentinean Banco de la Nacin controversy. In both cases, local prosecutors in the IBM subsidiarys host country charged the subsidiary with paying bribes to government officials or employees of state-owned companies to secure a state procurement contract. After local investigations commenced, IBM fired its subsidiary executives. U.S. charges were never formally initiated. The primary difference between the two cases was the size of the purported bribes: in Argentina, the transfer would have yielded approximately $250 million in new contracts, whereas in South Korea, IBMs subsidiary reportedly netted under $50 million in new contracts for about $300,000 in alleged bribes.38

Since 2005, IBMs total hazardous waste has decreased by 33.9 percent. By 2009, IBM recycled 45 percent of all of its hazardous waste while 31.4 percent (mainly sludge from industrial wastewater treatment plants) was sent to landfills. Of the nonhazardous waste IBM generated in 2009, 76 percent was recycled.7But while IBM has made significant inroads in reducing landfill waste, it must still grapple with accumulated electronic or e-waste. In the post-World War II age, IBM, like all other technology manufacturing companies, realized enormous success with the production of computers and software. But with rapidly changing technology, electronics have been rendered obsolete in short periods of time. The U.S. alone discards 30 million computers each year of which the Environmental Protection Agency estimates only 15-20% is recycled with the remainder disposed of into landfills.8

Undoubtedly, the measure of true principled growth of both individuals and businesses is taking full accountability for past mistakes and committing to change. IBM has – especially within the last several decades – launched laudatory environmental initiatives. In addition to the reduction of its own generated waste, IBM has ventured into smarter commuting practices and the use and development of alternate sources of energy. With respect to worker commuting, IBM was recognized in 2005 as one of the Top 20 Best Workplaces for Commuters by the United States Environmental Protection Agency (EPA) in recognition of the companys efforts to reduce traffic and air pollution.13And in the field of solar power, Tokyo Ohka Kogyo Co., Ltd. (TOK) and IBM have been in the process of collaborating to establish affordable methods for introducing the next generation of solar energy products into the global marketplace.14Known as CIGS (Copper-Indium-Gallium-Selenide) solar cell modules, this thin film technology, has been touted as being capable of reducing the overall cost of solar cells to further enable their widespread adoption.15

uses of PFOS and PFOA in the companys semiconductor manufacturing operations.

It is important to note that of the worlds global water sources, only 3% is fresh water and 21% of this 3% is found in the Great Lakes of the U.S.46This sustained threat to these scant resources which support all life is beginning to attract more publicity and attention and to spur creative resolve. With respect to national action, some countries are reacting to this crisis more quickly than others. For example, Israel maintains a 75% water recycling program while Los Angeles, California, U.S. only recycles 3% of its water – and this is primarily done to sustain the citys landscaping.47

Joined the Carbon Disclosure Projects Supply Chain Project at its inception.

Additionally, IBM has also made a switch to natural gas which has helped the company lower its greenhouse gas emissions by 70 percent and its energy use by 21 percent since 1990. In 2005 and 2006 alone, the company saved $4.4 million through a 2 percent reduction in fuel consumption.16Other noteworthy initiatives include the following:

The issues we are addressing – from clean water, to safe food, to sustainable and vibrant cities, to smarter work, to empowered communities – are not a choice between business strategy and citizenship strategy. They are both.1

Received Low Carbon Leaders Award from The Climate Group.

Prohibited the use of polyvinyl chloride (PVC) in IT system enclosures and perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA) in new IBM manufacturing, development, and research processes.

One of the most controversial business relationships is said to have occurred during World War II between IBM and the Third Reich. In his book,IBM and the Holocaust,33author Edwin Black maintains that the Nazi government, in its determination to eradicate Europes Jewish populations, needed a way in this pre-computer age to manage the massive trafficking of people to ghettos, detention facilities, and ultimately, concentration camps to complete the final solution. With the movement and relocation of millions of people, number systems had to be used to identify the camps, classify the prisoners, and relate the status of each person taken into custody. These punch cards were not sold, but leased and serviced on site each month. Black points to documentary evidence in the form of lease and service contracts entered into between the Third Reich and IBM-New York regarding the lease and service of these machines. IBM has countered with the argument that it had no control over how the machines were used and therefore was in no way complicit with the Holocaust.

This Code of Conduct (Code) applies to all your activities in your IBM business relationship with us. By establishing this Code and making it part of your relationship with IBM, we are acknowledging your critical role in defining and protecting our most valuable collective asset – the trust that our clients, investors, colleagues and communities place in IBM and our business associates.

IBM established a corporate policy on environmental protection in 1971 with the support of a comprehensive global environmental management system. According to company reports, its total hazardous waste decreased by 44% over the past five years and 94.6% overall since 1987. IBMs total hazardous waste calculation consists of waste generated from both non-manufacturing and manufacturing operations. Waste from manufacturing operations includes waste recycled in closed-loop systems where processed chemicals are recovered for subsequent reuse rather than for potentially toxic disposal. Within the last decade, IBM has redesigned processes to eliminate almost all closed-loop recycling and has actively substituted more environmental-friendly materials. IBM has additionally constructed a modeling solution to help protect the environment and reduce its own carbon footprint by using aGreen Sigmasystem.5IBMs goal with the Green Sigma offering is to partner with clients to both realize economic benefits and to achieve a reduction of the companys impact on the environment.6

In an attempt to privatize the processing of welfare assistance applications and determine eligibility for food stamps, Medicaid, and other needs-based benefits, Indiana Governor Mitch Daniels signed a 10-year, $1.16 billion deal with IBM in 2006. The objective of this alliance was to upgrade and outsource the states paper-based welfare application system to a system which uses a statewide call center and online document processing. Part of this new plan was to shift 1,500 of the states 2,200 caseworkers to the private sector. After receiving myriad complaints from clients whose claims were allegedly lost or wrongfully denied, the State of Indiana cancelled the contract and filed a lawsuit against IBM. IBM has countersued the Indiana Family and Social Services Administration for claimed deferred payments, arguing that the Daniels administration failed to anticipate the consequences of increased new applications due to an economic downfall.32

This company recognizes the interconnected global community that exists and realizes that:

It has been said that water is quickly becoming the worlds most precious commodity; that instead of living in a petroleum-based world, we are now living in a water-based world. Sources of clean water are indisputably becoming scarcer and more polluted as the worlds population continues to escalate at unprecedented, unsustainable levels. One phenomenon which has demonstrated this serious ecological change is Lake Chad in North Africa – once one of the worlds largest fresh water lakes. As of the date of this writing, Lake Chad has all but dried up, leaving hundreds of thousands of people without livelihoods derived from fishing and farming and without a reliable source of drinking water.45

On May 21, 1997, both the New York Times and the Wall Street Journal reported that an Argentinean federal judge had indicted 10 people on charges of bribery in connection with a contract entered into between an Argentinean subsidiary of IBM and Banco de la Nacin – Argentinas state-owned bank. IBM Argentina and its former President, Ricardo Martirano, were accused of paying an estimated $37 million in bribes to secure an agreement to computerize Banco de la Nacins 525 branches. In July of 1997, an Argentinean court of appeals overturned the bribery charges but left the lesser charge of fraud standing. IBM-NY-USA immediately fired its Argentinean subsidiary executives in response to this scandal.36

The way the world literally works has to become smarter.

IBM has summarized its approach in doing business in a world marked by serious challenges:

This particular program addresses the aging infrastructure, inefficient banking, water quality, transportation, communication, and crime control concerns which exist primarily in cities (in which over half of the worlds population now resides). Data is collected and analyzed to project when and if roads, bridges, and highways are dangerous and in need of immediate attention and repair. Data indicating shifting demographics as well as peak times of commuting, communicating, and monetary and service transactions are gathered, interpreted, and translated into potentially new policies which are designed to better the citizens quality of life as well as improve customer services. With respect to crime control, IBM has developed the technology to detect gunfire which reports such suspicious criminal activity to the nearest police precinct even before a 911 call can be made.40

According to the Environmental Protection Agency, the U.S. is currently home to approximately 3,091 active landfills and over 10,000 old municipal landfills,9most of which contain e-waste or Waste Electrical and Electronic Equipment (WEEE). E-waste includes discarded, surplus, obsolete, or nonfunctioning electrical or electronic devices. The particles and compounds which comprise these devices are known to causes serious health and pollution problems to humans, animals, and eco-systems. Some electronic scrap components, such as cathode ray tube (CRT) computer monitors, contain contaminants such as lead, cadmium, epoxy resins, fiberglass, PCBs, PVC (polyvinyl chlorides), thermosetting plastics, and mercury – all known toxins. The release of these materials into the ground contaminates underground aquifers and into the air as methane gas increasingly continues to pose serious environmental dangers.10To date, there is no federal or state legislation that would require the producers of these items – including IBM – to mine these landfills and recover their discarded products.11

Received the U.S. EPAs Climate Protection Award (the first company to receive the award twice) and was recognized by the U.S. EPA under the

IBM added sexual orientation to its nondiscrimination policy in 1984 acknowledging that by eliminating such barriers, the company would acquire a competitive advantage because IBM would be able to hire talented people turned down by its competitors.27IBM has gone even further with its human relations policies by providing same-sex partners of its employees with health care benefits and by creating both aGLBT Diversity Network Groupand theEmployee Alliance for Gay and Lesbian Empowerment(EAGLE), the latter boasting over 1000 registered members worldwide. TheHuman Rights Campaignhas rated IBM 100% on its index of gay-friendliness since 2003.28This recognition and protection of human rights has not just been restricted to employees in the United States. For example, in 2007 and again in 2010, IBM was ranked first inStonewallsannualWorkplace Equality Indexfor U.K. employers. Globally, IBM has won over forty gay, lesbian, bisexual, and transgender awards.29And with respect to working women, IBM was the only technology company ranked inWorking Mothermagazines Top 10 for 200430and one of two technology companies in 2005.31

The Act will attempt to establish over the next two years exactly how the tracking is to be accomplished and may likely lead to the promulgation of new FDA requirements which will in essence, require farmers and manufacturers to purchase computer systems to monitor and track shipments, using labels and scanning devices as part of this process.44

This case came directly under the purview of the FCPA and was investigated by both the U.S. SEC and the DOJ. In 2000, IBM agreed with the SEC to pay a civil penalty of $300,000 and to accept entry of an administrative cease and desist order arising out of alleged bribes while the DOJ ended its own investigation.37

program for attaining voluntary goals.

Established requirement that all IBM suppliers develop, deploy, and sustain a corporate responsibility and environmental management system, set voluntary environmental goals, and disclose performance.

In January, 2011, the U.S. Government passed the Food Safety Modernization Act,41giving the FDA the mandate to implement a science-based system for producing, processing, transporting, and preparing foods in ways to maximize safety for the consumer. Paul Chang, director of IBMs international traceability system, is ready to tackle the challenges posed by the new law.42By using its established pharmaceutical tracking program, IBM already possesses the ability to trace food products from farm and factory to food stores. With ever increasing product recalls (152 billion per year) and resulting deaths from tainted products (5,000 per year), IBM, in cooperation with the Food and Drug Administration (FDA), should be able to determine the precise movement and storage of products in the food chain and invoke a recall to minimize outbreaks of food-borne illnesses.43

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