Supplier audits Each year, a cross-section of IBM’s global suppliers is requested to participate in RBA-validated audits to gauge their degree of conformance to the RBA code and to IBM’s requirements. If an audit reveals nonconformance, IBM works with suppliers to review their corrective action plans and suggests recommendations to reach code conformance. IBM follows the RBA assessment process and requires reaudits for these suppliers to measure their progress toward full conformance. In 2021, IBM suppliers participated in 68 RBA full-scope audits and 25 reaudits in 19 countries where heightened risks for social responsibility are known to exist. The 68 full audits revealed 661 nonconformances against the five provisional sections of the RBA Code—the 10 most frequent nonconformances are shown in the graph on the following page. 2021 full audits and reaudits by country Full audit Reaudit Total China 17 13 30 India 10 0 10 Mexico 6 2 8 Korea 4 2 6 Taiwan 5 1 6 Thailand 5 1 6 Brazil 2 1 3 Chile 3 0 3 Hungary 3 0 3 Philippines 2 1 3 Singapore 2 1 3 Japan 1 1 2 Portugal 2 0 2 Romania 2 0 2 United Arab Emirates 1 1 2 Malaysia 0 1 1 Saudi Arabia 1 0 1 Turkey 1 0 1 Vietnam 1 0 1 Totals 68 25 93 These results include Kyndryl for the full year. In 2021, IBM collaborated with 25 suppliers to plan and execute RBA reaudits to vet corrective action plans associated with full audits performed during 2019–21. These reaudits found an 80% improvement against the nonconformances from the full audits. In this same group, 60% of suppliers had attained full compliance to the RBA Code after one cycle of audit, correction action, and reaudit. We remain engaged with suppliers that show residual nonconformance and require a second corrective action plan to be developed for further assessment. As part of our RBA Code conformance management system, IBM reviews full and reaudit results monthly with IBM’s procurement teams and vice presidents, and IBM’s chief procurement officer reviews them quarterly. From this dialogue, IBM makes alterations to its supplier education programs, assistance, and future sourcing patterns. 35 IBM 2021 ESG Report