Philips Remains Dedicated to ESG Goals
Koninklijke Philips N.V.
Royal Philips, a leading global health technology company, has made significant strides in achieving its Environmental, Social, and Governance (ESG) goals.
In 2022, Philips provided its products and services to 1.81 billion people while reducing operational and indirect emissions throughout the healthcare value chain with its suppliers.
“We continue to move closer to our aim of improving 2 billion lives per year by 2025 while stepping up our sustainability efforts in our operations and value chain,” said Marnix van Ginneken, Chief ESG & Legal Officer at Royal Philips. "The growing momentum in the healthcare industry and among customers to reduce our collective environmental footprint encourages us every day as we work to reduce emissions across the entire healthcare value chain and drive the shift to a circular economy."
Philips has made significant strides in increasing its social impact, as evidenced by its health technology products, services, and solutions that have improved the lives of 1.81 billion people, of whom 202 million reside in underserved communities. This marks a noteworthy improvement from last year's figure of 1.67 billion lives impacted. Philips is inching closer to achieving its target of enhancing the lives of 2 billion individuals annually by 2025, with a special focus on underserved communities, which is expected to benefit 300 million people. Philips did this by making shared-value partnerships, creating innovative digital solutions, and launching new business and financing models that are both sustainable and scalable.
Moreover, the company has achieved other significant developments in the social dimension, including a 30% representation of women in senior leadership positions, prioritising employee health and well-being (both physical and mental), and maintaining a safe and healthy workplace environment.
In 2022, Philips made significant progress towards creating sustainable innovations, with circular revenues accounting for 18% of sales (up from 16% in 2021). The company also observed a 10% increase in returns of large medical equipment from customers compared to 2021 and successfully closed the loop on more than 3,500 systems. Moreover, consumers responded positively to the newly introduced options to rent a Philips Avent breast pump or IPL Lumea hair removal device.
Philips' commitment to EcoDesign has resulted in revenue contribution increasing to 71.7% (up from 70.5% in 2021), driven by grooming and beauty products that incorporate over 25% recycled plastics. Furthermore, Oral Healthcare launched its first brush heads containing 75% bio-based materials. The growing demand for sustainable healthcare systems is addressed by Philips' MR 5300, which features the industry-leading BlueSeal magnet, reducing the need for scarce helium gas in radiology departments.
Lowering Operational Emissions
Philips has demonstrated its commitment to reducing operational emissions and waste through several initiatives. The company has been carbon-neutral in its operations since 2020 and has achieved 77% renewable energy usage in 2022 (up from 74% in 2021), surpassing the 75% target set for 2025. Philips has also reduced transport- and distribution-related CO2 emissions by 22% by implementing a stricter air-freight policy and optimising warehouse locations.
Furthermore, Philips has improved the circularity of its waste stream to 91% (up from 87% in 2021) by increasingly recycling, reusing, or reducing waste. For instance, the company replaced single-use plastic in supplier packaging with reusable boxes. As a result, less than 0.1% of the remaining operational waste ended up in landfills, consistent with the zero-waste-to-landfill goal.
Philips takes pride in being ranked on the CDP Climate Change 'A' List for the tenth consecutive year by CDP, a global NGO that evaluates the CO2 emissions performance and management of reporting companies. This recognition is a testament to the company's ongoing climate performance and transparency.
Low Carbon Operations and Value Chain
Philips has made commitments towards achieving low-carbon operations and a sustainable value chain. In 2022, the company became the first health technology company to receive approval from the Science Based Targets initiative (SBTi) for its comprehensive value-chain CO2 emissions reduction targets, covering Scope 1-3. Furthermore, 41% of the company's suppliers (by spend) have committed to science-based targets, up from 28% in 2021. Philips aims to increase this to 50% by 2025.
Progress in Governance
Philips' commitment to responsible and transparent governance is evident in its publication of the Philips Human Rights Report 2022, which highlights the company's efforts to address critical human rights issues and outlines plans for further improvements. The company actively collaborates with global institutions such as the International Financial Reporting Standards (IFRS) Foundation, the World Economic Forum (WEF), and the European Union to promote a standardised global ESG reporting framework.
For a comprehensive summary of Philips' Environmental, Social, and Governance accomplishments, please refer to chapter 5 of the recently released Philips Annual Report 2022.
Source: Royal Philips