HealthTech

Philips delivers strong ESG performance in 2023

February 20, 2024

  • 1.88 billion lives improved by Philips’ health technology products and services; on track to improve 2 billion lives by 2025
  • Through its industry leading innovations and partnerships, Philips helps increase access to healthcare globally and create sustainable and resilient healthcare models
  • Philips expanded its circular revenues to 20% of sales; remained carbon-neutral in its operations, and further reduced its value chain carbon emissions with 46% of its purchases (in spend) made at suppliers that have committed to science-based targets
  • Third year of country-by-country activity and tax reporting; enhanced scope 1-3 emissions reporting in preparation for new EU Corporate Sustainability Reporting Directive

Royal Philips (NYSE: PHG, AEX: PHIA), a global leader in health technology, has relentlessly focused on further improving its Environmental, Social, and Governance (ESG) performance in 2023. For example, Philips improved the health and well-being of 1.88 billion people with its innovative products and services, of which 221 million in underserved communities, bringing the company close to its goal of improving 2 billion lives per year by 2025. Philips innovated with partners to increase access to sustainable healthcare globally, and further increased its circular revenues, while reducing its operational and value chain carbon emissions.

Marnix van Ginneken, Chief ESG & Legal Officer at Royal Philips, said: “Building on our strong heritage in environmental and social responsibility, we have a fully integrated approach to doing business responsibly and sustainably, in line with our company purpose. I am convinced that our ESG commitments are the best way for Philips to drive priorities for global impact and create long-term value for our stakeholders.”

“We are proud of the progress we have made towards our goal of improving 2 billion lives per year by 2025, on delivering on our low-carbon commitments, and in expanding our portfolio of EcoDesign products and systems. We remain focused on driving further improvements in line with our 2025 commitments.”

Towards better care for more people in a sustainable way
Today, millions of people around the world have little or no access to basic healthcare, and climate change is impacting both environmental and human health. Together with partners, Philips is developing an AI-powered ultrasound solution that aims to address the shortage of healthcare workers by putting a diagnostic tool previously reserved for expert technicians in the hands of midwives, expanding access to maternal care in rural underserved communities in Kenya. Philips is also developing new, technology-driven business models to enhance access to care. An example is the mobile CT trucks Philips has rolled out in medically underserved Australian and North American communities. This innovation offers a global blueprint to ensure timely lung screening that saves lives.

Philips supports creating a sustainable and resilient healthcare system through partnerships, as well as through its industry leading sustainability innovations portfolio. These include energy efficient MRI scanners with helium free operations, and Philips Radiology Operations Command Center that enables real-time collaboration and virtual imaging operations and can decrease staff travel time and costs. Philips teamed up with Portugal’s  Champalimaud Foundation to halve its diagnostic and interventional imaging carbon footprint by 2028. And Philips and the Vanderbilt University Medical Center are researching how to decarbonize the health system’s radiology department. Initial results of these collaborations show that sustainable initiatives can be both environmentally friendly and cost-effective.

Diversity and inclusion
Philips has a diverse team made up of approximately 70,000 individuals across over 100 countries, all with different backgrounds, perspectives, and experiences. The company attaches great importance to creating an environment of inclusion to ensure that creativity and innovation can flourish. For example, regarding gender diversity, Philips reached a 31% representation of women in senior management in 2023. External recognition of this in 2023 included Forbes Best Employers for Women and Forbes Best Employers for Diversity.

Advancing towards low-carbon operations and value chain
In 2023, Philips expanded its circular revenues to 20% of sales, and alongside remaining carbon-neutral in its operations since 2020, Philips achieved 78% renewable energy usage, exceeding its 75% science-based target goal for 2025. This was supported by the renewable electricity supply from the new Mutkalampi windfarm in Finland, and the new Pontinia solar power generation farm in Italy. In December 2023, Philips signed its first direct renewable energy agreement in China.

Philips also maintained the circularity of its waste stream at 91% (against a goal of 95% for 2025) and retained its Zero Waste to Landfill status with all 23 industrial sites meeting this goal at the end of 2023.

In 2022, Philips became the first health technology company with approval from the Science Based Targets initiative (SBTi) for its entire value-chain CO₂ emissions reduction targets, including scope 1-3, and already 46% of its purchases (in spend) were made at suppliers that have committed to science-based reduction targets. Philips’ goal is to achieve 50% by 2025.

Global leadership and governance standards
Philips was listed in the top 3 health technology companies in the global 2023 Dow Jones Sustainability Indices list; and CDP (formerly known as the Carbon Disclosure Project), a global NGO that assesses the greenhouse gas emission performance and management of reporting companies, has ranked Philips on the CDP Climate Change ’A’ List for the 11th year in a row, citing its continued climate performance and transparency.

Philips’ is committed to transparency and accountability, and a pioneer in its corporate governance practices aligned with global standards and best practices. For example, Philips’ Human Rights Report 2023 outlines progress made by Philips to uphold human rights, while its Country Activity and Tax Report illustrates how the company considers its tax payments as a significant contribution to the communities in which it operates, and an integral part of its social value creation. Additionally, Philips already added enhanced scope 1-3 emissions reporting in its Annual Report 2023, preparing for the European Union’s new Corporate Sustainability Reporting Directive (CSRD), which will be mandatory as of 2024.

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