1. Introduction
Philips is a multinational technology enterprise focused on improving people’s lives through meaningful innovation. With a history spanning over 130 years, the company has become a leader in healthcare, consumer electronics, and lighting. Headquartered in Amsterdam, the Netherlands, Philips operates in over 100 countries and employs approximately 82,000 people worldwide (Davids, 2004).
In 2021, Philips reported total revenues of €19.5 billion, with the largest share of revenue coming from its Personal Health segment, which includes products such as electric toothbrushes, shavers, and air purifiers (Philips, 2013). The company also has a strong presence in the healthcare sector, with its Connected Care segment offering solutions for patient monitoring, diagnosis, and treatment.
Philips operates across various sectors, including healthcare, consumer electronics, and lighting. The company’s healthcare offerings include diagnostic imaging systems, patient monitoring solutions, and healthcare informatics, while its consumer electronics products include televisions, audio equipment, and personal care products. In the lighting sector, Philips offers a wide range of lighting solutions for residential, commercial, and industrial use. Overall, Philips is a diversified company with a global presence and a strong focus on innovation and improving people’s lives.
2. Overview of the company
Philips is a diversified technology company focused on improving people’s health and well-being through innovative solutions. The company was founded in 1891 in the Netherlands and has since become a global leader in healthcare technology, consumer electronics, and lighting solutions (Karsten et al., 2009)s. Philips operates in over 100 countries and employs approximately 82,000 people worldwide (Philips, 2023a). Philips’ portfolio includes various healthcare products such as diagnostic imaging systems, patient monitoring systems, and clinical informatics solutions. The company also offers personal health products such as oral care, grooming, and mother and child care products. In addition, Philips provides lighting solutions for both consumer and professional applications.
Philips’ mission is to improve people’s lives through meaningful innovation. The company is committed to sustainability and aims to create environmentally friendly, safe, and energy-efficient products. Philips has set ambitious sustainability targets, such as becoming carbon-neutral by 2020 and having 75% of its revenues from sustainable products by 2025 (Schramade, 2017).
Overall, Philips is a company focused on using technology to improve people’s lives in meaningful ways. With a broad portfolio of innovative products and a commitment to sustainability, Philips is well-positioned to continue driving positive change in the healthcare, consumer electronics, and lighting industries.
3. Analysis
Philips Lighting is a global leader in the lighting industry, offering a wide range of products and services for both consumer and professional markets. The company is committed to operating sustainably and has developed policies and programs to address environmental, social, and governance (ESG) issues. This report will analyze the company’s approach to ESG matters, including its internal policies and management practices, its impact on brand reputation, and how it discloses and reports on its ESG performance.
3.1 Internal Policies and Management Practices:
Philips Lighting has developed a comprehensive set of internal policies and management practices to address ESG issues. The company’s sustainability framework focuses on three main areas: creating products, operating sustainably, and promoting a sustainable world (Philips, 2023). To achieve these goals, the company has established a range of policies and programs, including:
3.1.1 Sustainable Product Design:
Philips Lighting has significantly emphasized designing energy-efficient and sustainable products with a longer lifespan. The company’s commitment to this goal is evident from its set targets, which include increasing the percentage of its sales from sustainable products, reducing the carbon footprint of its products, and increasing the use of recycled materials. In line with this commitment, Philips Lighting has launched several products to minimize energy consumption while maintaining high-performance levels. These products include LED lighting solutions designed to be long-lasting and energy-efficient, with an expected lifespan of up to 50,000 hours (Philips, 2023a).
Additionally, the company has set a target to achieve 100% circularity for its products by 2025. To achieve this target, Philips Lighting has been developing products that can be easily disassembled, repaired, or reused at the end of their lifecycle. This approach reduces the environmental impact of its products and creates value for customers who can save money by repairing or upgrading their existing products rather than purchasing new ones.
3.1.2 Energy Efficiency:
Philips Lighting’s commitment to reducing energy consumption is vital to its sustainability efforts. The company recognizes that energy use is a significant contributor to greenhouse gas emissions and climate change and, as such, has set ambitious targets to reduce its energy use and carbon footprint. Philips Lighting has implemented various energy-saving measures to achieve these targets in its operations. The company has invested in more energy-efficient equipment, implemented energy management systems, and optimized its production processes to reduce waste and improve energy efficiency. Figure 1 shows Plihips Lighting energy efficiency to tackle climate change (Philips, 2023).
Figure 1: Energy efficiency of Phillips light to tackle climate change
(Philips, 2023)
Additionally, the company has implemented green building practices in its facilities to reduce energy consumption and waste. Regarding greenhouse gas emissions, Philips Lighting has set targets to reduce its emissions from its operations (Scope 1 and 2 emissions) as well as its supply chain (Scope 3 emissions). The company has implemented measures to reduce emissions from its operations, such as investing in renewable energy and increasing energy efficiency. Figure 2 shows the environmental impact of the company.
Figure 2: Environmental impact by Philips lightings in 2019
(Philips, 2023a)
To address Scope 3 emissions, Philips Lighting works closely with its suppliers to reduce emissions throughout the supply chain. Philips Lighting’s commitment to reducing energy consumption and greenhouse gas emissions is essential to its sustainability efforts. The company’s actions to reduce its environmental impact contribute to a more sustainable future and demonstrate its commitment to social responsibility and corporate citizenship (Weforum, 2023).
3.1.3 Social Responsibility:
Philips Lighting recognizes the importance of promoting social responsibility in its operations and supply chain. The company has established policies and programs to ensure ethical practices and promote the well-being of its employees and local communities. One of how Philips Lighting promotes social responsibility is through its supplier code of conduct. The company requires its suppliers to adhere to ethical standards such as labor practices, human rights, and environmental responsibility. It also conducts audits of its suppliers to ensure compliance with these standards. In addition to its focus on ethical supply chain practices, Philips Lighting has implemented programs to promote employee well-being. The company offers its employees a range of health and wellness programs, including access to fitness centers and mental health support services( Philips, 2023e). Philips Lighting also supports local communities through various initiatives. The company has partnered with local organizations to promote energy efficiency and provide lighting solutions in underprivileged communities. It has also implemented programs to support education and job training in these communities. Overall, Philips Lighting’s commitment to promoting social responsibility has helped to enhance its brand reputation as a socially responsible organization. The company’s efforts to ensure ethical supply chain practices, promote employee well-being and support local communities demonstrate its commitment to sustainability and social responsibility.
3.2 Impact on Brand Reputation
Philips Lighting’s commitment to ESG matters has positively impacted its brand reputation. Several external organizations, including the Dow Jones Sustainability Index, CDP, and the Carbon Disclosure Project, have recognized the company’s efforts. These recognitions are proof of the company’s dedication to sustainability and its ability to meet its environmental, social, and governance responsibilities. By prioritizing ESG matters, Philips Lighting has demonstrated its commitment to sustainable business practices. The company’s focus on sustainability has helped to enhance its brand reputation and attract customers who prioritize environmental responsibility. In today’s business landscape, customers are increasingly concerned about the impact of their purchasing decisions on the environment and society (Serafeim, 2023). Therefore, companies like Philips Lighting that prioritize ESG matters are well-positioned to attract such customers. Philips Lighting’s success in managing ESG matters has also helped attract and retain employees committed to sustainability. The company’s commitment to sustainability sends a positive message to potential employees about the values and culture of the organization. Overall, Philips Lighting’s commitment to ESG matters has positively impacted its brand reputation and helped position it as a socially responsible organization.
3.3 Disclosures and Reporting:
Philips Lighting’s commitment to transparency is evident in its efforts to disclose information on its ESG performance. Figure 3 shows the ESG profile score of the company.
Figure 3: Philips’ ESG Evaluation score
(Ratings, 2023)
The company provides detailed reports on its sustainability goals and progress toward achieving them. This level of transparency is essential in building trust with stakeholders, as it allows them to understand the company’s ESG performance and hold it accountable for its actions. By reporting on its sustainability initiatives, Philips Lighting is demonstrating its commitment to being a socially responsible organization and is providing stakeholders with the information they need to make informed decisions (Villena, Wilhelm, and Xiao, 2020).
4. Recommendation
To continue its leadership in ESG matters and maintain its positive reputation, Philips Lighting should prioritize sustainable product design, reduce its carbon footprint, and increase the use of recycled materials. The company should also strive to reduce its energy consumption and greenhouse gas emissions further in its operations and supply chain while promoting social responsibility and ethical standards. Additionally, Philips Lighting should consider expanding its sustainability reporting to include more detailed information on its ESG performance and its plans for addressing future challenges and opportunities in this area.
5. Conclusion
Philips Lighting has made significant efforts to integrate ESG considerations into its business operations and has demonstrated a solid commitment to sustainability, social responsibility, and ethical governance. The company’s efforts have positively impacted its brand reputation, attracting customers who prioritize sustainability. However, Philips Lighting could improve its ESG performance by setting ambitious targets and developing comprehensive sustainability reporting. The company could also consider investing in renewable energy sources and further enhancing its supply chain transparency. Overall, it is recommended that Philips Lighting prioritize ESG considerations and strive for continuous improvement in its sustainability performance.
6. References
Davids, M. (2004). The fabric of production: the Philips industrial network. History and Technology, 20(3), pp.271–290.
Karsten, L., Keulen, S., Kroeze, R. and Peters, R. (2009). Leadership style and entrepreneurial change. Journal of Organizational Change Management, 22(1), pp.73–91.
Philips (2013). Philips – Global. [online] Philips. Available at: https://www.philips.com/global [Accessed 23 Apr. 2019].
Philips (2023a). ‘A life of 50,000 hours’. [online] Philips. Available at: https://www.lighting.philips.com/main/support/support/faqs/life-and-light-output/a-life-of-50000-hours [Accessed 12 Sep. 2022].
Philips (2023b). About us. [online] Philips. Available at: https://www.philips.co.in/a-w/about.html [Accessed 21 Mar. 2023].
Philips (2023c). Demystifying EcoDesign – and the impact when we get it right. [online] Philips. Available at: https://www.philips.com/a-w/about/news/archive/blogs/innovation-matters/2020/20200729-demystifying-ecodesign-and-the-impact-when-we-get-it-right.html [Accessed 21 Mar. 2023].
Philips (2023d). Driving energy efficiency to tackle climate change. [online] Philips. Available at: https://www.philips.com/a-w/about/news/archive/features/2022/20220912-driving-energy-efficiency-to-tackle-climate-change.html [Accessed 21 Mar. 2023].
Philips (2023e). Past to present – driven by our purpose and caring for people. [online] Philips. Available at: https://www.philips.com/a-w/about/news/archive/features/2022/20220318-past-to-present-driven-by-our-purpose-and-caring-for-people.html [Accessed 21 Mar. 2023].
Philips (2023). Philips continues to demonstrate a solid commitment to its ESG ambitions. [online] Philips. Available at: https://www.philips.com/a-w/about/news/archive/standard/news/press/2023/20230221-philips-continues-to-demonstrate-strong-commitment-to-its-esg-ambitions.html [Accessed 21 Mar. 2023].
Ratings, S.G. (2023). Health Care Technology Company Koninklijke Philips Scored 90 On ESG Evaluation; Preparedness Best In Class. [online] www.prnewswire.com. Available at: https://www.prnewswire.com/news-releases/health-care-technology-company-koninklijke-philips-scored-90-on-esg-evaluation-preparedness-best-in-class-301258579.html [Accessed 21 Mar. 2023].
Schramade, W. (2017). Investing in the UN Sustainable Development Goals: Opportunities for Companies and Investors. Journal of Applied Corporate Finance, 29(2), pp.87–99.
Serafeim, G. (2023). Social-Impact Efforts That Create Real Value Sustainability. [online] Available at: https://www.highmeadowsinstitute.org/wp-content/uploads/2021/07/Social-Impact-Efforts-That-Create-Real-Value.pdf [Accessed 21 Mar. 2023].
Villena, V.H., Wilhelm, M. and Xiao, C. (2020). Untangling drivers for supplier environmental and social responsibility: An investigation in Philips Lighting’s Chinese supply chain. Journal of Operations Management.
Weforum (2023). How 4 leading companies are tackling supply chain emissions. [online] World Economic Forum. Available at: https://www.weforum.org/agenda/2022/11/scope3-supply-chain-emissions-cop27-ikea-philips-zf-unilever/ [Accessed 21 Mar. 2023].
7. Bibliography
Brock, K., den Ouden, E., van der Klauw, K., Podoynitsyna, K. and Langerak, F., 2019. Light the way for smart cities: Lessons from Philips Lighting. Technological Forecasting and Social Change, 142, pp.194-209.
Scholand, M. and Dillon, H.E., 2012. Life-cycle assessment of energy and environmental impacts of LED lighting products part 2: LED manufacturing and performance (No. PNNL-21443). Pacific Northwest National Lab. (PNNL), Richland, WA (United States).
Sathya, P. and Natarajan, R., 2014, January. Energy estimation and photometric measurements of LED lighting in the laboratory. In 2014 International Conference on Advances in Electrical Engineering (ICAEE) (pp. 1-5). IEEE.
Hoelen, C., Borel, H., de Graaf, J., Keuper, M., Lankhorst, M., Mutter, C., Waumans, L. and Wegh, R., 2008, September. Remote phosphor LED modules for general illumination: toward 200 lm/W general lighting LED light sources. In Eighth International Conference on Solid State Lighting (Vol. 7058, pp. 116-125). SPIE.
8. Appendices
Philips Lighting is committed to sustainable business practices and has integrated ESG principles into its operations. The company’s comprehensive ESG program includes reducing carbon emissions, promoting circular economy principles, and ensuring ethical business practices. Philips Lighting has been recognized for its ESG efforts, including being included in the Dow Jones Sustainability Index and the FTSE4Good Index. The company has also been recognized for its commitment to reducing greenhouse gas emissions and increasing its use of renewable energy sources. Regarding social responsibility, Philips Lighting is committed to diversity and inclusion and has set targets for increasing the number of women in leadership positions. The company also supports various community and charitable initiatives, including lighting solutions for underprivileged communities. Philips Lighting’s commitment to ESG principles demonstrates its dedication to being a responsible and sustainable business.
Q: How has Philips Lighting reduced its carbon emissions?
A: Philips Lighting has reduced its carbon emissions through various initiatives, including investing in renewable energy sources, implementing energy-efficient technologies, and optimizing its supply chain to reduce transportation emissions.
Q: What is the circular economy, and how is Philips Lighting promoting it?
A: Circular economy is an economic model that aims to minimize waste and maximize the use of resources by promoting recycling, reuse, and repair. Philips Lighting is promoting circular economy principles by designing products for circularity, using recycled materials, and implementing take-back programs for end-of-life products.
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