Philips: Committed to Creating a Responsible Supply Chain

Philips continues to lead global health technology, providing cutting-edge solutions ranging from ultrasound technology to advanced toothbrushes. As a leader in diagnostic, treatment and personal health solutions, the company remains committed to sustainability and ESG principles.

The release of Philips' 2024 annual report provides an in-depth examination of how the company is embedding such initiatives at the heart of its operations.

Despite global economic challenges, including a decline in demand from China and persistent supply chain pressures, Philips remains focused on its long-term sustainability goals and responsible innovation.

"We want to help deliver better care for more people across the world," emphasises CEO Roy Jakobs, highlighting the company's commitment to healthcare innovation and environmental responsibility.

Emissions reduction and circular economy gains

One of the standout achievements highlighted in the report is Philips' progress in reducing emissions, with strategic collaborations significantly advancing its sustainability initiatives.

For instance, a partnership with Portugal's Champalimaud Foundation achieved a 24% emissions reduction in diagnostic and interventional imaging equipment within one year, cutting an estimated 40 tonnes of CO₂e. This milestone is part of Philips' broader ambition to halve the carbon footprint of its diagnostic operations by 2028.

Additionally, Philips has made significant strides in advancing its circular economy goals. Circular revenues—generated from products designed for reuse, refurbishment and recycling—now account for 24% of total sales.

This reflects its dedication to reducing electronic waste and promoting sustainable consumption, aligning with the United Nations' Sustainable Development Goals.

Advances in sustainable healthcare technology

Philips' commitment to sustainability extends beyond emissions reduction and into technological advancements that minimise environmental impact. A prime example is the next-generation BlueSeal helium-free MRI system, designed to eliminate reliance on scarce helium resources while maintaining high-quality imaging capabilities.

According to the report, these systems are operational in over 1,500 locations worldwide, expanding access to sustainable healthcare solutions.

AI is key to Philips' sustainability strategy. The AI-enabled SmartSpeed MRI platform, which offers up to three times faster scans, reduces energy consumption while enhancing diagnostic accuracy.

These innovations contribute to sustainability while addressing efficiency challenges in increasingly strained healthcare systems.

ESG leadership and social responsibility

Philips' ESG efforts extend well beyond environmental performance, strongly emphasising social responsibility. The 2024 report reveals that it has positively impacted 1.96 billion lives globally, including 242 million people in underserved communities.

Philips on track to achieving its ambitious goal of improving 2.5 billion lives annually by 2030.

It has also been recognised for its responsible supply chain initiatives, earning a finalist position in Fortune's 'Change the World' rankings.

"Our supplier sustainability approach reflects our commitment to creating a responsible and transparent supply chain," explains Marnix van Ginneken, Chief ESG & Legal Officer at Philips.

Employee engagement has seen notable improvements, with an engagement index score of 78—an increase of five points from the previous year. This score reflects the company's ongoing efforts to foster a culture of safety, integrity and inclusion. Notably, 83% of employees rated Philips' patient safety culture favourably.

Financial resilience and sustainable growth

From a financial perspective, Philips reported sales of US$19.5bn with an adjusted EBITA margin of 11.5%.

A free cash flow of US$948m and an improved credit rating outlook highlight the company's ability to balance profitability with responsible business practices.

However, challenges remain. Economic uncertainty, particularly in China and regulatory hurdles following the Respironics recall continue to pose risks. Nonetheless, Philips' strategic focus on simplifying operations and regionalising its supply chain is expected to mitigate some of these challenges.

Looking ahead to 2025 and beyond, Philips remains committed to making good on its three-year plan with ESG priorities firmly in focus.

"We remain focused on successfully executing our three-year plan and are determined to build on our industry-leading innovations," says Roy.

Despite economic and regulatory challenges, Philips' 2024 annual report reinforces its dedication to sustainability in the healthcare technology sector. From reducing emissions to pioneering AI-driven medical advancements, Philips continues to lead the way in aligning business success with environmental and social responsibility.

"We are focused on executing our plan, improving fundamentals and simplifying how we work—ensuring we are more competitive and agile and delivering growth and margin expansion, with patient safety and quality as a priority," concludes Marnix.

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