Health Technology Leader Philips on Track With Its Environmental, Social, and Governance Commitments

Royal Philips (NYSE: PHG, AEX: PHIA), a global leader in health technology, today provided an update on its key Environmental, Social, and Governance (ESG) achievements in 2021 as it continues to deliver innovative health technology solutions around the world. These 2021 ESG achievements include 1.7 billion lives improved by Philips’ healthcare and personal health products, services and solutions, 16% of sales derived from circular revenues, and continued carbon neutrality in its own operations.

“Inspired by our purpose to improve people’s health and well-being, we innovate solutions that deliver meaningful impact, while doing business responsibly and sustainably,” said Frans van Houten, CEO of Royal Philips. “I am proud that we again delivered on our ESG commitments, such as reaching 1.7 billion people with our products, services and solutions in 2021, including 167 million in underserved communities. Driven by the creativity and hard work of our global workforce, we will continue to raise the bar for ourselves and our partners across our entire value chain.”

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Environmental:

• Circular revenues accounted for 16% of sales in 2021, driven by healthcare informatics and services to enhance medical equipment uptime and utilization, system and software upgrades for enhanced functionality and extended lifetime, reusing refurbished parts and systems, as well as product rental models and operational leases. As part of Philips’ ambition to close the loop for all professional equipment by 2025, over 3,000 systems were returned to the company for responsible recycling/repurposing. In addition, Philips further reduced the amount of waste produced in its sites, realizing a 29% waste reduction compared to 2020. Of the waste that was produced, 87% was repurposed.
• While already carbon neutral in its own operations, Philips further reduced its remaining site-related CO₂ emissions by 12% in 2021 by installing solar panels and making its buildings more energy efficient. The company also continued to shift to low carbon transport modes, reducing its aviation-related emissions by instigating a stricter air freight policy, optimizing its warehouse locations, and electrifying its leased vehicle fleet.
• Philips stepped up its supplier sustainability program with the aim of at least 50% of its suppliers (based on spend) committing to science-based targets (SBTs) for CO₂ emissions reduction by 2025. This major push to decarbonize its supply chain will have a potential impact seven times greater than the reduction of CO₂ emissions from Philips’ own operations. In 2021, 28% of Philips’ purchases were made at suppliers that have committed to science-based CO₂ reduction targets. Philips’ supplier engagement actions on climate change were recognized by CDP, the not-for-profit environmental impact disclosure organization, for the fifth year in a row in 2021.

Social:

• Philips reached 1.7 billion people with its products and services in 2021, of which 167 million in underserved communities (which the Philips Foundation contributed to), taking the company closer to its goal of improving 2 billion lives per year by 2025 with 300 million in underserved communities.
• As part of its ESG commitments, Philips aims to improve the lives of 1 million workers in its supply chain by 2025. The number of employees positively impacted at suppliers participating in Philips’ Supplier Sustainability Program increased to approximately 430,000 in 2021.
• Philips’ average employee engagement score remained high at 79%, exceeding the Fortune 500 benchmark. Philips was awarded a top spot on the Forbes ‘America’s Best Employers of 2021’ list, ranking 135 among the top 500 large companies in America based on an independent survey of employees.
• Philips raised its commitment of gender diversity in senior leadership positions to 35% by the end of 2025, from its original commitment of 30%. In 2021, the percentage of females in senior leadership positions increased to 28%.

Governance:

• All of Philips’ ESG data is externally audited at the highest level, building on Philips’ strong track record of transparency in its ESG plans, actions, and reporting. Philips won the annual Dutch Kristal Prize 2021 for its transparency in reporting, specifically regarding climate related matters.
• For the second year, Philips published its Country Activity and Tax Report 2021 detailing its tax contributions for all countries it operates in.
• To mark 2021 United Nations Human Rights Day, Philips published the Philips Human Rights Report 2021 – an update on Philips’ progress in addressing key human rights over the past year, along with the company’s plans for continuous improvement.

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