More than 90 percent of biodiversity loss around the globe is caused by the extraction and process of natural resources, according to the World Economic Forum. The earth’s extraction of material resources like fossil fuels has tripled since the 1970s and, according to an International Resource Panel Report, it could more than double by 2050 without interventions. 

Philips is reducing environmental impact by extending the lifespan of their products.

Working towards a circular economy could help reduce the strain on the Earth’s natural resources — by designing to minimize waste, reusing materials, and regenerating farmland, the circular economy can reduce emissions by up to 9.3 billion tons (which is like eliminating current emissions from all forms of transport around the world). It’s an approach Philips, a leading global health technology company, has adopted as a core philosophy. 

A leading health technology company, Philips has long recognized it must play a critical role in addressing the systemic global issues that impact our planet and society.  In 2018, they were one of the first health tech companies to join the Science Based Targets initiative, committing to reduce emissions by 75 percent by 2025 and 90 percent by 2040. The move is one of many steps Philips has taken as it aims to in the hopes of improving the lives of 2 billion people a year by 2025, including 300 million in underserved communities, rising to 2.5 billion and 400 million respectively by 2030.

A key focus of Philips’ sustainability practices is the raw materials and resources used for manufacturing, which currently account for 80 percent of the company’s environmental impact. Philips is reducing that impact through circular design: extending the lifespan of their products by serving them and upgrading them throughout their lifetime, and reusing, refurbishing, and recycling material when the devices finally reach the end of use. “Through our circular economy program, we are maximizing the lifetime value of our products and solutions while minimizing the use of new materials and resources and eliminating waste,” wrote Robert Metzke, Philips’ global head of sustainability. This begins with a product’s design and goes all the way until the very end — currently, 16 percent of Philips’ revenue comes from circular products and services. 

Building and growing the circular economy

By 2025, Philips aims to get a quarter of their revenue from circular products and services and to offer trade-in programs for all professional medical equipment including responsible recycling. In 2021, more than 3,000 professional medical systems were returned to Philips for responsible recycling and repurposing. 

“The circular economy gives us the tools to tackle climate change and biodiversity loss together while addressing important social needs. It gives us the power to grow prosperity, jobs, and resilience while cutting greenhouse gas emissions, waste, and pollution,” describes the Ellen MacArthur Foundation, a non-profit that promotes the circular economy. Philips joined the foundation in 2013. “Under Frans van Houten’s [Philips’ chief executive officer] stewardship, Philips has repeatedly raised the bar — setting and achieving ambitious goals as a leader in the transition to a circular economy,” the Foundation writes. 

In addition to its collaboration with the Ellen MacArthur Foundation, Philips’ CEO has become a co-chair of the Platform for Accelerating the Circular Economy (PACE) and helped launch the PACE Circular Economy Action Agendas. These agendas provide a comprehensive overview of best practices and obstacles for a circular economy across five major sectors (capital equipment, electronics, textiles, food, and plastics), and each report includes ten calls to action for organizations to start creating change and overcome barriers. 

Philips has been searching for solutions to make its operations and innovations more sustainable, with an emphasis on EcoDesign: the company is thinking about the environmental impact of a product each step of the way, minimizing the use of hazardous materials, improving energy efficiency, and using minimal and recyclable materials and packaging for products so that circularity is built into the design

Producing results across the health tech industry

The circular economy has been foundational to Philips’ approach to reducing emissions, and it’s been working. Philips is working to meet the Paris Climate Accord’s goal of reducing the footprint of their supply chain in line with a 1.5°C global warming scenario. In 2020, Philips was ranked number two in the Wall Street Journal’s new global sustainability ranking. 

In 2020, Philips achieved its goal of becoming net carbon-neutral. By the end of 2021, all 25 Philips industrial sites sent zero waste to landfills. By 2025, Philips is working towards 100 percent renewable electricity use, and getting 75 percent of their total energy consumption from renewable sources. 

The company compensates for unavoidable emissions with projects that improve lives and environments in underserved communities, like providing access to clean drinking water in Uganda, improving respiratory health with clean cookstoves across Kenya and Ghana, and protecting forests through sustainable production.

By connecting with its network of supply chain collaborators, the company can amplify its impact even further. Philips is working towards getting over half of their supply chain companies on board with science-based climate commitments through its Supplier Sustainability Program by incentivizing participation and supporting their suppliers’ commitments.

Philips is influencing other private and public sectors through their collaborations with PACE and the Ellen MacArthur Foundation, and they’re always working towards eco-innovation inside the company, whether it’s big changes through circular design and repurposing health care technology, or concrete steps towards reducing their carbon footprints by focusing on remote meetings over air travel, sustainable packaging over single-use ones.