Philips Supplier Sustainability approach secures finalist position for Philips in Fortune’s 2024 ‘Change the World’ rankings

“Actively helping our suppliers to set and advance sustainability goals is proving to have a real ripple-effect,” said Marnix van Ginneken, Executive Vice President and Chief ESG & Legal Officer at Philips. “The Fortune ‘Change the World’ recognition underscores the importance and value of our work with supply chain partners. The results illustrate our continued focus on embedding our ESG priorities in our global business practices."

In addition to reducing its Scope 1 (operations) and Scope 2 (energy sourcing) greenhouse gas emissions, reducing Scope 3 emissions (emissions that occur in the value chain outside the company’s direct control) is key to reducing Philips’ overall environmental footprint.

In healthcare, it is estimated that 71% of emissions are derived from the supply chain through the production, transport, and disposal of goods and services [1]. Philips therefore set itself the target of having at least 50% of the suppliers in its supply chain (based on spend) committed to science-based targets for CO₂ emission reduction by 2025. Reducing these Scope 3 supply chain emissions is expected to have a seven times greater impact than simply lowering CO₂ emissions from the company’s own operations.

Integral to its Supplier Sustainability approach, Philips’ Supplier Sustainability Performance program leverages the tools, expertise, and experience Philips has gained in driving environmental sustainability across its own operations to help its suppliers do the same. Scope 3 emissions reduction in the supply chain is vitally important, because the responsible sourcing of goods and services has a positive knock-on effect within the entire healthcare value chain, ultimately helping to reduce the environmental footprint of Philips’ customers.

Since its inception in 2016, Philips’ Supplier Sustainability Performance program has transformed the way the company engages with suppliers regarding sustainability, going beyond an audit approach to drive continual improvement in a collaborative and structured way across a supplier’s full operations. Philips then actively helps its suppliers to meet their targets and audit their results by providing hands-on assistance, not only in the form of expertise but also in the form of advanced AI-based data analytics.

As a responsible business, Philips is committed to securing a strong, stable, and sustainable supply chain – essential to the company’s aim of improving people’s health and well-being in support of United Nations Sustainable Development Goal (SDG) 3 ‘Ensure Healthy Lives and Promote Well-being for all at all Ages’. Philips is also focused on driving tangible progress to improve the lives of workers in its supply chain by identifying and mitigating potentially adverse human rights impacts. The company’s Supplier Sustainability Performance program has already resulted in improved labor conditions and reduced risk of serious injury, in addition to lowering the negative environmental impact of Philips’ suppliers. With more than 230 tier 1 and tier 2 suppliers participating in 2023, the program positively impacted approximately 723,000 employees in the company’s supply chain – almost three quarters the way to meeting Philips’ target of improving the lives of one million supply chain workers by 2025. Advancing human rights throughout the supply chain, right back to the responsible sourcing of raw materials, is a key element in Philips’ Supplier Sustainability approach.

Along with its Annual Report, Philips shares the impact of supplier sustainability in its annual Human Rights Report. The company’s 2023 Human Rights Report provides information about Philips’ zero-tolerance stance to human rights abuses, together with related efforts to advance social and environmental responsibility and business ethics.