SDG 12.2: A business case about responsible production

Summary

Philips envisions a healthier, sustainable world through innovation and circular economy. They aim to decouple economic growth from natural resource use, supported by digital technology and consumer preference for experiences over ownership. Philips commits to UN's sustainable development goals, setting targets for circular products, waste recycling, and medical equipment sustainability. They offer circular models like pay-for-access, refurbished systems, and products with recycled materials, fostering customer loyalty and investor appeal.

Takeaways

• 🌟 Philips envisions a healthier and more sustainable world through innovation and the circular economy.
• 🌱 The circular economy is about decoupling economic growth from the use of natural resources, keeping products and materials valuable for as long as possible.
• 📈 Global trends like digital technology and consumer focus on experiences over ownership support the shift to a circular economy.
• 🎯 Philips has set ambitious targets for 2020, including 15% of sales from circular products and services, 90% operational waste recycling, and zero landfill waste.
• 🔄 Philips aims to close the loop on all large medical systems by 2020 and extend this to all medical equipment by 2025.
• 💼 Philips is driving the transition with innovative business models that maximize the lifetime value of their products and solutions.
• 🏥 Philips offers a subscription service for ultrasound equipment, providing access over ownership and reducing upfront costs.
• 🛠️ The company provides refurbished systems that are thoroughly tested, offering customers high-quality pre-owned options at a lower price.
• ♻️ Philips incorporates recycled materials into product design, with some products featuring a significant proportion of recycled plastics.
• 🤝 Circular propositions help build customer loyalty, brand reputation, and appeal to investors and purpose-driven talent.
• 🛑 Philips emphasizes the importance of scaling up circular initiatives by integrating learnings into innovation and strategy, and embedding circular thinking into company culture.
• 📚 The company focuses on educating employees, developing training, applying reinforcing mechanisms, and promoting role modeling to foster a circular economy mindset.

Q & A

What is Philips' vision regarding the world's health and sustainability?

Philips' vision is to make the world healthier and more sustainable through innovation and by transitioning to a circular economy.

Why is the transition to a circular economy important according to the script?

The transition to a circular economy is important because the current global increase in human economic development while expanding our ecological footprint is not sustainable. A circular economy decouples economic growth from the use of natural resources.

What role do digital technology and network connectivity play in the shift to a circular economy?

Digital technology and network connectivity enable more efficient collaboration across the value chain, making it easier to track and recover end-of-life products and materials.

How do younger consumers' preferences align with the circular economy?

Younger consumers tend to focus more on the experiences products and services offer rather than ownership, which supports the shift to a circular economy.

What commitments does Philips have to the UN's sustainable development goals?

Philips is committed to UN's sustainable development goal number 12, which is to ensure sustainable consumption and production patterns.

What targets has Philips set for itself by 2020 in terms of circular economy?

By 2020, Philips aimed for circular products and services to account for 15% of their total sales, 90% of their operational waste to be recycled, and zero waste to be sent to landfill.

How does Philips plan to close the loop on medical systems by 2025?

Philips plans to fully close the loop on all large medical systems that become available to them and extend such practices to all medical equipment by 2025.

What is an example of a circular model Philips offers in terms of patient care?

Philips offers a flexible subscription service called Luma Fire, which provides users with access to portable ultrasound equipment, an app, and an online ecosystem, reducing upfront costs and improving access to innovative care.

How does Philips' refurbished systems business unit contribute to the circular economy?

The refurbished systems business unit offers pre-owned systems that have been thoroughly refurbished, upgraded, and quality tested, providing customers with products as new but at a more affordable price with a full Philips warranty.

What role does recycled material play in Philips' product design?

Recycled materials have become an integral part of product design at Philips, with many consumer products featuring an increasing proportion of recycled plastics, such as the Performer Ultimate vacuum cleaner which contains 36% recycled plastics.

How does Philips ensure that circular thinking is embedded in its company culture?

Philips works on four critical elements: telling a clear story about circular economy to employees, developing dedicated training formats, applying reinforcing mechanisms for corporate targets, and promoting role modeling through dialogue with leaders and encouraging ambassadors.

What advice does the CEO give for businesses considering a circular economy journey?

The CEO advises businesses to assemble a team from marketing, R&D, manufacturing, and sales for a workshop with an open mind to understand what they really offer to customers and to involve customers to understand what they value.