Greening the Supply Chain

For many years, Philips has looked at ways to improve the environmental performance of its suppliers. When it comes to climate change, we have adopted a multipronged approach: reducing the environmental impact of our products, committing to carbon neutrality in our own operations, and engaging with our supply chain to reduce their carbon footprint.

Greening the Supply Chain

For many years, Philips has looked at ways to improve the environmental performance of its suppliers. When it comes to climate change, we have adopted a multipronged approach: reducing the environmental impact of our products, committing to carbon neutrality in our own operations, and engaging with our supply chain to reduce their carbon footprint.

Carbon disclosure

Through our partnership with the CDP supply chain program, Philips motivates its suppliers to disclose emissions, embed board responsibility on climate change, and actively work on reduction activities.

Through our partnership with the CDP Supply Chain program since 2011, we have invited many of our largest suppliers, including first-tier manufacturing and transportation-related suppliers, to disclose their environmental performance and carbon intensity. In 2020, there was a response rate of 92% (2019: 80%). From this group, 61% engaged in emission reduction initiatives (2019: 66%). In addition, 61% committed to carbon emission targets (2019: 59%). Furthermore, 43% of the responding suppliers have set science-based targets of which 31% has been formally approved.

We also use CDP to work together with suppliers in reducing carbon emissions along our supply chain. Through the CDP Action Exchange program, our suppliers are connected to globally recognized solution providers in energy-efficient technology. The energy efficiency experts can help our suppliers in their search for innovative solutions to reduce future carbon emissions. In 2020, our suppliers undertook projects that resulted in savings on carbon emissions amounting to 17 million metric tonnes CO₂.

As part of 2020 adoption of our new ESG commitments, we have set the target to actively engage 80% of our supply base to:

1. disclose scope 1 and 2 carbon emissions annually,
2. implement de-carbonization strategies in line with the 2015 Paris Agreement.

Circular procurement

Procurement has a major role to play in the transition towards a circular economy. Circular procurement is all about making the right choices early in the product creation process, so that materials and components are suitable, at end-of-life, for repair or refurbishment and re-use, thus helping to close the materials loop.

Circular procurement contributes to developing our circular products and services. Amongst our circular propositions, recycled materials have become an integral part of product design of our consumer products. For that purpose, Philips has actively been working on introducing recycled plastics in its product portfolio. By co-creating with recycled materials organizations, we can use our expertise to further improve the quality of materials.

Greening the Supply Chain