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Sep 14, 2020

Our commitment to society: doing business responsibly and sustainably

Frans van Houten
CEO Royal Philips

Estimated reading time: 4-6 minutes

Reinforcing our purpose, strengthening our power of innovation, and uniting our employees

As the CEO of Philips, I have spent almost a decade navigating the company through its rewarding transformation to become a focused health technology leader, improving the health and wellbeing of almost 1.5 billion people per year through innovation. That is one in five people in the world today!

 

As we grapple with the enormity of the COVID-19 pandemic and subsequent societal consequences, I find myself reflecting on leadership experiences from managing through crises in the course of my career. I have always felt strongly that company leaders, given their experience and privileged positions, need to lead, inspire, and act responsibly, and therefore play an active role in addressing the global issues we face. That is certainly the case now.

 

The world is changing faster than ever before, with COVID-19 accelerating the transformation of healthcare. For example, it has already changed the way consumers engage with their health and with their healthcare providers. But as we battle the pandemic, other major challenges have not gone away. Aging societies, the increasing number of people with (multiple) chronic medical conditions, and the fact that half the world’s population still has no access to quality care remain challenging issues both from a social and economic point of view. In addition, climate change is already negatively impacting many people’s lives and will affect future generations even more. Together with economic downturns, all these factors aggravate social injustice and inequality. And geo-political tensions and polarization of opinions make things even more difficult. 

Looking at the challenges the world is facing today, the expectations that society is placing on the contribution of multi-national companies have significantly increased. And rightly so. If there is one thing, the challenges I have described remind us of, it is that we need to build a more inclusive and resilient world right now. Confronted with this need, Philips’ purpose has never been more relevant. While we are proud of what we do already, it is very clear that we need to step up our actions. Philips has always taken the interests of all stakeholders and society to heart, and we are happy to do more. 

 

Because how can we claim that our purpose is to improve the health and wellbeing of 2 billion people a year by 2025, if we do not convincingly demonstrate that we are doing everything in our power to make sure the world we inhabit will be a better and fairer place to live in. A world in which every child enjoys opportunities. A world that embraces diversity of thought, belief, creativity and passion, with a conviction that every individual can and should be able to contribute. As an innovation company, we know that many of history’s greatest innovations were actually created by people who thought differently, were prepared to stand up for their ideas, and followed through courageously.

 

We are living up to these beliefs every day. Thanks to the creativity, inspiration and determination of our 80,000+ employees, we are united in our ambition to deliver meaningful innovation to make the world healthier and more sustainable. This year our health technology innovations will already improve the health and wellbeing of around 1.5 billion people around the world. I am heartened by the way our employees responded to the COVID-19 crisis, showing their full engagement and creativity in a time of utmost urgency. In record time, we quadrupled our ventilator production and doubled our patient monitor production, devised telehealth solutions to keep infected patients in touch with their caregivers, built secure IT systems to transfer patient data between hospitals at the touch of a button, and designed mobile intensive care units for flexible deployment in countries such as India. We know that when you unite people in a common, meaningful purpose and give them the power to innovate, they come up with solutions, fast.

 

We are also proud that over the last years Philips became the first health technology company in the world to have its CO2 emission targets endorsed by the Science Based Targets initiative, a collaboration between the UN Global Compact, the World Resources Institute and the World Wide Fund for Nature aimed at driving ambitious corporate climate action. We expect to deliver on all targets set out in our industry-leading 2016-2020 ‘Healthy people, Sustainable planet’ program by the end of this year.

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Reinforcing our commitments on all ESG dimensions towards 2025

And now I would like to share with you today that we are reinforcing our commitments as a purpose-driven company with the announcement of a fully integrated approach to doing business responsibly and sustainably, laying the proper foundation for our next phase of growth. 
We are raising the bar across the entire spectrum of Environmental, Social and Corporate Governance (ESG) activities, setting ourselves challenging environmental and social targets, and living up to the highest standards of governance. I am convinced that this is the best way for us to create superior, long-term value for Philips’ multiple stakeholders, including the global community.

Frans van Houten

CEO Royal Philips

We are raising the bar across the entire spectrum of Environmental, Social and Corporate Governance (ESG) activities, setting ourselves challenging environmental and social targets, and living up to the highest standards of governance. I am convinced that this is the best way for us to create superior, long-term value for Philips’ multiple stakeholders, including the global community.

 

For example, in terms of environmental responsibility, we will no longer be targeting 2.0oC of global warming. Instead, we will raise the bar to target the 1.5 oC end of the Paris Agreement goal. By 2025, Philips will be 75% powered by renewable energy, including fuel. All our products and services will be designed in line with EcoDesign requirements. And where we cannot completely eliminate our CO2 emissions, we will offset them via investment in health-benefitting environmental projects, such as safe drinking water, clean energy, biodiversity, and forestation programs. In addition, we are committed to closing the circular economy loop by embracing circularity in our business models and recycling all waste.

 

When it comes to social responsibility, we commit to improving the lives of 2 billion people a year by 2025 through innovation, including 300 million in underserved communities and 1 million workers in our supply chain. In our own workforce, we will step up our efforts to build and foster an inclusive working environment in which diversity and different perspectives are welcomed, and people are empowered to achieve their true potential through continuous learning, mentoring and employee networking programs. Philips has set a new goal of 30% gender diversity in senior leadership positions by the end of 2025, up from the 2020 target of 25% that it expects to meet before the end of this year.

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And when it comes to good governance, we are adding a commitment to be transparent in the tax contributions we make in all countries Philips operates in. To this end, Philips will publish a supplemental financial report for 2020, in addition to the Annual Report 2020. We will of course continue to engage transparently with shareholders, customers, business partners, governments and regulators, to deliver high-quality products and services that comply with all relevant laws and standards. And we will continue to subject our targets and metrics to external audit.

 

Bringing together all these aspects of responsible, sustainable business into a single framework will not only help us improve lives throughout the world.  It will also reinforce our purpose, strengthen our power of innovation, unite our employees, and help build a strong ecosystem of partners, enabling Philips to thrive and serve society in the best way possible for a century to come.

 

I hope that through our actions we can inspire many others to contribute and do more as well.

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Frans van Houten

Frans van Houten

CEO Royal Philips

Frans van Houten is CEO of Royal Philips. He is also Chairman of the Board of Management and the Executive Committee.
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