Philips sustainability program puts collaboration ahead of auditing to reduce supply chain CO2 emissions

Chinese company Zhejiang Haishun Electric Enterprises LTD. (Wenzhou City, China), supplies Philips with a range of accessories for Philips electric shavers and hair clippers. As a major supplier, it was invited to participate in Philips’ Supplier Sustainability Performance (SSP) program - a systematic initiative to improve sustainability throughout Philips’ supply chain. Rather than taking an audit-based approach, which often leads to so-called ‘audit fatigue’, the SSP program involves close collaboration with suppliers to identify areas where sustainability can be improved, together with the co-creation of solutions. All supplier action plans are driven by clear targets and their success assessed via transparent reporting.

Since joining the program in 2020, Philips and Haishun have jointly identified over 120 potential areas for sustainability improvement, many of which are already being actioned. These include simple operational changes, such as turning off lighting and computing equipment at the end of the working day and the installation of water-saving faucets, to modification of the company’s manufacturing equipment and processes, such as upgrading the heating elements in the company’s injection moulding machines, installing more efficient air compressors, and improving the wastewater treatment process. The projected energy savings amount to more than 350,000 kWh (3.5 MWh) per year. Water savings are projected to be around 9,000 tons (9 million liters) per year, while changes to the company’s wastewater treatment should result in a tenfold improvement in wastewater quality[1].

As part of its ongoing Environmental, Social, and Govenance (ESG) commitments, Philips has already taken widespread action to improve sustainability and reduce CO₂ emissions in its own operations. It includes science-based target setting, circular-economy solutions for its medical equipment, eco-design principles applied to all new product introductions, and a renewable energy sourcing strategy that will result in CO₂-equivalent emissions from its own sites falling 75% by 2025, and 90% by 2040[2].

The SSP program in which Haishun participated is at the core of Philips’ strategy to achieve similar emissions reductions in its supply chain, where they potentially have a beneficial impact seven times greater than those in its own operations. Through the program, Philips’ goal is to have at least 50% of its suppliers (based on spend) committed to science-based targets for CO₂ emissions reduction by 2025.

Philips is already widely recognized for its achievements in doing business responsibly and sustainably. In March 2021, it was ranked by not-for-profit environmental impact disclosure organization CDP as being among the top 7% of all companies assessed for supplier engagement on climate change[3]. It has been on the CDP Climate Change A-list for eight consecutive years. Its greenhouse gas reduction targets are approved by the Science Based Targets initiative (SBTi), and it achieved second place in 2020 on Wall Street Journal’s 100 Most Sustainably Managed Companies in the World.

[1] Based on Chemical Oxygen Demand (COD) - an indication of the amount of oxidizable pollutants found in the wastewater
[2] Compared to Philips’ 2015 levels
[3] Based on Philips’ 2020 disclosures