Philips’ 2024 Annual Report Demonstrates Commitment to ESG and Emissions Reduction
Philips, a global leader in health technology, has released its 2024 annual report, showcasing significant strides in sustainability, Environmental, Social, and Governance (ESG) goals, and healthcare innovation. The report underscores the company’s commitment to reducing emissions and enhancing patient safety, even amidst economic challenges.
Philips’ annual report shines a light on the sustainability performance of the company across the past year
Throughout the world, Philips develops and manufactures a wide array of products that support diagnostics, treatment, and personal health. Its 2024 report offers a comprehensive overview of how the company is integrating sustainability and ESG practices into its core operations. Despite challenges such as reduced demand in China and global supply chain pressures, Philips remains focused on its long-term sustainability objectives and responsible innovation. CEO Roy Jakobs emphasized the company’s double commitment: “We want to help deliver better care for more people across the world.”
Emissions Reductions and Circular Economy Initiatives
One of the most noteworthy achievements highlighted in the report is Philips’ success in cutting emissions, particularly through strategic partnerships. A collaboration with Portugal’s Champalimaud Foundation resulted in a 24% reduction in emissions from diagnostic and interventional imaging equipment within a year. This saved an estimated 40 tonnes of CO₂e. It aligns with Philips’ goal to halve the carbon footprint of its diagnostic operations by 2028.
Furthermore, Philips made significant progress in its circular economy objectives. Circular revenues, driven by products designed for reuse, refurbishment, and recycling, now comprise 24% of total sales. This reflects a growing emphasis on reducing electronic waste and promoting a more sustainable consumption model, in line with the UN’s Sustainable Development Goals.
Advancements in Sustainable Healthcare Technology
Innovative medical technologies also underscore Philips’ environmental focus. The company’s next-generation BlueSeal helium-free MRI system has been launched globally, removing the necessity for scarce helium resources while maintaining high-quality imaging.
Philips’ BlueSeal MRI scanners use helium-free magnets, which boosts the product’s sustainability
According to the report, these systems are now installed in more than 1,500 locations worldwide, broadening access to sustainable healthcare solutions. Artificial intelligence (AI)-driven technologies are also key to Philips’ sustainability strategy, such as the AI-enabled SmartSpeed MRI platform, which offers faster scans (up to three times faster) and reduces energy consumption while increasing diagnostic precision. This innovation supports environmental goals and addresses the need for increasing efficiency in healthcare systems.
ESG Leadership and Social Responsibility
Philips’ ESG strategy extends beyond environmental performance. In 2024, the company reported that it had positively impacted 1.96 billion lives worldwide, including 242 million people in underserved communities. This advances Philips closer to its goal of positively influencing 2.5 billion lives annually by 2030. Also, the company achieved recognition for its responsible supply chain initiatives, earning a finalist position in Fortune’s ‘Change the World’ rankings. Marnix van Ginneken, Chief ESG & Legal Officer at Philips, explained, “Our supplier sustainability approach reflects our commitment to creating a responsible and transparent supply chain.” Internal employee engagement measures also revealed an improvement, with an engagement index score of 78, an increase of five points compared to 2023. This reflects ongoing initiatives to foster a culture of safety, integrity and inclusion, with 83% of employees rating the company’s culture of patient safety favorably.
Financial Performance and Sustainable Growth
Financially, Philips reported sales of €18 billion (US$19.5 billion), along with an adjusted EBITA margin of 11.5%. The company’s free cash flow of €906 million (US$948 million) and a favorable credit rating outlook show a balance between profitability and responsible business strategies. However, challenges persist. Economic uncertainty, especially in China, and regulatory issues following the Respironics recall continue to impact growth. Notwithstanding these challenges, Philips is focusing on streamlining operations and regionalizing its supply chain to mitigate operational risks.
Goals for 2025 and Beyond
As Philips looks forward to 2025, the company reaffirms its commitment to its existing three-year plan, focusing on ESG priorities. In the words of Roy Jakobs, “We remain focused on successfully executing our three-year plan and are determined to build on our industry-leading innovations.” Despite facing various economic and regulatory challenges, Philips’ 2024 annual report underscores its commitment to driving sustainability within the healthcare technology sector. Both Jakobs and Marnix van Ginneken emphasized the focus on executing their plans and improving fundamentals to ensure Philips is more competitive and agile. These efforts will ultimately drive growth and margin expansion, while prioritizing patient safety and high quality deliverables.
