ESG & Emissions in Healthcare: Philips’ 2024 Annual Report
Philips, a global leader in health technology, released its 2024 annual report, detailing significant advancements in environmental, social, and governance (ESG) performance, alongside continued innovation in healthcare solutions. The report highlights the company’s commitment to sustainability, particularly in reducing emissions, promoting a circular economy, and improving patient care.
Philips manufactures a range of products, from diagnostic equipment to personal health devices, serving healthcare needs worldwide. Despite economic headwinds, including decreased demand in China and supply chain pressures, Philips remains focused on its long-term sustainability objectives and responsible innovation. “We want to help deliver better care for more people across the world,” stated CEO Roy Jakobs, underscoring the company’s dedication to both healthcare advancement and environmental responsibility.
Emissions Reduction and Circular Economy
A noteworthy achievement in the report is Philips’ success in cutting emissions. The company’s partnership with Portugal’s Champalimaud Foundation led to a 24% reduction in emissions from diagnostic and interventional imaging equipment usage within its first year. This collaboration decreased emissions by an estimated 40 tonnes of CO₂e. This achievement contributes to Philips’ broader objective of halving the carbon footprint of its diagnostic operations by 2028.
Philips also made significant strides in its circular economy goals. Circular revenues—generated from products intended for reuse, refurbishment, and recycling—now constitute 24% of total sales. This indicates a growing focus on minimizing electronic waste and promoting sustainable consumption patterns, directly supporting the UN’s Sustainable Development Goals.
Advancements in Sustainable Healthcare Technology
Philips’ innovations in medical technology also reflect its commitment to environmental sustainability. The next-generation BlueSeal helium-free MRI system, now launched globally, eliminates the need for scarce helium resources while providing high-quality imaging. According to the report, over 1,500 locations worldwide have installed these systems, expanding access to sustainable healthcare solutions.
AI-driven technologies are also central to Philips’ sustainability strategy. The AI-enabled SmartSpeed MRI platform, for instance, reduces energy consumption and offers up to three times faster scans while improving diagnostic accuracy. These innovations support environmental goals and address the need for greater efficiency in healthcare systems.
ESG Leadership and Social Responsibility
Philips’ ESG strategy extends beyond its environmental impact. In 2024, the company reported that it had improved the lives of 1.96 billion people globally, including 242 million in underserved communities. This progress moves Philips closer to its target of positively impacting 2.5 billion lives annually by 2030. Additionally, the company received recognition for its responsible supply chain initiatives, earning a finalist position in Fortune’s ‘Change the World’ rankings.
“Our supplier sustainability approach reflects our commitment to creating a responsible and transparent supply chain,” explained Marnix van Ginneken, Chief ESG & Legal Officer at Philips. Employee engagement also improved, with an engagement index score of 78—a five-point increase from 2023. This reflects ongoing efforts to cultivate a culture of safety, integrity, and inclusivity, with 83% of employees favorably rating the company’s patient safety culture.
Financial Performance and Sustainable Growth
From a financial perspective, Philips reported €18 billion (US$19.5 billion) in sales with an adjusted EBITA margin of 11.5%. A free cash flow of €906 million (US$948 million) and an improved credit rating outlook demonstrate Philips’ balance of financial performance and responsible business practices. However, challenges persist. Economic uncertainty, particularly in China, alongside the regulatory hurdles connected to the Respironics recall, continue to affect growth. Nonetheless, Philips addresses these risks by renewing its focus on streamlining operations and regionalizing its supply chain.
Looking Ahead
As Philips moves forward into 2025, the company is committed to its three-year plan, focusing on its ESG priorities. “We remain focused on successfully executing our three-year plan and are determined to build on our industry-leading innovations,” Roy Jakobs stated.
In the face of economic and regulatory hurdles, Philips’ 2024 annual report reinforces the company’s commitment to driving sustainability within the healthcare technology sector.
“We are focused on executing our plan, improving fundamentals and simplifying how we work – ensuring we are more competitive and agile, and delivering growth and margin expansion, with patient safety and quality as priority,” Marnix elaborated.
