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Re-Think, Re-Frame, Re-Make:
Innovating for a circular economy

MVO Zorgnetwerk event Circulaire Economie



Robert Metzke,
Senior Director Philips EcoVision Program
March 27th, 2013
2050
• 9 billion people

• High quality of life


• One planet living

                         2 2
Why do we need a circular economy?
Sustainable development means                                                      Ecological footprint
to improve people‟s live
while respecting the limits of natural resources




 Human
 Development
 Index*




                            *HDI = life expectancy + education level + purchasing power
Source: WWF Living Planet Report                                                                          3
How sustainable is our current healthare system?
   Dutch Healthcare spent as percentage of BBP




                                                 CBS: Dutch
                                                 Healthare
                                                 cost
                                                 increased
                                                 with 1250%
                                                 since 1972




                                                              4
Source: CBS Nov 2012
Healthcare providers face complex challenges

        High, fixed expenses and           Increased workforce
                       labor costs         shortages

    Efficient resource
                                                     Growing demand
           usage

                                                  Overburdened emergency
           Value-based                            rooms and acute care wards
       reimbursements
                                                    Acute -> Chronic
                                                    diseases
  responsibility for the
promotion of health and                             Service
 healthy communities                                expectation

                    Widespread         Patient
                     knowledge       Preference

                                                                               5
“Traditional approaches to business will
collapse, and companies will have to develop
innovative solutions. That will happen only
when executives recognize a simple truth:
Sustainability = Innovation.”


-- CK Prahalad et al, “Why Sustainability Is Now the Key Driver of Innovation”; Harvard
Business Review



                                                                                          6
At Philips we strive to make the world
healthier and more sustainable
Philips EcoVision5 commitments for 2015


       • Philips will bring care to more than 500 million              Ecological footprint
  1
         people

  2    • Philips will improve the energy efficiency of its                      2
         overall product portfolio by 50%                                       3
   3 • Philips will double the global collection and




                                                                                DOWN
         recycling amounts of our products, as well as
         double the amount of recycled materials in our
         products

                                                                           Health &
                                                   1 UP
                                                                          well-being

                 Human Development Index


 1 Lead by Healthcare    2 Lead by Lighting    3   Lead by Consumer Lifestyle                 7
Sustainability drives innovation at many levels
Philips Healthcare examples, illustrative only




  Product level: Philips EcoDesign               MX16EVO CT
                                                 scanner




  Solutions level: SmartPath                     Refurbished
  Lifecycle solutions                            solutions:
                                                 Achieva MRI



  System level: Multi stakeholder                Sustainable
  involvement across the value                   hospitals &
  chain                                          environments




                                                                8
With EcoVision5 we will invest
more than 2bln € until 2015
in sustainable innovation

 • Philips focused on embedding EcoDesign with attention
   to six Green Focal Areas


 • Starting with EcoVision4 in 2007, we invested already
   more than 1 bln EUR in research and development of
   green products and solutions and reached 45% in 2012

 • Green products defined as minimum 10% improvement in
   at least one of the six Green Focal Areas; audited by
   independent external party (KPMG)




                                                           9
Example Re-Make (product-level):
Technology breakthrough-Master LED A19


 75% energy reduction compared
 to incandescent lamp




  25 times longer lifetime than
  comparable incandescent lamp




                                         10
Example Re-Make (product-level):
Ecopassport example – MRI Ingenia 1.5 T




                                          11
Example Re-Think:
Reducing cost and waste with Philips
Diamond Select (solutions-level)



Helps to preserve the environment
Extends the lifetime of a system and lowers
the emission of CO2

Top quality at an affordable price
Fully refurbished systems configured to fit
the needs of customers.

New system warranty and full service
offering

Broad range of refurbished systems
Interventional X-ray - Computed Tomography
- Magnetic Resonance - Nuclear Medicine -
Ultrasound


                                              12
Example Re-Think (business model innovation):
Light as a service / “Pay per Lux”
Ambition and guiding principles


• True, ambitious and visionary partnership, with a
  economic interesting perspective from both sides
• Pay for use instead of pay for possession (“Performance
  Lease”)
• State of the art installation with LED and dynamic lighting
• Taking into account employee happiness and productivity
• Materials stay in possession of Philips (assumption:
  recycling costs will be paid out of material value increase)
• Disposal and/or re-use of old materials is included
• Lighting energy bill will be paid by Philips, to stimulate
  further innovation
• Turnkey solution, including maintenance
• Contract period of 60 months
                                                                 13
Example Re-Frame: System-innovation:
Luz Verde Project Mexico
CDM-based / Carbon Emission Rights

                           50% guarantor
          Shareholder of
            Cool NRG                       ING


Philips                    Cool
 Sales of CFLi             NRG                      Eneco
 At low margin at
 normal payment
 term

                              CER‟s

                                                  Mexican
                   United Nations                Households
                & Mexican Government


                                                              14
Example Re-Frame:
Green Hospitals Solutions
Supporting hospitals in their growing need for an
improved sustainability performance (system level)


A strategic partner, every step of the way
Philips helps customers to plan, design, build and manage
sustainable healthcare environments

Global leader in Healthcare , Lighting and Sustainability
Lighting and also Healthcare equipment have significant impact
on the Hospital‟s energy use


Partner of the 'Green Hospital Program' at Asklepios
Philips supports Asklepios, the largest Private Healthcare group
in Europe, in their drive for a smaller carbon footprint and a
lower energy bill




                                                                   15
“Ultimately, Leadership is about how we
shape futures we truly desire, as opposed to
try as best as we can to cope with
circumstances we believe are beyond our
control”


-- “The Necessary Revolution”, Peter Senge etc al, Doubleday 2008




                                                                    16
Some recent awards and recognitions


Super Sector Leader Category
Personal and Household Goods                                                Best score for Supplier Sustainability
2012/2013                                                                   out of five multinational finalists


                                      Eight year in a row, included in 20
                                      most Sustainable Stocks

Significant advancement in LED
lighting by US Department of Energy

                                                                            Top score for Carbon Disclosure
                                                                            Leadership Index and the Carbon
                                                                            Performance Leadership Index 2012




Environment Excellence Award for      Global Top 10 of Newsweek                “Most Responsible Company Award’
Philips Lighting Pakistan             2011 ranking of greenest                 for Philips China


                                                                                                                     17
18
Mission and Vision
Mission:

• Improving people's lives through meaningful
  innovation


Vision:

• At Philips, we strive to make the world
  healthier and more sustainable through
  innovation. Our goal is to improve the lives of
  3 billion people a year by 2025.
• We will be the best place to work for people
  who share our passion.
• Together, we will deliver superior value for our
  customers and shareholders.

                                                     19
                                                     19
A well-respected, blue-chip
company for over 100 years
Founded in 1891
Headquartered in Amsterdam, the Netherlands

Sales over EUR 23 billion (USD 32 billion)
30% in emerging economies

Emerging Markets
30% of sales generated in Emerging Markets

Globally recognized brand (world top 50)
Our brand value almost doubled to $8.1bn since 2004

116,000 employees
Sales and service outlets in over 100 countries

€1.6 billion investment in R&D, 7% of sales
48,000 patent rights – 35,000 registered trademarks –
56,000 design rights                                    20
What makes Philips different?
Early start in Social Responsibility

1900           • Various Health insurance Arrangements

1912           • Profit sharing

1913           • Pension Fund

1929           • Philips Company School

1920–1931      • First phase of housing Program

1950           • Collective Labor Agreement

1961           • 5-day working Week

                                                         21
What makes Philips different?
Long history of Environmental Policy

1970           • Participation in „Club of Rome‟

1974           • Corporate Environmental Function

1980           • Energy and emission reduction Programs

1987           • First Global Policy

1991           • Second Global Policy

1994           • Environmental Opportunity, first structured 4-year Program

1998 - 2010    • EcoVision1, 2, 3, 4, 5



                                                                              22
The ecological footprint




                   www.footprintnetwork.org   23
The Human Development Index




               www.hdr.undp.org
                                  24
Providing a high standard of care
with increasingly scarce resources




                                     25
Sustainability drives innovation at many levels
Lighting examples, illustrative only




  Product level: Philips EcoDesign     MasterLED
                                       Glow




  Solutions level: Turnkey             Light and
  Projects & Solutions                 Healthcare
                                       as a service



  System level: Multi stakeholder      Value creation
  involvement across the value         with carbon
  chain                                credits




                                                        26

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Philips - MVO Netwerk Zorg

  • 1. Re-Think, Re-Frame, Re-Make: Innovating for a circular economy MVO Zorgnetwerk event Circulaire Economie Robert Metzke, Senior Director Philips EcoVision Program March 27th, 2013
  • 2. 2050 • 9 billion people • High quality of life • One planet living 2 2
  • 3. Why do we need a circular economy? Sustainable development means Ecological footprint to improve people‟s live while respecting the limits of natural resources Human Development Index* *HDI = life expectancy + education level + purchasing power Source: WWF Living Planet Report 3
  • 4. How sustainable is our current healthare system? Dutch Healthcare spent as percentage of BBP CBS: Dutch Healthare cost increased with 1250% since 1972 4 Source: CBS Nov 2012
  • 5. Healthcare providers face complex challenges High, fixed expenses and Increased workforce labor costs shortages Efficient resource Growing demand usage Overburdened emergency Value-based rooms and acute care wards reimbursements Acute -> Chronic diseases responsibility for the promotion of health and Service healthy communities expectation Widespread Patient knowledge Preference 5
  • 6. “Traditional approaches to business will collapse, and companies will have to develop innovative solutions. That will happen only when executives recognize a simple truth: Sustainability = Innovation.” -- CK Prahalad et al, “Why Sustainability Is Now the Key Driver of Innovation”; Harvard Business Review 6
  • 7. At Philips we strive to make the world healthier and more sustainable Philips EcoVision5 commitments for 2015 • Philips will bring care to more than 500 million Ecological footprint 1 people 2 • Philips will improve the energy efficiency of its 2 overall product portfolio by 50% 3 3 • Philips will double the global collection and DOWN recycling amounts of our products, as well as double the amount of recycled materials in our products Health & 1 UP well-being Human Development Index 1 Lead by Healthcare 2 Lead by Lighting 3 Lead by Consumer Lifestyle 7
  • 8. Sustainability drives innovation at many levels Philips Healthcare examples, illustrative only Product level: Philips EcoDesign MX16EVO CT scanner Solutions level: SmartPath Refurbished Lifecycle solutions solutions: Achieva MRI System level: Multi stakeholder Sustainable involvement across the value hospitals & chain environments 8
  • 9. With EcoVision5 we will invest more than 2bln € until 2015 in sustainable innovation • Philips focused on embedding EcoDesign with attention to six Green Focal Areas • Starting with EcoVision4 in 2007, we invested already more than 1 bln EUR in research and development of green products and solutions and reached 45% in 2012 • Green products defined as minimum 10% improvement in at least one of the six Green Focal Areas; audited by independent external party (KPMG) 9
  • 10. Example Re-Make (product-level): Technology breakthrough-Master LED A19 75% energy reduction compared to incandescent lamp 25 times longer lifetime than comparable incandescent lamp 10
  • 11. Example Re-Make (product-level): Ecopassport example – MRI Ingenia 1.5 T 11
  • 12. Example Re-Think: Reducing cost and waste with Philips Diamond Select (solutions-level) Helps to preserve the environment Extends the lifetime of a system and lowers the emission of CO2 Top quality at an affordable price Fully refurbished systems configured to fit the needs of customers. New system warranty and full service offering Broad range of refurbished systems Interventional X-ray - Computed Tomography - Magnetic Resonance - Nuclear Medicine - Ultrasound 12
  • 13. Example Re-Think (business model innovation): Light as a service / “Pay per Lux” Ambition and guiding principles • True, ambitious and visionary partnership, with a economic interesting perspective from both sides • Pay for use instead of pay for possession (“Performance Lease”) • State of the art installation with LED and dynamic lighting • Taking into account employee happiness and productivity • Materials stay in possession of Philips (assumption: recycling costs will be paid out of material value increase) • Disposal and/or re-use of old materials is included • Lighting energy bill will be paid by Philips, to stimulate further innovation • Turnkey solution, including maintenance • Contract period of 60 months 13
  • 14. Example Re-Frame: System-innovation: Luz Verde Project Mexico CDM-based / Carbon Emission Rights 50% guarantor Shareholder of Cool NRG ING Philips Cool Sales of CFLi NRG Eneco At low margin at normal payment term CER‟s Mexican United Nations Households & Mexican Government 14
  • 15. Example Re-Frame: Green Hospitals Solutions Supporting hospitals in their growing need for an improved sustainability performance (system level) A strategic partner, every step of the way Philips helps customers to plan, design, build and manage sustainable healthcare environments Global leader in Healthcare , Lighting and Sustainability Lighting and also Healthcare equipment have significant impact on the Hospital‟s energy use Partner of the 'Green Hospital Program' at Asklepios Philips supports Asklepios, the largest Private Healthcare group in Europe, in their drive for a smaller carbon footprint and a lower energy bill 15
  • 16. “Ultimately, Leadership is about how we shape futures we truly desire, as opposed to try as best as we can to cope with circumstances we believe are beyond our control” -- “The Necessary Revolution”, Peter Senge etc al, Doubleday 2008 16
  • 17. Some recent awards and recognitions Super Sector Leader Category Personal and Household Goods Best score for Supplier Sustainability 2012/2013 out of five multinational finalists Eight year in a row, included in 20 most Sustainable Stocks Significant advancement in LED lighting by US Department of Energy Top score for Carbon Disclosure Leadership Index and the Carbon Performance Leadership Index 2012 Environment Excellence Award for Global Top 10 of Newsweek “Most Responsible Company Award’ Philips Lighting Pakistan 2011 ranking of greenest for Philips China 17
  • 18. 18
  • 19. Mission and Vision Mission: • Improving people's lives through meaningful innovation Vision: • At Philips, we strive to make the world healthier and more sustainable through innovation. Our goal is to improve the lives of 3 billion people a year by 2025. • We will be the best place to work for people who share our passion. • Together, we will deliver superior value for our customers and shareholders. 19 19
  • 20. A well-respected, blue-chip company for over 100 years Founded in 1891 Headquartered in Amsterdam, the Netherlands Sales over EUR 23 billion (USD 32 billion) 30% in emerging economies Emerging Markets 30% of sales generated in Emerging Markets Globally recognized brand (world top 50) Our brand value almost doubled to $8.1bn since 2004 116,000 employees Sales and service outlets in over 100 countries €1.6 billion investment in R&D, 7% of sales 48,000 patent rights – 35,000 registered trademarks – 56,000 design rights 20
  • 21. What makes Philips different? Early start in Social Responsibility 1900 • Various Health insurance Arrangements 1912 • Profit sharing 1913 • Pension Fund 1929 • Philips Company School 1920–1931 • First phase of housing Program 1950 • Collective Labor Agreement 1961 • 5-day working Week 21
  • 22. What makes Philips different? Long history of Environmental Policy 1970 • Participation in „Club of Rome‟ 1974 • Corporate Environmental Function 1980 • Energy and emission reduction Programs 1987 • First Global Policy 1991 • Second Global Policy 1994 • Environmental Opportunity, first structured 4-year Program 1998 - 2010 • EcoVision1, 2, 3, 4, 5 22
  • 23. The ecological footprint www.footprintnetwork.org 23
  • 24. The Human Development Index www.hdr.undp.org 24
  • 25. Providing a high standard of care with increasingly scarce resources 25
  • 26. Sustainability drives innovation at many levels Lighting examples, illustrative only Product level: Philips EcoDesign MasterLED Glow Solutions level: Turnkey Light and Projects & Solutions Healthcare as a service System level: Multi stakeholder Value creation involvement across the value with carbon chain credits 26

Hinweis der Redaktion

  1. Demand for care is growing We need more care and caregivers. According to the World Health Organization, the world is short more than 4 million health workersOur lifestyle is taking it’s toll on our health. Obesity, heart disease, and cancer are global health issuesChronic disease, such as heart disease, stroke, cancer, chronic respiratory diseases and diabetes, cause 60% of all deaths globally.Efficient resource usageAround the globe, societies are already facing the growing reality and burden of increasing and aging populations, as well as the spiraling costs of keeping everyone in good healthBased on projected population growth rates, global spending on healthcare will increase to €8 trillion by 2050This rising demand is increasing the societal cost at an unsustainable rate. If current trends continue, healthcare spending in many markets will exceed 20% of GDP in the not too distant future. In the USA healthcare spending currently is at16% of GDP. the next biggest spenders are in Europe. Both France, Belgium, Denamr and the Netherlands spend 11-12% of GDP on healthcare expenditures. This is followed by Switzerland, Canada, Germany and Austria at somewhere between 10 and 11%. The vast majority of other developed countries are in the high single digits (Sweden 9%, Norway 9.6%), and the average of this group is 10.1%. Laggards, which are a good thing when it comes to total spending, include the U.K., Spain and Japan, all of which are around 7%.Responsibility for the promotion of health and healthy communitiesHospitals have significant environmental impact – for example, they typically consume two times the energy per square meter, in comparison to commercial office buildingsIn response green procurement criteria, and green building codes for hospitals are emergingThe same people that are affected by the health care sector's pollution will in the end require care from the very same sector. For hospitals, this means that working in a sustainable way actually reduces long term costs and releases them from unnecessary strain.
  2. Ecodesign: According to COCIR (European Coordination Committee of the Radiological, Electromedical and Healthcare IT Industry), the Philips MRI fleet average energy consumption in ‘off’ and ‘ready-to-scan’ mode is deemed 22% lower than the average consumption of the market fleet for 2011.Refurbishment, Achieva 1.5 T: Keep the core and experience moreHealwell & green hospital solutions
  3. To earn an Energy Star label, a 60-watt LED equivalent must have a minimum light output of 800 lumens, a color temperature of 2700K (for soft white light), color rendering index (CRI) of 80 and a minimum three year warranty, among other requirements. The Philips AmbientLED meets or exceeds these requirements with 806 lumens, 2700K, a CRI of 80 and a six year warranty. 
  4. Our ambition for 2015 is to be a leading company in Health & Wellbeing, lead in sustainability and making a positive difference in people’s life for all stakeholders, including our employees. To accomplish this ambition it is clear that we should also lead in terms of Health & Safety performance. Therefore, we decided to initiate a more integral approach for Health & Safety. Although there is already a downward trend in the number of serious incidents over the last years, we feel there is still room for improvement. Together with you we will strive to create an injury and illness free working environment at all Philips organizations. Several initiatives will be launched the coming period to realize our ambitions and we invite all of you to participate. Launch of the Philips Health & Safety ManualIn addition to our Occupational Health & Safety Policy, we developed a Health & Safety Manual in cooperation with the sectors. The purpose of this manual is to describe the One Philips approach to Occupational Health & Safety and provide guidance to all Philips organizations around the world. The manual is setup to follow the international standard OHSAS 18001 and 18002, and has been adapted to provide the minimum Philips standards for large, medium and smaller Philips organizations.  Please start using the manual to shape or improve your site Health & Safety management system.  The current manual will be open for consultation till the 31st of March which allows you to provide feedback on suggestions for improvements. Please send any feedback to sustainability@philips.com.  
  5. Our ambition for 2015 is to be a leading company in Health & Wellbeing, lead in sustainability and making a positive difference in people’s life for all stakeholders, including our employees. To accomplish this ambition it is clear that we should also lead in terms of Health & Safety performance. Therefore, we decided to initiate a more integral approach for Health & Safety. Although there is already a downward trend in the number of serious incidents over the last years, we feel there is still room for improvement. Together with you we will strive to create an injury and illness free working environment at all Philips organizations. Several initiatives will be launched the coming period to realize our ambitions and we invite all of you to participate. Launch of the Philips Health & Safety ManualIn addition to our Occupational Health & Safety Policy, we developed a Health & Safety Manual in cooperation with the sectors. The purpose of this manual is to describe the One Philips approach to Occupational Health & Safety and provide guidance to all Philips organizations around the world. The manual is setup to follow the international standard OHSAS 18001 and 18002, and has been adapted to provide the minimum Philips standards for large, medium and smaller Philips organizations.  Please start using the manual to shape or improve your site Health & Safety management system.  The current manual will be open for consultation till the 31st of March which allows you to provide feedback on suggestions for improvements. Please send any feedback to sustainability@philips.com.  
  6. Our vision is to create a brighter future for healthcare. By partnering with you care providers, we aim to support you in improving patient outcomes and providing better value.Together we can overcome your most difficult challenges.• How do you improve the patient experience and work environment?• How do you drive performance and efficiency?• How do you attract and retain talented staff?• How do you improve people’s health & well-being while respecting the limits of natural resources?It’s all about providing a high standard of care for the members of our communities with increasingly scarce resources