Philips (NYSE: PHG) wants at least half of its supply purchasing to come from companies that commit to science-based targets to reduce carbon dioxide emissions by 2025.
The health technology company said yesterday that the initiative would be seven times more impactful than Philips’ own carbon dioxide emission reductions.
“Over the last few years, we have made major progress in reducing our own greenhouse gas emissions. We have been carbon neutral in our operations since 2020 and source all of our electricity from renewable sources,” Philips CEO Frans van Houten said in a news release. “We are now using what we have learned to further build out and scale that success with our partners in the supply chain, where the overall environmental impact can even be even greater.”
Based in the Netherlands — a country with about one-third of its surface area below the rising sea level — Philips aims to reduce its own greenhouse gas emission through product development, business model innovation and carbon neutrality in its operations. The company said it was the first health technology company to have its carbon dioxide emission targets for 2020 to 2040 assessed and approved by the Science-Based Targets initiative.
Science-based targets rely on the latest climate science to take steps to limit global warming to well below 2°C above pre-industrial levels, and efforts to limit warming to 1.5°C. The global healthcare industry accounts for around 4% of global carbon dioxide emissions, Philips said.
The move comes as medical device companies are increasingly aware of the risk climate change poses to their businesses, supply chains and the health and safety of their employees and patients.
“We are at a critical point of urgency where we need to accelerate the global transition to climate neutral, circular and resource-efficient economies and societies,” van Houten said.
More than 200 Philips suppliers already participate in the company’s supplier sustainability performance program, but the company said it will go further to actively support and incentivize suppliers to set and meet climate targets. For example, the company will offer preferential payment terms to suppliers committed to reducing emissions.