Here’s How Philips Healthcare Is Driving Industry-Wide Progress Towards Circular Economy
As notions of recycling and the circular economy gain ground, Philips Healthcare is driving industry-wide initiatives aimed at steering the modern healthcare sector along the circular path to sustainability.
Philips has a mission to look beyond technology to the experiences of consumers, patients, providers, and caregivers across the health continuum – from healthy living and prevention to diagnosis, treatment, and home care. With extensive research, design, and innovation capabilities, the organisation partners with customers to transform the delivery of healthcare.
Royal Philips is the European arm of the Philips Healthcare network. From its headquarters in the Netherlands, the company is a leader in diagnostic imaging, image-guided therapy, patient monitoring and health informatics, as well as consumer health and home care.
With sales and services in more than 100 countries and a workforce of around 77,000 employees, Philips is committed to leading by example through environmentally- and socially-responsible programmes.
The Need for a Circular Economy
We live in a world of finite resources – and many of those resources are rapidly diminishing. As such, it makes sense from a practical and financial level to adopt practices that enable us to get the most use out of the materials which are available. This is where the concept of the circular economy comes into play.
In contrast to the linear processes of extraction, manufacture, consumption, and discard that characterise most transactions, a circular economy is based on re-use, recycling, and re-manufacturing or refurbishment. This new concept of economic value operates within the natural limits of the environment and finite resources. The circular economy begins at home, by eliminating waste through measures such as repairing, recycling, and repurposing products.
The PACE Initiative
Philips is a leader of an initiative called the Platform for Accelerating the Circular Economy (PACE), and in that capacity has made a pledge that by 2020 it will take back and repurpose all the large medical systems equipment that its customers are prepared to return. After pilot projects in Italy and Greece in 2018, Philips successfully launched the first phase of a global program to achieve this ambitious circular economy goal, together with metrics to monitor its progress. The kind of equipment that Philips will take back and recycle or repurpose includes the MRI and CT scanners in its health technology product and solutions portfolio.
The Capital Equipment Coalition
In conjunction with eight other leading companies representing multiple industry sectors, Philips also co-founded the Capital Equipment Coalition, an initiative aimed at driving industry-wide progress towards closing the sustainability loop for large-scale equipment.
At the 2018 World Economic Forum in Davos, Switzerland, all members of the coalition pledged their companies would drive specific actions that preserve and recover value from capital equipment. A report titled "Circular Value Creation – Lessons from the Capital Equipment Coalition" was published in January 2019, and charts the shared experience of the group.
The report also outlines the business case for adopting a circular economy approach, with the associated value drivers and organisational changes needed to embed circularity within a company’s processes and corporate culture. As part of its Executive Committee dashboard, Philips has set up a dedicated circular economy performance indicator.
Requirements for a Circular Economy
Frans van Houten, CEO of Royal Philips, summarises the coalition's progress and gives a blueprint for circular economy best practice: “In implementing the circular economy, we all identified a common set of requirements. You need to start with a clear vision, offer leadership and accountability, and foster the right culture and skills both within your organisation and across the value chain to unite all stakeholders in a common goal. As with any effective change process, you not only need to act, you also need to measure, which is why Philips has established a dedicated circular economy performance indicator as part of its Executive Committee dashboard."
At a non-strategic level, used products can be given new life through repair or refurbishment, or become a source of materials for new products, while at an operational level, sustainable procurement policies, strategies, and practices, can empower healthcare authorities, governments, and international development organisations to lead the drive towards more inclusive, green economies.
Recycling and Sustainability in Action
One of the ways that Royal Philips has been able to recycle and re-manufacture complex equipment is through the use of modular design. Here, the products are built up from smaller sub-units, which allow for easier repair and disassembly and lowers the cost of refurbishing. Under the long-standing practice, Philips Healthcare offers customers refurbished options under its Diamond Select product line.
Elsewhere, Philips has been instrumental in establishing a USD 2 million public-private partnership project to initiate a circular e-waste system in Nigeria, a country which processes around 500,000 tons of electronic waste annually. Initial funding will allow the Nigerian government to build the required skills, tools, and governance mechanisms for e-waste management, and to pilot new e-waste collection and recycling programs.