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Philips Sustainability Report: Carbon Footprint Falls, Efficiency Rises but Progress Slows

Philips Electronics reduced its operational carbon footprint and increased its energy efficiency – both by 4 percent – between 2010 and 2011, but its water intake for manufacturing purposes rose 3 percent over the same time period, according to the company’s 2011 integrated annual report.

These figures represent a slow down from progress stated in the 2010 report, in which the company announced a 7 percent reduction in its carbon footprint and increased operational energy efficiency by 6 percent year-on-year.

According to the latest report, in 2011, the electronics company reduced its carbon footprint from 1,845 to 1,771 kilotons of CO2 equivalent year-on-year, reducing scope 1,2 and 3 emissions by 11 percent, 12 percent and 0.75 percent respectively over that time period.

Manufacturing accounts for 40 percent of the the company’s carbon footprint, and an eight percent year-on-year reduction in emissions from its manufacturing processes formed a large part of the company’s overall reduction. Philips attributes the drop in manufacturing emissions to continued energy efficiency improvement programs, its changing industrial footprint and a further increase in the share of purchased electricity from renewable sources. Renewables now account for 44 percent of Philips’ total purchased electricity.

CO2 emissions from nonindustrial operations, such as offices and warehouses, represented nine percent of the company’s total. Acquisitions over the year resulted in a slight increase in floor space related to these operations, but emissions dropped two percent from 2010 to 2011. Philips attributes the drop to its continued efforts to focus on more efficient uses of facility space and, again, increasing the share of purchased electricity from renewable sources.

However, 2011 was not completely good news in emissions reduction. Despite the small year-on-year decrease in scope 3 emissions, Philips’ emissions related to business travel increased four percent, accounting for 14 percent of its carbon footprint. Business travel emissions rose from 247 kilotons of CO2 equivalent in 2010, to 256 in 2011 – the second year in a row that the company has shown an increase in such emissions. The company has reduced the emission per kilometer of its lease car program by eight percent over the year and is committed to an increase in video conferencing to help slow the rise in such emissions.

Over the course of 2011, the Dutch multinational implemented an IT system in a bid to increase accuracy of its carbon reporting. Philips also went back and recalculated its carbon footprint figures from previous years, resulting in slightly different figures for those years than stated in previous reports.

Philips’ operational energy efficiency improved four percent, from 1.29 terajoules per million euro sales in 2010 to 1.24 terajoules per million euro sales in 2011. Total energy usage in manufacturing amounted to 13,982 terajoules in 2011, of which its lighting division consumed about 80 percent. This figure is down from 14,426 terajoules in 2010. Compared with 2010, energy consumption at Philips went down by three percent. The company attributes the reduction to organizational changes, energy efficiency improvements, less load in glass furnaces and production mix changes.

The company’s total water intake for manufacturing in 2011 was 4.3 million m3, about 3 percent higher than in 2010. This is the third year in a row that the company’s manufacturing processes have used more water than in the previous 12 months. Philips attributed the year-on-year increase to a change in the manufacturing process at a major lighting site, coupled with two new acquisitions that started to report in 2011.

Lighting-related manufacturing accounts for almost 80 percent of such water usage at Philips and a two percent increase in that sector’s water use accounts for the lion’s share of the water increase company-wide. The health care sector also showed an increase in water intake, but the consumer lifestyle sector showed a decrease.

Total waste from manufacturing decreased 10 percent to 94 kilotons in 2011 from 105 kilotons in 2010. Lighting (69 percent) and consumer lifestyle (21 percent) account for 90 percent of the company’s total waste. The reduction was due to the closure of a glass furnace and organizational changes in the consumer lifestyle and lighting divisions, Philips says. The 2011 figure is the lowest total waste from manufacturing figure for any year in the report, 2007 being the earliest year reported.

The company’s overall sales showed a nominal 1 percent increase from 2010 to 2011 but sales of its green products have experienced something of a boom. Sales of green products jumped to €8.8 billion ($11.7 billion) and now account for 39 percent of Philips’ total sales, up from 36 percent in 2010. The company says it is “well on track” to reach its 2015 target of 50 percent of sales being green products.

The sustainability segment of the company’s annual report was compiled using Global Reporting Initiative’s G3.1 Sustainability Reporting Guidelines. With regard to the GRI Application Levels system, Philips assessed itself at the A+ level.

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