Challenge

Healthcare systems have long prioritized patient diagnosis and treatment, with energy use and waste management treated as afterthoughts. Yet hospitals generate approximately 13 kg of waste per bed per day, of which 15–25% is hazardous, while the global healthcare sector accounts for over 4% of worldwide carbon emissions. Materials represent the second-largest expense for hospitals after labor, and the extraction of natural resources for manufacturing is a primary driver of biodiversity loss. Confronted by climate change, resource scarcity, and ecosystem degradation, Philips identified circularity as the critical pathway to sustainable resource use, and a prerequisite for decarbonizing healthcare.

Solution

Philips embedded the circular economy into its strategy through the principle of use less, use longer, and use again, built on five pillars: EcoDesign, circular supply chain management, circular delivery and leasing, usage-phase optimization, and end-of-life circular management. Five practical actions underpin this framework: (1) dematerialization and digitalization — deploying digital solutions to reduce hardware consumption and shifting from product sales to performance-based solutions; (2) service and upgrade models — transitioning customers from ownership to access, with maintenance, repair, and software upgrades embedded in agreements; (3) refurbishment — replacing or repairing faulty components to extend product lifespan; (4) recycling — recovering valuable materials from end-of-life components for new production; and (5) sustainable material use — increasing recycled content, improving energy efficiency, and eliminating hazardous substances.

Philips’ EcoDesign system, built around Life Cycle Assessment (LCA), targets four domains: energy efficiency, packaging reduction, material sustainability, and circularity. The EcoHeroes product portfolio showcases breakthrough innovations — notably the BlueSeal helium-free MRI, which employs a 7-liter micro-cooling circuit in place of the conventional 1,500–2,000 liters, eliminating dependency on imported helium, a strategically scarce resource. Trade-in programs with incentive vouchers ensure responsible disposal and reuse of legacy equipment, closing the loop.

Impact&Value

Environmental value: By end-2023, Philips maintained carbon-neutral operations, with 70.5% of new products meeting EcoDesign requirements, 91% operational waste recycling, zero landfill across all plants, and circular products and solutions accounting for 20% of revenue.

Technological leadership: EcoDesign principles have been embedded in product development since the early 1990s, with solutions applicable across clean energy, smart buildings, and transportation.

Social value: Eco-designed products provide affordable health choices for underserved communities — 1.88 billion people have used Philips products and services cumulatively, including 221 million in underserved regions.

Business model innovation: The shift from product sales to service-based models offers a replicable blueprint for energy-intensive manufacturing sectors.

Industry mobilization: Philips engaged suppliers, customers, policymakers, and academic institutions in the circular transition, co-conducting a study on deep decarbonization pathways for China’s healthcare system with Tsinghua University, with several recommendations being adopted by national authorities. The case won the EU Chamber of Commerce in China’s Sustainable Business Award 2023 (Circular Economy) and was shortlisted for the British Chamber of Commerce ESG China  Award.