Royal Philips today announced that its strategy to do business responsibly and sustainably has been validated by S&P Global Ratings. Evaluated across the Environmental, Social and Governance (ESG) dimensions of S&P Global Ratings’ assessment, Philips received a score of 90 out of 100, the highest that S&P Global Ratings has awarded to date.
“I am proud that this commitment has again been recognized externally, receiving the highest score to date in the S&P Global Ratings ESG Evaluation.” – Frans van Houten, CEO of Royal Philips
“As a purpose-driven company, we are conscious of our responsibility towards society and of the need to continue to embed ESG practices ever deeper in the way we do business,” said Frans van Houten, CEO of Royal Philips. “I am proud that this commitment has again been recognized externally, receiving the highest score to date in the S&P Global Ratings ESG Evaluation. This sends a strong message to investors and our other stakeholders, who increasingly look to a company’s ESG actions as a measure of its commitment to doing business in a responsible and sustainable manner.”
S&P Global Ratings’ ESG Evaluation assesses a company’s ESG strategy and ability to prepare for potential future risks and opportunities and is used by investors as a forward looking, long-term opinion of a company’s readiness for disruptive ESG risks and opportunities. It provides an overall ESG Score that allows comparison with other entities globally, including sector peers.
“Our ESG Evaluation score of 90 reflects our view that sustainability is at the core of Philips’ corporate strategy,” states S&P Global Ratings in its evaluation report. “The company built a digital, integrated, and solution-based business model before most of its global peers, which it leverages to respond to key challenges in the health care industry, such as inequality in the access and affordability of care, and shortages of medical professionals.”
In the Environmental domain, S&P Global Ratings notes that “Philips applies leading environmental standards across its value chain” and “distinguishes itself in the management of its indirect environmental impact.” It also recognizes that “Philips has a track record of setting and achieving more ambitious targets in its direct operations than many of its industry peers.”
In the Social domain, Philips is recognized for being “better positioned than many industry peers to provide access to medical care to customers and communities because of its diversified regional footprint and portfolio of products and services.” The report also applauds “Philips’ commitment to pay a living wage to all its staff…”, and recognizes that “its management of human rights risk in its supply chain sets the company apart from peers.”
For Governance, S&P Global Ratings notes that “Philips’ governance structure follows the Dutch Corporate Governance Code…”, which the report views as “aligned with international best practices”. The evaluation also notes that “Philips has comprehensive financial and sustainability disclosures audited by an external auditor…”, including “policies on most material environmental and social risks, and approaches used to calculate key performance indicators, including green revenue and millions of lives improved.”
Enhanced ESG framework
In September 2020, as part of its ongoing commitment to making the world healthier and more sustainable through innovation, Philips launched an enhanced and fully integrated approach to doing business responsibly and sustainably. This framework comprises a comprehensive set of targets, commitments, and action plans across all the Environmental, Social and Governance dimensions that will drive further growth while acting responsibly towards the planet and society.
The full report is available here.