As pointed out in the recent Circularity Gap Report 2021 from Circle Economy, doubling the current global circularity rate of 8.6% would cut emissions by 39%, and reduce usage of virgin resources by 28%. We can also address 45% of global greenhouse gas emissions by changing the way we make and use products. And by helping to avoid waste, stimulating business growth, and creating employment, the transition to a circular economy presents a USD 4.5 trillion economic opportunity. Reasons aplenty, then, to go all-in on circular.
Circular economy supporting sustainable healthcare
In healthcare, the combined burden of expanding, aging populations and the increase in chronic diseases has created an urgent need for sustainable models of care delivery. As a health technology company, Philips is committed to making the world healthier and more sustainable through innovation, while acting responsibly towards the planet and society. And the transition to a circular economy is central to that endeavor.
We take an end-to end approach to circularity, reducing, re-using and recycling wherever possible. Our aim is to minimize the use of new materials and resources, while simultaneously maximizing the lifetime value of our products and solutions through innovative service models, smart digital solutions, and product take-back, refurbishment and parts recovery.
We can now offer a trade-in on all large medical equipment deals that we have won around the globe and have the capability to take care of responsible repurposing, such as refurbishment or recycling. We are also reducing our use of virgin materials by increasing use of recycled materials. In this way, we can improve more people’s lives without unnecessarily further depleting natural resources.
Through our long-established EcoDesign program, we continue to optimize the design of our products and solutions to increase energy efficiency and reduce emissions, and to reduce packaging. At the same time, we are stepping up our efforts in circular design. This means, from the outset of the product creation process, designing for less weight and for recycled content, as well as designing for serviceability, upgradability, modularity, recycling, parts recovery and/or refurbishment. And so the mindset horizon shifts from ‘today’ to ‘tomorrow and beyond’.
Business model innovation
Circular, service-oriented models are central to reducing waste and carbon emissions. In our field, they can help make healthcare more effective and efficient – and more sustainable. That’s why, at Philips, we have started to fundamentally redesign our business models.
With new periodic, usage- and outcome-based business models, we are moving from selling the physical product or system to offering its use ‘as a service’. Models like this have the added benefit of supporting multiple re-use and recycling, thus contributing to the sustainable use of resources.
Let me give an example that illustrates how all of this comes together.
One of our customers, a leading healthcare provider, is committed to becoming carbon-neutral. They have acquired an MRI scanner from us. The product has been refurbished: it is a pre-owned system that has been thoroughly upgraded and quality-tested. We have now leased it to the healthcare provider, who can access the solution’s potentially life-saving functionality without having to make the capital expenditure needed to own the product.