Climate Change Data

Environmental Metrics

ESG Focus Areas

• Packaging
• Sustainable Products
• Circularity
• Transparent Supply Chains

Environmental Achievements

• Development of brown cardboard packs with dedicated offline and online packs for IT Accessories. Online packs are full cardboard with brown cardboard inner tray.
• Partnership with Muirhead, a company that makes the world’s lowest carbon intensity leather (1.4kg of CO2 per hide), for leather products in Philips Fidelio audio products and Philips OLED TV remote control buttons.
• PPDS offering free software updates to extend the lifetime of its televisions, reducing WEEE.

Social Achievements

• Launched CSR Foundation to streamline community investment efforts, supporting projects linked to the UN SDGs.
• Partnership with Mercy Ships, providing displays, monitors, headphones, and soundbars for their eLearning program.
• Initiated a tender for a labor market communication provider to define an Employer Brand Strategy and develop a new vacancy website.

Governance Achievements

• Introduced a Sustainability Steering Committee with representatives from business units to discuss new projects and initiatives.
• Zero cases reported regarding anti-corruption and bribery.
• Implementation of data privacy protection procedures and regular employee trainings.

Climate Goals & Targets

Environmental Challenges

• Production facility closure in China due to Covid-19 pandemic.
• Postponement of marketing activities due to Covid-19 pandemic.

Mitigation Strategies

• Thinking outside the box, learning, and applying new things quickly to continue business growth.
• Intensive consumer research to understand sustainability's role in purchasing decisions.

Supply Chain Management

Supplier Audits: Annual audit/assessment regarding human rights themes (forced labor, child labor, minimum wage compliance, anti-discrimination).

Responsible Procurement

• TPV Supplier Code of Conduct; compliance with RBA/EICC Code of Conduct, ISO 45001, and ISO 14001; social responsibility agreement for new suppliers; audits on health & safety, human rights, and conflict minerals.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards (future goal)

Certifications: ISO 14001 (mentioned in relation to CO2 emission reduction)

UN Sustainable Development Goals

• 3
• 4
• 8
• 12
• 13

The report details how initiatives contribute to these goals.

Sustainable Products & Innovation

• Philips Fidelio audio products with Muirhead leather; Philips OLED TV remote control buttons with Muirhead leather; products with brown cardboard packaging.

Environmental Metrics

ESG Focus Areas

• Climate Change
• Circular Economy
• Green Supply Chain
• Labor Rights
• GHG Emissions Reductions
• Product Quality
• Customer Health and Safety
• Business Ethics and Compliance
• Data Privacy and Security
• Human Rights and Conflict Minerals
• Cooperation with Business Partners
• Communication and Transparency
• Biodiversity
• Supporting Local Communities
• Diversity and Inclusion
• Waste Water and Waste Management

Environmental Achievements

• Awarded an A- score in Carbon Disclosure Project (CDP)’s Supplier Engagement Rating
• Obtained a B ranking in the CDP climate change and water security questionnaire
• Joined the Science Based Targets initiative (SBTi), committing to reducing Scope 1 and Scope 2 emissions by 42%, and reducing Scope 3 emissions from the use of sold products by at least 42% by 2030 from 2020.
• Purchased 205,555 kWh of renewable electricity globally.
• Self-generated 1,324,141 kWh of renewable electricity through solar photovoltaic systems.
• Reduced energy consumption per product by 13.40%
• Reduced Scope 3 emissions by 8.76%

Social Achievements

• Launched the Online Spare Parts Web Shop in Europe, providing customers with effective repair and maintenance services for 10 years.
• Achieved 98.4% total customer satisfaction rate in 2021
• Achieved 98% after-sales satisfaction rate in 2021
• 100% of suppliers signed procurement contracts with clauses covering environmental, labour and human rights requirements.
• 100% of suppliers signed the Supplier Code of Conduct.
• No confirmed customer health and safety incidents.
• No work-related fatalities.
• Employee satisfaction in TPV manufacturing bases in China reached 75%.

Governance Achievements

• Established a three-level ESG governance structure comprising the Board of Directors, the ESG Committee, and the ESG Taskforce.
• Promulgated policies on equal work and promotion measures for all employees, including the disabled and pregnant women.
• Implemented digital transformation in customer service, manufacturing, and other business procedures.
• Established the service system in China using public cloud.
• Formulated the Corporate Policy for Information Security Management and TPV Information Protection Policy.

Climate Goals & Targets

Environmental Challenges

• Extreme weather events impacting manufacturing bases and supply chains.
• Supply chain disruptions.
• Water scarcity in different regions.
• Potential physical impacts of climate change on manufacturing bases (floods, supply chain interruptions, rising sea levels).

Mitigation Strategies

• Formulated measures for the management and emergency preparedness (Administrative Measures for the Prevention of Typhoon and Flood Prevention for Factories on the Mainland, and the Emergency Measures for Major Floods).
• Strengthened the treatment of domestic sewage, ensuring discharged water pollutants are up to standards, and improving recycling efficiency.
• Introduced a series of internal management institutions based on local conditions and commissioned qualified manufacturers to test water resources.
• Introduced various measures of water conservation (enhancing pipeline inspections, renovation of pipelines, water-saving faucets).

Supply Chain Management

Supplier Audits: 10% of product suppliers participated in third-party RBA on-site audits; 12.7% completed on-site CSR risk assessments and surveys.

Responsible Procurement

• Strict access policies for suppliers
• Evaluation of suppliers' labor, business ethics, product quality, and environmental management
• Requirement of ISO 9001 and ISO 14001 certifications
• Quality Contract and Procurement Contract with environmental protection requirements, energy saving, business ethics, and anti-corruption clauses
• Regular evaluations and audits of supplier performance
• Supplier Code of Conduct and Human Rights Policy

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather (typhoons, rainstorms, floods)
• Supply chain interruptions
• Rising sea levels

Transition Risks

• Regulatory changes
• Market shifts towards low-carbon products

Opportunities

• Development of energy-efficient products
• Expansion of renewable energy use

Reporting Standards

Frameworks Used: GRI Standards - Core option, Shenzhen Stock Exchange Guidelines for Social Responsibility of Listed Companies, UN Sustainable Development Goals (SDGs), UN Global Compact (UNGC) Ten Principles

Certifications: ISO 14001, ISO 27001, ISO 45001, ISO 50001, SA 8000, EPEAT (gold and silver ratings for Philips monitors, silver ratings for AOC monitors), FSC (Forest Stewardship Council)

Third-party Assurance: PricewaterhouseCoopers Zhong Tian LLP

UN Sustainable Development Goals

• Goal 3 (Good Health and Well-being)
• Goal 4 (Quality Education)
• Goal 8 (Decent Work and Economic Growth)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)

Initiatives contributing to these goals are detailed throughout the report.

Sustainable Products & Innovation

• Antibacterial remote control
• Philips displays with built-in air quality sensors
• Eco-friendly Philips monitors with PowerSensor and LightSensor technologies
• Philips TVs and audio products using sustainable fabrics from Kvadrat
• Philips monitors with recyclable materials

Awards & Recognition

• ESG Pioneer of the Year
• Golden Bridge Awards - Outstanding Enterprise for Corporate Social Responsibility of the Year
• Top 500 Chinese Enterprise in ESG
• ESG Pioneer 50 Index
• iF Design Award
• Red Dot Design Award
• ZOL Recommended Product Award
• 2021 Technology Excellence Award
• Recommended Product of 2021 Award
• Editor’s Choice Award of Popular Computer Week’s 2021 China Technology Billboard

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced TV packaging weight by 16% and CO2 emissions by 18% compared to 2021.
• Achieved a 3,202-ton CO2-eq reduction across the operational footprint.
• Reduced headphone packaging weight by 43% and CO2 emissions by 72% for certain models.
• Introduced eco-packaging with soy-based ink and air buffers replacing EPS.
• TAH8507 headphones are climate neutral certified.

Social Achievements

• Launched TPV Cares, a platform for community support.
• Partnered with Mercy Ships, The Explorers’ Foundation, KLABU, and Wings for Life.
• Supported dental care programs in Senegal and Guinea.
• Supported Scarlet Macaw conservation in Honduras.
• Partnered with Wings for Life World Run.

Governance Achievements

• Achieved a gold rating from EcoVadis (top 6% in the industry).
• Developed an ESG platform for data collection and auditability.
• Implemented a human rights risk assessment.
• Approved Science Based Targets (SBTi) for emissions reduction.
• Zero cases of anti-corruption and bribery reported.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• CSR Supplier Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: UN Global Compact, SBTi

Certifications: Climate Neutral Certification

Third-party Assurance: PwC

UN Sustainable Development Goals

• SDG 3 (Good Health and Well-being)
• SDG 4 (Quality Education)
• SDG 12 (Responsible Consumption and Production)
• SDG 13 (Climate Action)

Supporting initiatives related to health, education, responsible consumption and production, and climate action.

Sustainable Products & Innovation

• Green television/audio product (planned for 2025)

Awards & Recognition

• EcoVadis Gold Medal

Environmental Metrics

ESG Focus Areas

• Climate Change
• Circular Economy
• Sustainable Supply Chain
• Human Rights & Labor Rights
• Occupational Health & Safety
• Data Security & Customer Privacy Protection
• Product Quality & Safety
• Biodiversity

Environmental Achievements

• 34% reduction of Scope 1 and 2 emissions compared to the base year (2020)
• 49% reduction of Scope 3 - Cat 11 emissions compared to the base year (2020)
• 11,812 MWh of renewable energy consumption, representing a 49.2% increase compared to the previous year
• 772 low-carbon and energy-efficient products launched

Social Achievements

• 77% employee satisfaction rate
• 1,497 hours devoted in employee volunteer activities
• RMB 4,028,536 donated for public welfare
• 98.5% customer satisfaction with after-sales service in China

Governance Achievements

• Linked ESG performance to executive compensation
• Organized workshops for directors, supervisors, and senior executives
• Held ESG Taskforce meetings to establish a top-down, all-inclusive ESG governance structure

Climate Goals & Targets

Environmental Challenges

• Intensified global climate crisis, deterioration of ecological environment, and shortage of energy and resources
• Geopolitical instability, increased supply chain risks, and growing inequality
• Climate disclosure obligations
• Low carbon pricing
• Product carbon footprint
• Renewable energy
• Innovation in low-carbon technology
• Increased raw material costs
• Changes in the needs of customers and consumers
• Negative evaluation from stakeholders
• Negative supply chain events
• Typhoons, storms, etc.
• Abnormal temperature changes
• Sea level rise
• Increased water pressure

Mitigation Strategies

• Developed management and emergency preparedness measures
• Improved the resilience of buildings and manufacturing facilities to extreme weather
• Strengthened competence to manage carbon costs
• Improved the competitiveness of green products
• Maintained low emission levels
• Increased carbon asset advantage
• Enhanced the Company’s green competitiveness
• Set carbon reduction targets and measures
• Promoted energy conservation initiatives and technology development
• Adopted renewable energy to improve energy efficiency
• Managed carbon emissions throughout the product lifecycle
• Developed green products
• Explored new market opportunities
• Advocated green product R&D
• Expanded the green product portfolio
• Raised awareness of green products and sustainable consumption
• Supported suppliers’ carbon reduction efforts
• Strengthened supplier carbon management
• Integrated GHG emissions-related supplier requirements
• Monitored climate changes and risk warnings
• Optimized the geographical distribution of manufacturing bases and warehouses
• Improved flood resilience of infrastructure
• Established water management action targets
• Actively adopted water recycling technology
• Tracked and disclosed information related to water management

Supply Chain Management

Supplier Audits: 133 supplier RBA audits; 25.4% of key suppliers underwent third-party RBA on-site audits.

Responsible Procurement

• TPV CSR Supplier Code of Conduct
• Warranty on the Non-Use of Conflict Minerals
• Supplier ESG Survey
• Training on sustainable procurement and environmental protection

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons, storms
• Abnormal temperature changes
• Sea level rise
• Increased water pressure

Transition Risks

• Climate disclosure obligations
• Low carbon pricing
• Product carbon footprint
• Renewable energy
• Innovation in low-carbon technology
• Increased raw material costs
• Changes in customer needs
• Negative stakeholder evaluation
• Negative supply chain events

Opportunities

• Developing new markets with low-carbon products
• Enhanced corporate resilience to environmental risks
• Reduced carbon footprint
• Innovation of sustainable business development models
• Improved market competitiveness

Reporting Standards

Frameworks Used: GRI Standards, TCFD framework, TNFD framework, Reference Index System for ESG Report of Central Holding Listed Companies, Chapter VIII “Social Responsibility” of the Business Guidelines of Shenzhen Stock Exchange, UN Sustainable Development Goals (SDGs), UN Global Compact (UNGC) Ten Principles

Certifications: ISO 14001, ISO 45001, ISO 27001, ISO 50001

Third-party Assurance: PricewaterhouseCoopers Zhong Tian LLP; TÜV NORD (Hangzhou) Co., Ltd.

UN Sustainable Development Goals

• 7, 9, 12, 13

Initiatives contribute to these goals through various environmental, social, and governance programs.

Sustainable Products & Innovation

• Energy-efficient products (PowerSensor, LightSensor, ZeroWatts)
• E-paper displays
• Solar-charging earphones
• Recyclable materials in products and packaging

Awards & Recognition

• EcoVadis Gold Medal (two consecutive years)
• Central SOE of China • ESG Pioneer Index (three consecutive years)
• CDP Climate Change rating B
• CDP Water Security rating A-
• EPEAT Climate+ Champion
• UL2799 Platinum Rating for Zero Waste to Landfill