Brighter Lives, Better World at Philips Lighting

“Less is more” might just be the operating philosophy of Philips Lighting as it launches its five year sustainability programme to accelerate consumer shift to LED lighting and connected lighting systems. While many companies are focused on shifting their electricity usage to renewable energy sources, Philips Lighting is changing the rules of the game altogether by improving energy efficiency of its products. Brighter Lives, Better World aims to “help to create a better world where customers can reduce their electricity use by up to 80%.”

This will mark the first time Philips Lighting has set sustainability goals as a standalone, listed company, apart from its parent. As a corporate, Philips Lighting also aims to achieve 100% carbon neutral operations and 100% renewable electricity usage by 2020. The company also aims, by 2020, to achieve 80% of its turnover from products, systems, and services that provide environmental and social benefits.

Far from an existential threat, climate change is a source of tremendous opportunity for Philips Lighting to serve the global community. As Eric Rondolat, CEO Philips Lighting, explained speaking at the Climate Week NYC:

“We have firm goals for 2020 which include improving energy efficiency, reducing waste through circular lighting and delivering access to light in off-grid areas. We are convinced that we can combat climate change and reduce global energy demand through our commitment to sell more than two billion LED light points by 2020. For us, sustainability is a double win: a driver for economic growth and a means of advancing the planet.”

Good business and good corporate citizenry appears to be aligned at Philips Lighting, but not without its challenges. The company’s commitment to sell more than two billion LED light points by 2020 is predicated on sales to large property developers. As buildings account for approximately 40 percent of all global energy usage, renovation of existing building stock and new building technologies can help drive demand as well as achieve energy efficiency and emissions reductions. Philips Lighting’s success will depend in no small part on its ability to form strong partnerships with key large customers.

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At the consumer level, the company is teaming up with mobile internet companies, such as Xiaomi in China, to create connected LED lighting units built for wireless smart home platforms. The effort also includes Android and iOS smartphone apps to control the lights. The products will be sold through Xiaomi, which is selling several of Philips Lighting’s smart LED lighting units already. Philips Lighting’s partnership with a local mobile internet carrier appears to be a credible way to break into a large new consumer market and establish presence, however actual consumer take up remains to be seen.

Philips Lighting is an example of a company that has embraced climate change as a spur to innovation and growth. Its business model of providing efficient LED electricals is particularly salient in an energy conscious environment. Its challenges are utilising its current technological know-how in achieving scale and winning market share in new and growing markets.

By aligning climate change activities with its business plan, Phillips is building its own paradigm of “doing well by doing good”. In 2015, Philips was recognized as a world leader for corporate action on climate change, achieving the highest score in the CDP Climate Change survey for the third year in a row. With its recent commitment to selling 2 billion LED lamps by 2020, Philips Lighting will help reduce the global demand for energy equivalent to that of 60 medium-sized, coal-fired power stations with emissions equivalent to 24 million cars.