Royal Philips

ESG governance

Reference: page 40 (Environmental, Social and Governance: ESG governance); page 48 (Corporate governance); page 64 (Supervisory Board report); page 268 (Other Board-related matters: Diversity).

Royal Philips has a two-tier board structure consisting of a Board of Management and a Supervisory Board, each accountable to the General Meeting of Shareholders. The Board of Management is entrusted with the management of the company; the Executive Committee supports the Board of Management.

Board of Management members (2024):

• Roy Jakobs – Chief Executive Officer and Chair of the Board of Management and Executive Committee
• Charlotte Hanneman – Chief Financial Officer
• Marnix van Ginneken – Chief ESG & Legal Officer

ESG responsibility allocation: The Board of Management, including the Chief ESG & Legal Officer, is responsible for the design and management of Philips' 2020–2025 ESG plan. The Board typically convenes the Group Sustainability team and (where relevant) Business, Region or Function leaders four times per year on ESG matters. During these meetings the Board of Management defines Philips' ESG strategy, commitments, programs, action plans and policies, oversees major transactions, monitors progress, and takes corrective action.

Supervisory oversight: Ultimate oversight of the ESG dimensions and their integration into the company's overarching strategy is a responsibility of the Supervisory Board as a whole. While retaining this overall responsibility, the Supervisory Board is supported by the Audit Committee, which meets quarterly to discuss significant developments in impacts, risks and opportunities, developments in ESG reporting, and other relevant topics. The Supervisory Board as a whole has sufficient ESG and sustainability-related expertise relevant to the health technology sector.

Both the Board of Management and the Supervisory Board leverage relevant expertise through their direct access to the Group Sustainability team and external experts.

Information flow on sustainability matters

Reference: page 40 (Environmental, Social and Governance: ESG governance).

Progress on ESG is communicated internally and externally on Philips' results website on a quarterly basis and at least annually to the Executive Committee and the Supervisory Board. The Audit Committee of the Supervisory Board meets quarterly to discuss significant developments in impacts, risks and opportunities, developments in ESG reporting, and other relevant topics.

The Board of Management is informed at least twice a year (and the Audit Committee of the Supervisory Board likewise) on relevant General Business Principles (GBP) metrics, cases, trends and learnings. The Quality & Regulatory Committee of the Supervisory Board conducts quarterly reviews of patient safety and quality matters. The IT Audit & Risk Committee prepares quarterly cybersecurity reports for the Board of Management and Supervisory Board.

In 2024, sustainability matters addressed by the bodies included: progress against 2020–2025 ESG program targets; the third Double Materiality Assessment; the Climate Transition plan; Science Based Targets revision; Human Rights Saliency Assessment outcomes; the People Engagement Survey results; SpeakUp (Ethics Line) trends (805 concerns in 2024); progress on Lives improved (1.96 billion in 2024) and on Circular revenues (24.4%); GBP update; and CSRD/ESRS implementation readiness.

Integration of sustainability-related performance in incentive schemes

Reference: page 76 (Remuneration Report: Non-financial Annual Incentive); page 80 (Remuneration Report: Long-term Sustainability objectives); page 170 (ESG governance, strategy and policies: Governance).

Roles covered

The scheme applies to the Board of Management and is cascaded to Executive Committee members and broader senior management through similar structures.

Short-term incentive (STI) – Non-financial Annual Incentive

The Annual Incentive plan includes a non-financial (ESG) component. ESG index realization in 2024 was reported as significantly ahead of target across the BoM scorecards. The non-financial component covers progress against Philips' 2020–2025 ESG commitments, including:

• Employee Engagement Index
• Lives improved
• Patient safety & quality metrics

Long-term incentive (LTI) – Long-term Sustainability objectives

The LTI includes long-term ESG/sustainability objectives. Performance metrics tied to the LTI include:

• Women in senior management positions (target: 35% by 2025; 33% achieved 2024)
• % of suppliers committed to Science Based Targets (target: 50% by 2025; 48% achieved 2024)
• Lives improved in medically underserved communities (target: 300 million by 2025; 242 million achieved 2024)

Oversight

The Remuneration Committee of the Supervisory Board sets and reviews the incentive metrics and target levels and reports outcomes through the Remuneration Report. The Board of Management's ESG performance scorecards are reviewed quarterly.

Statement on due diligence

Reference: page 40 (ESG governance); page 58 (Governance: Financial reporting and sustainability reporting).

Philips' due diligence on sustainability matters is anchored in the General Business Principles (GBP), the Human Rights Policy, the Supplier Sustainability Declaration (SSD), the Regulated Substances List (RSL), and topic-specific policies (Environmental Policy, Occupational Health & Safety Policy, Fair Employment Policy, Diversity & Inclusion Policy, SpeakUp Policy).

The approach follows the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises. Philips has been a signatory to the UN Global Compact since 2007.

Due diligence elements mapped to the sustainability statement:

• Embedding due diligence in governance, strategy and business model – ESG governance section
• Engaging with affected stakeholders – Double Materiality Assessment process and Working with stakeholders and advocacy
• Identifying and assessing adverse impacts – DMA, Human Rights Saliency Assessment (2023–2024), Risk Assessment Platform for suppliers, Beyond Auditing program
• Taking actions to address adverse impacts – Supplier Sustainability Program, Climate Transition Plan, Code of Conduct training, Conflict Minerals due diligence
• Tracking effectiveness – GBP monitoring program, SpeakUp investigations, ESG commitments tracking on results hub

In 2024 Philips conducted its third Double Materiality Assessment and continued to roll out the management response to the 2023–2024 Human Rights Saliency Assessment.

Risk management and internal controls over sustainability reporting

Reference: page 54 (Governance: Working with stakeholders and advocacy); page 170 (ESG governance, strategy and policies: Strategy).

Philips' internal control framework over sustainability reporting is integrated with its broader internal control over financial reporting (ICFR), which is assessed under the COSO 2013 framework. The Board of Management is responsible for establishing and maintaining adequate internal controls; the Audit Committee oversees both financial and sustainability reporting controls.

Key elements specific to sustainability reporting:

• CSRD Steering Committee – internal experts from Enterprise Risk Management, Group Control, Internal Audit, Legal, Insurance and Risk Management, People Function, and Sustainability – calibrates double materiality outcomes and aligns them with Enterprise Risk Management
• Sustainability reporting system – data is reported and validated each month for environmental KPIs (energy, waste, water, emissions, H&S)
• Coverage above 98% for Health & Safety reporting; smaller non-reporting offices excluded due to insignificance
• Reporting based on internal methodologies aligned to GHG Protocol, SBTi guidance, Anker/WageIndicator for living wage, and ESRS definitions
• All ESRS datapoints in the cross-reference table are subject to limited assurance by EY (with selected datapoints in scope of reasonable assurance, indicated in the table)
• Forward-looking information is subject to inherent uncertainty and not part of the assurance scope

Identified sources of estimation and outcome uncertainty (per Basis for preparation):

• Scope 3 emissions (especially Category 11 Use of sold products – methodology version 2024)
• Lives Improved methodology
• Environmental Profit & Loss and Material Flow methodology

Strategy, business model and value chain

Reference: page 54 (Governance: Working with stakeholders and advocacy); page 170 (ESG governance, strategy and policies: Strategy).

Purpose: Royal Philips' purpose is to improve people's health and well-being through meaningful innovation. The company aims to improve the lives of 2.5 billion people a year by 2030, including 400 million medically underserved individuals.

Business segments:

• Diagnosis & Treatment – imaging systems, image-guided therapy, ultrasound, enterprise diagnostic informatics (24,544 FTEs end 2024)
• Connected Care – monitoring & analytics, sleep & respiratory care, enterprise informatics (16,829 FTEs)
• Personal Health – personal grooming, oral healthcare, mother & child care (7,991 FTEs)
• Other – includes corporate functions and research (18,459 FTEs)

Workforce: 66,678 employees at end of 2024 (2023: 69,656); 1,741 contingent workers. Philips completed its previously announced plan to reduce workforce by 10,000 roles globally by 2025.

Geographic footprint: Headquartered in Amsterdam, with key manufacturing and R&D locations in the Netherlands (Eindhoven/Best/Drachten), United States, Greater China, Germany, and the Indian Subcontinent.

Value chain:

• Upstream: approximately 4,400 product and component suppliers and 15,100 service providers; top 35 suppliers represent ~80% of sourcing spend
• Own operations: design, manufacturing, R&D, sales, customer services
• Downstream: hospitals, clinical providers, consumers; product use phase dominates lifecycle impact (48% of EP&L; majority of GHG emissions in Scope 3 Category 11 Use of sold products)

Sustainability-related products/services:

• Circular revenues: 24.4% of total revenues 2024 (target 25% by 2025)
• EcoHero revenues: 21.9% of hardware revenues 2024 (target 25% by 2025)
• EcoDesigned NPIs: 100% of new product introductions 2024 (target 100% by 2025)

Interests and views of stakeholders

Reference: page 54 (Governance: Working with stakeholders and advocacy); page 170 (ESG governance, strategy and policies: Strategy).

Philips actively engages with stakeholders aligned with its purpose to improve people's health and well-being through meaningful innovation.

Key stakeholder groups

• Employees and prospective talent
• Customers (hospitals, clinical providers, consumers) and patients/end-users
• Suppliers and value chain partners
• Investors and shareholders
• Regulators and policy makers
• NGOs, civil society, and local communities
• Industry associations (Semiconductor Climate Consortium-adjacent peers, DITTA, RBA, RMI, CDP)

Engagement mechanisms

• People Engagement Survey (PES) – 84% response rate in 2024, almost 58,000 employees participated; EEI 78% (up from 73% in 2023)
• DMA validation survey – sent to more than 300 internal and external stakeholders; 117 responses from a representative group
• Working with stakeholders and advocacy – year-round engagement including with customers, NGOs, and regulators
• SpeakUp (Ethics Line) – 805 concerns reported in 2024 (1.7 per 100 employees)
• Supplier Sustainability – CDP Supply Chain (504 suppliers in 2024, 88% response rate), Supplier Day, Beyond Auditing
• Advocacy – DITTA, ATACH, COP29, COP16, World Health Assembly, UN General Assembly participation

How stakeholder input informs strategy

Stakeholder inputs inform Philips policies in their objectives and governance. The 2024 DMA used data from 21 key suppliers, 37 customers, 32 peer companies and 72 countries, plus internal subject matter experts. The Board of Management, Executive Committee and Supervisory Board calibrated and approved the DMA results.

Material impacts, risks and opportunities

Reference: page 54 (Governance: Working with stakeholders and advocacy); page 170 (ESG governance, strategy and policies: Strategy); page 174 (Sustainability statement: IRO Table); page 188 (Climate change: Impact, risk and opportunity management).

Material topics identified through the 2024 DMA

Philips reports on the topical standards: E1 (climate change), E5 (resource use and circular economy), S1 (own workforce), S2 (workers in the value chain), S4 (consumers and end-users), G1 (business conduct) plus a number of entity-specific topics (product responsibility, product safety, big data/AI/cybersecurity, geopolitical events, business ethics, tax transparency).

Not material topics

• E2 Pollution, E3 Water and marine resources, E4 Biodiversity and ecosystems – not material per the DMA, supported by Philips' EP&L, the Climate Resilience report, and the TNFD report.
• S3 Affected communities – not material; current stakeholder consultation process deemed sufficient.
• Within S1: child labor, forced labor, and adequate housing were assessed as not material.

Key impacts, risks and opportunities by topic (excerpts from IRO table)

• Climate change (E1): negative impact via GHG emissions across value chain (own operations + value chain); physical and transitional risks; opportunity to grow via energy-efficient EcoDesigned products.
• Energy efficiency (E1): material risk and opportunity – competitive position depends on energy-efficient equipment.
• Circular Economy (E5): negative impact from resource extraction; risks of resource scarcity and meeting customer demand; opportunity to expand circular practices.
• Waste management (E5): negative impact from waste in own operations and the world's fastest-growing electronics waste stream.
• Fair & Inclusive workplace (S1): positive impact; opportunity to strengthen engagement.
• Employee rights (S1): positive impact; risk of fines and reputational damage.
• Employee well-being, H&S (S1): positive impact, negative impact from work-related incidents; H&S risk.
• Talent & development (S1): positive impact; opportunity to strengthen relationships.
• Human Rights (S1 and S2): material negative impact in operations and supply chain; material risk in supply chain.
• Responsible & resilient supply chains (S2 and G1): positive impact via supplier engagement; risk of revenue and reputational damage.
• Access to (quality & affordable) care (S4): material positive impact; opportunity via partnerships.
• Product responsibility & safety (S4): material negative impact and risk of fines, reputational damage, legal costs.

Philips has not identified any actual material risks and opportunities expected to have current financial effects on financial position, cash flows and carrying value of assets and liabilities reported within the next annual reporting period.

Processes to identify and assess material IROs

Reference: page 171 (Sustainability statement: Double Materiality Assessment).

The 2024 DMA is the third Philips has conducted. The 2023 DMA served as the starting point. The process used an evidence-based approach powered by a third-party AI-based application, updated in 2024 to address the CSRD requirements.

Inputs

• Data from 21 key suppliers, 37 customers, 32 peer companies and 72 countries
• Automated analysis of millions of data points from publicly available sources including corporate reports, mandatory regulations, voluntary initiatives, and news
• Internal subject matter experts via workshops

Steps

1. Created a long list of sustainability topics from AI analysis
2. Narrowed to 32 most relevant topics via internal SME workshops; clustered into 20 topics to avoid overlaps; mapped against the value chain
3. Defined and assessed IROs related to the topics, connected to strategy and business model
4. Materiality of negative impacts assessed on scale, scope and irremediable character; materiality of positive impacts assessed on scale and scope; most impacts assessed as 'actual' rather than 'potential'
5. For risks and opportunities, assessed dependencies on natural, human and social resources; materiality based on combination of likelihood and potential magnitude of financial effects
6. Materiality thresholds primarily qualitative, quantitative where possible
7. Validation survey sent to more than 300 internal and external stakeholders; 117 responses received
8. Calibrated with the CSRD Steering Committee (Enterprise Risk Management, Group Control, Internal Audit, Legal, Insurance and Risk Management, People Function, Sustainability) and aligned with the Enterprise Risk Management assessment
9. Results approved by the Board of Management and the other Executive Committee members, followed by the Supervisory Board

Topic-specific IRO processes

• For climate (E1): see Climate Resilience report; physical and transition risk scenarios assessed
• For resource use and circular economy (E5): Material Flow analysis and EP&L statement used as inputs
• For own workforce (S1): Human Rights Saliency Assessment 2023–2024 used; engagement of internal and external stakeholders
• For value chain workers (S2): Risk Assessment Platform scoring regions on five pillars (Labor, H&S, Environment, Business Ethics, Management Systems)
• For business conduct (G1): SpeakUp data and GBP monitoring program inputs

Calibration outcome: Financial materiality of most Environmental topics increased compared with initial assessment. On Social topics, financial impact of Human rights increased the most, followed by Fair & inclusive workplace. Product responsibility & safety, Geopolitical events, Big data, AI and cybersecurity, and Business ethics & general business principles were assessed to have the highest financial materiality, similar to 2023.

Disclosure requirements covered

Reference: page 171 (Sustainability statement: Double Materiality Assessment); ESRS cross-reference table (pages 243–249).

Philips' sustainability statement includes by reference Chapter 4 (Environmental, Social and Governance) and selected other sections referenced in the ESRS cross-reference table.

Topical standards reported on

• ESRS 2 – General disclosures (BP-1, BP-2, GOV-1 to GOV-5, SBM-1 to SBM-3, IRO-1, IRO-2)
• ESRS E1 – Climate change (E1-1 to E1-8; E1-9 subject to phase-in provision)
• ESRS E5 – Resource use and circular economy (E5-1 to E5-5; E5-6 subject to phase-in provision)
• ESRS S1 – Own workforce (S1-1 to S1-17)
• ESRS S2 – Workers in the value chain (S2-1 to S2-5)
• ESRS S4 – Consumers and end-users (S4-1 to S4-5)
• ESRS G1 – Business conduct (G1-1 to G1-6)

Topical standards assessed as not material

• ESRS E2 (Pollution), ESRS E3 (Water and marine resources), ESRS E4 (Biodiversity and ecosystems), ESRS S3 (Affected communities)

Entity-specific disclosures

• Environmental Profit & Loss (EP&L) account
• Green/EcoDesigned Innovation (NPI and spend)
• EcoHero Revenue
• Circular Revenue
• Circular Materials Management
• Closing the Loop
• Zero Waste to Landfill
• Women in leadership positions
• Employee Engagement Index
• Living wage
• Human rights impact assessments
• Supplier Sustainability Program
• Lives improved
• Product responsibility & Safety
• Big data & privacy / Cybersecurity
• Competition & Market access
• Geopolitical events
• Tax transparency

Assurance

Limited assurance provided by EY Accountants B.V. on the full sustainability statement; reasonable assurance provided on selected datapoints (indicated in the cross-reference table) including SBM-3 (material IROs), IRO-1 climate/E5, E1-2 (policies), E1-5 (energy), E1-6 (gross GHG emissions), E1-7 (carbon credits), E1-8 (internal carbon pricing), E5-1 to E5-5 (selected), S1-6, S1-8, S1-9, S1-14, S1-17, G1-1, G1-3, G1-4, EP&L, EcoDesigned NPI spend, EcoHero Revenue, Circular Revenue, Closing the Loop, Circular Materials Management, Women in leadership, Supplier Sustainability Program, Tax transparency.

Philips transition plan for climate change mitigation

Reference: page 189 (Climate change: Philips transition plan).

Together with customers and suppliers, Philips aims to reduce its collective carbon footprint and build a more sustainable and resilient healthcare industry, in line with a 1.5°C scenario as validated by SBTi. The plan is embedded in business strategy and financial planning. The Climate Resilience report (approved by the administrative, management and supervisory bodies) provides the underlying assumptions.

Core objectives (prioritized by potential impact)

1. Designing energy-efficient products and collaborating with customers on use-phase emissions – since most climate impact occurs downstream during product use, the EcoDesign program covers energy efficiency as a key focus. Approach assumes electrical grids decarbonize in line with the IEA's Stated Policy Scenario (SPS) or Announced Pledge Scenario (APS).
2. Collaborating with suppliers to reduce supply-chain emissions – via the CDP Supply Chain program (504 suppliers engaged in 2024, 88% response rate) and Supplier Sustainability program; encouraging suppliers to set Science Based Targets (target: 50% by 2025; achieved 48% in 2024).
3. Reducing emissions from logistics – Sustainable Logistics program: shifting air to ocean, reducing chargeable weight per EcoDesign, transitioning to alternative fuels (electric, biofuel).
4. Transitioning to lower-carbon energy at own sites – reducing natural gas consumption (e.g., geothermal/district heating, biofuels) and increasing renewable electricity (80% renewable energy share in 2024, achieved 2025 ambition of 75%).
5. Increasing circular practices and responsible waste management – per the waste hierarchy; target zero waste to landfill (2024: 0%; target less than 0.5%).
6. Responsible reuse of products and parts at end of use – refurbishment and responsible takeback.

Expected emission reductions vs. 2020 baseline (Scope-by-scope)

Capital expenditure linked to climate transition

No capital expenditures have been made related to coal, oil or gas-related economic activities. No site-related investments in 2024 with significant locked-in GHG emissions that might impede renewable energy or emission-related targets. New long-term Power Purchase Agreements signed in 2024 secure future renewable energy delivery (e.g., second direct renewable deal in China in December 2024).

Paris alignment

Near-term Scope 1 & 2 targets (75% by 2030 vs 2015 baseline) and long-term targets (90% by 2040) are SBTi-validated. Scope 3 target (42% reduction by 2030 vs 2020 baseline) is also SBTi-validated.

Policies related to climate change mitigation and adaptation

Reference: page 180 (Double Materiality Assessment: Policy Overview); page 183 (Climate change: Policies, metrics and targets).

Environmental Policy

Scope: All Philips Businesses, Regions and Functions globally; cascaded to suppliers via the Supplier Sustainability Declaration.

Key content:

• Commitment to reduce full value chain emissions in line with the Paris Agreement 1.5°C scenario
• Building Philips' adaptive capacity to climate-related physical and transition risks
• Three improvement levers integrated into the Climate Transition Plan: energy efficiency, renewable energy switching, residual emission offsetting
• Carbon neutral operations since 2020 maintained through carbon offsetting program (Scope 1, 2, and Scope 3 business travel and transportation & distribution)

Links to international standards:

• Paris Agreement (1.5°C)
• SBTi-validated near-term and long-term targets
• IEA Stated Policy Scenario (SPS) and Announced Pledge Scenario (APS) used for assumptions
• GHG Protocol Corporate Standard for measurement
• RE100 for renewable energy quality criteria

Governance: The Board of Management, including the Chief ESG & Legal Officer, adopts the Climate Transition Plan. The Audit Committee of the Supervisory Board reviews progress quarterly. Group Sustainability team is the day-to-day owner; topic owners identified (Real Estate/Procurement for sites; EcoDesign/Markets/Circular Economy for use phase; Supplier Sustainability and Procurement for purchased goods and services; Finance/Procurement for travel).

Public availability: Environmental Policy available at the Philips ESG downloads page.

Monitoring: Annual environmental performance reporting; monthly data validation through sustainability reporting system; ISO 14001 certified at 100% of reporting manufacturing sites (2024).

Actions and resources for climate change

Reference: page 184 (Climate change: Actions associated with climate change); page 194 (Climate change: Resources allocated to climate change).

Actions – Own operations (Scope 1 & 2)

• Energy efficiency at manufacturing sites and offices – led by Real Estate function; investments in cooling, lighting, building envelope, heat pumps
• Renewable electricity sourcing – multiple PPAs including Los Mirasoles (US wind), Krammer and Bouwdokken (Netherlands wind), Mutkalampi (Finland wind, added 2023/2024), Pontinia (Italy solar, added 2023/2024), first China direct renewable deal (Dec 2023), second China deal (Dec 2024). Unbundled EACs purchased for remaining demand per RE100 recommendations.
• Natural gas reduction – moving towards geothermal and renewable district heating/cooling and exploring biofuels
• Carbon offsetting – unavoidable Scope 1, 2 and Scope 3 business travel/transportation & distribution offset annually via carbon credits to maintain carbon-neutral operations since 2020 (474 kt CO2-e cancelled in 2024)

Actions – Use phase (Scope 3 Cat 11)

• EcoDesign program – 100% of NPIs EcoDesigned in 2024 (target met); embeds energy efficiency at the design stage
• Customer collaboration – supporting customers' transition to renewable energy (e.g., Champalimaud case)
• Energy efficiency roadmaps per business unit

Actions – Purchased goods and services (Scope 3 Cat 1)

• CDP Supply Chain – 504 biggest suppliers engaged in 2024 (88% response rate); 59% of responding suppliers in emission-reduction initiatives; 51% with committed carbon targets; suppliers reported 37 Mt CO2-e savings from 2024 improvement projects
• Supplier Sustainability program – sustainability declaration, Beyond Auditing, capability building
• Target: 50% of suppliers by spend committed to Science Based Targets by 2025 (achieved 48% in 2024; 46% in 2023)

Actions – Logistics (Scope 3 Cat 4 & 9)

• Sustainable Logistics program – modal shift air-to-ocean, route optimization, fleet decarbonization, sustainable aviation fuel pilot, alternative fuels (electric, biofuel)
• EcoDesign lever – reducing chargeable shipping weight

Resources

No capex made related to coal, oil or gas activities. No site-related investments in 2024 with significant locked-in GHG emissions. Climate-related capex is embedded in real estate and product R&D budgets. Detailed quantified resource amounts are reported in the Resources allocated to climate change section.

Targets related to climate change mitigation and adaptation

Reference: page 183 (Climate change: Policies, metrics and targets); page 189 (Climate change: Designing energy-efficient products).

SBTi-validated absolute contraction targets

Performance vs. baselines (2024):

• Scope 1 & 2 emissions: 33,543 t CO2-e (Scope 1) + 2,179 t CO2-e (Scope 2 market-based) = ~35.7 kt vs. 2015 baseline reduced by 85% – on track for 2030 target
• Scope 3: 12% reduction vs. 2020 baseline – 110 kt CO2-e of reduction still required to reach 2030 target (excluding any carbon credits)

2020–2025 ESG program quantitative climate-related targets

Carbon offsetting

Philips uses verified carbon credits to maintain carbon-neutral operations (Scope 1, 2 and selected Scope 3) but treats offsetting as supplementary to absolute reductions. 474 kt CO2-e cancelled in 2024 (2023: 418 kt; 2022: 438 kt).

Philips' energy consumption and mix

Reference: page 184 (Climate change: Philips' energy consumption and mix).

Total energy consumption (MWh)

Key 2024 observations

• Total energy demand increased by 2% compared to 2023, primarily due to employees going to the office more frequently
• Self-generated non-fuel renewable energy increased by 45% compared to 2023
• Achieved 80% renewable energy in 2024, exceeding the 2025 ambition of 75%
• Energy intensity: 25.78 MWh/EUR million sales (2023: 25.18) – slight 2% decline due to office attendance
• Total Sales (high climate impact sectors per NACE code C26.6): EUR 16,848 million (2024)

Philips' gross Scopes 1, 2, 3 and Total GHG emissions

Reference: page 185 (Climate change: Philips' gross Scopes 1, 2, 3 and Total GHG emissions).

Scope: Philips reports on its full value chain emissions covering approximately 96% of Scope 1, 2 and 3 emissions. Compared to 2023 no changes to reporting scope, ensuring comparability. Main 2024 adjustment: splitting upstream from downstream transportation and distribution.

Carbon footprint by Scope and category (tonnes CO2-equivalent)

Progress against SBT targets

• Scope 1 & 2 reduced 85% vs. 2015 baseline – 7 kt CO2-e additional reduction needed for 2040 target
• Scope 3 reduced 12% vs. 2020 baseline – 110 kt CO2-e additional reduction needed for 2030 target (excluding any carbon credits)

Methodology

• Greenhouse Gas Protocol Corporate Standard
• Scope 1 base year 2015 (earliest feasible measurement date)
• Scope 3 base year 2020 (relative stability in customer base and emissions profile despite COVID-19)
• 5% threshold for baseline restatement per SBTi guidance
• Internal carbon pricing methodology version 2024 (Note XIII)

GHG removals and carbon credits

Reference: page 187 (Climate change: Philips' GHG removals and GHG mitigation projects financed through carbon credits).

Since 2020, Philips has been carbon-neutral in its own operations (Scope 1, Scope 2, and Scope 3 business travel and transportation & distribution). Although carbon reduction is prioritized, a comprehensive carbon offsetting program is still necessary to maintain operational carbon neutrality.

Carbon credits cancelled (kt CO2-equivalent)

Approach

The carbon offsetting program covers Scope 1, Scope 2, and selected Scope 3 categories (business travel and transportation & distribution). The 2024 operational footprint increased compared with 2023 driven by increased air travel (employees meeting with customers) and a significant uplift in air freight emission factors. Philips introduced new KPIs to reverse this trend.

The carbon credits comprise verified credits cancelled against recognized standards. Philips views carbon credits as a complement to – not a substitute for – absolute emission reductions, which remain the primary lever per the SBTi-validated transition plan.

The report does not split the 474 kt CO2-e between nature-based and tech-based removals, nor between Voluntary Carbon Markets registries (e.g., Verra, Gold Standard); these details are referenced in the methodology document on the Philips ESG website.

Philips' Internal carbon pricing

Reference: page 188 (Climate change: Philips' Internal carbon pricing).

Philips uses an internal carbon pricing mechanism to integrate the climate cost of carbon into investment decisions, business cases for real estate and product development, and supplier evaluation. The mechanism supports decarbonization decisions tied to the SBTi targets.

Scope of application:

• Investment decisions for own sites (Scope 1 & 2)
• Product development decisions affecting use-phase emissions (Scope 3 Cat 11)
• Supplier evaluation and engagement in the Supplier Sustainability program (Scope 3 Cat 1)
• Logistics decisions affecting Scope 3 Cat 4 and 9

Use: The internal carbon price is a shadow price (not a direct monetary flow) and is used to assess business cases, prioritize energy efficiency and renewable energy investments, and evaluate trade-offs in product design and logistics (e.g., air vs. ocean freight). Internal carbon pricing is one of the mechanisms supporting Philips' achievement of SBTi-validated targets.

Philips reports under the entity-specific 'Operational Carbon Footprint' that internal carbon pricing is part of its broader climate action governance, and is referenced as a mechanism in the metrics framework (Note XIII).

Note: The annual report excerpts confirm the existence and scope of the internal carbon pricing mechanism but do not disclose the specific monetary price per tonne CO2-e applied in 2024 in the text inspected. Additional detail is available in the methodology documents on the Philips ESG downloads page.

Policies related to resource use and circular economy

Reference: page 180 (Double Materiality Assessment: Policy Overview); page 196 (Resource use and circular economy: Policies, metrics and targets).

Environmental Policy (extending to E5)

Scope: All Philips Businesses, Regions and Functions globally; cascaded to suppliers via the Supplier Sustainability Declaration.

Key content:

• Embedding EcoDesign in product development to address energy, substances, circularity and packaging at the design stage
• Driving circular revenues (products, services and solutions contributing to circularity, including refurbishment, take-back, parts reuse)
• Reducing reliance on virgin raw materials via circular material flows
• Maintaining Zero Waste to Landfill in own operations as part of the 2020–2025 ESG program
• Closing the Loop on professional medical equipment (achieved for large medical equipment; extension to small medical equipment planned)

Links to international standards: SDGs 12 (Responsible Consumption and Production) and 13 (Climate Action); Ellen MacArthur Foundation principles; ESRS E5.

Governance: Topic owners – EcoDesign and Circular Economy teams within the Group Sustainability function, in collaboration with Business Units (D&T, CC, PH) and Supplier Sustainability/Procurement.

Monitoring: Annual ESG program tracking; ISO 14001 certified at 100% of reporting manufacturing sites in 2024.

Actions related to resource use and circular economy

Reference: page 198 (Resource use and circular economy: Actions); page 200 (Allocated Resources to Resource use and circular economy).

EcoDesign program

• 100% of NPIs are EcoDesigned in 2024 (2025 target met)
• EcoDesign focuses on four areas: energy, substances, circularity, packaging
• Builds Green/EcoDesigned/EcoHero and Circular product portfolio
• Driven by Life Cycle Assessments (LCAs) – Philips has been performing LCAs since 1990

Refurbishment and remanufacturing

• Refurbished large medical equipment (e.g., MRI, CT, image-guided therapy systems) offered to extend useful life
• 'Closing the Loop' KPI: more than 8,600 systems or pieces of equipment in 2024 (achieved for large medical equipment; extending to small medical equipment per 2025 target)

Take-back and end-of-life management

• Responsible take-back commitment on all professional medical equipment by 2025
• Recovered material flows feed back into manufacturing via the Circular Materials Management metric (94% in 2024)

Zero waste to landfill

• 2024: 0.0% of total regular waste sent to landfill (2025 target: less than 0.5%)
• Embedding circular practices at manufacturing sites

Supplier collaboration

• Material reuse promoted via Supplier Sustainability program
• Light-weight and sustainable material design specifications cascaded to suppliers

Resources

The implementation of the EcoDesign and Circular Economy programs is performed by dedicated teams within Group Sustainability and the Business Units. Operating expenditure (OpEx) is embedded in the relevant Business Unit budgets; no material standalone capital expenditure (CapEx) is required beyond standard R&D and Real Estate budgets. No significant change in OpEx/CapEx is expected in the short-, medium- or long-term.

Targets related to resource use and circular economy

Reference: page 196 (Resource use and circular economy: Policies, metrics and targets).

Methodology and scope

• EcoDesigned NPIs: Each NPI required to meet EcoDesign criteria across energy, substances, circularity, packaging
• Circular revenues: Propositions qualifying for circular revenues must comply with circular design, circular material use and/or circular end-of-use management criteria; reported as % of total revenue
• EcoHero revenues: Subset of Green/EcoDesigned propositions with leadership performance against peer benchmarks
• Closing the Loop: Counts large medical equipment systems and pieces of equipment that are taken back; 2024 count of 8,600+ vs. 2023 11,500 reflects market mix
• Circular Materials Management (CMM): Share of materials managed through circular flows in Philips' manufacturing operations

Stakeholder involvement in target setting

Targets were set through the Executive Committee with input from internal experts, customer engagement and review of international standards (e.g., World Economic Forum International Business Council common metrics, GRI).

Resource inflows

Reference: page 196 (Resource use and circular economy: Policies, metrics and targets); page 203 (Material Flow reporting methodology).

Scope

Resource inflows cover materials, components, packaging and consumables entering Philips' manufacturing operations across Diagnosis & Treatment, Connected Care, Personal Health and Other segments. The Material Flow methodology (version 2024) is published on the Philips ESG downloads page.

Inflow categories and material composition

• Electronic components and printed circuit boards – including significant share of overall material weight in medical systems
• Metals – including steel, aluminum, copper, used in medical equipment housings and structural elements; identified as a key contributor to EP&L impact (~EUR 1.71 billion of the 2024 EP&L = 45% of total)
• Plastics and polymers – used across all product lines including in Personal Health
• Cables and wiring
• Packaging materials – paper-based, cardboard, plastics, foam
• Consumables and accessories

Renewable / recycled / refurbished material content

Philips' Circular Materials Management (CMM) metric covers the percentage of materials managed through circular flows in manufacturing: 94% in 2024 (target 95% by 2025; baseline 90% in 2020).

Materials reuse is supported by:

• Refurbishment of returned large medical equipment
• Parts reuse via field and factory returns
• Recycled content where technically feasible (specific recycled content percentages by material type not separately disclosed in the inspected excerpts)

Estimation uncertainty

The Material Flow methodology relies on EcoInvent 3.9.1 data sets (2023 and 2024) and supplier-reported information. Estimates rely on assumptions about use-case scenarios and product lifetimes (e.g., 10 years for MRI, 5 years for Sonicare toothbrush). Resource inflow data is subject to inherent measurement uncertainty.

Reasonable assurance is provided by EY on selected datapoints in this section, including Circular Materials Management.

Resource outflows

Reference: page 196 (Resource use and circular economy: Policies, metrics and targets); page 203 (Resource use and circular economy: Waste).

Products and materials leaving Philips' value chain

Products sold and put on the market:

• Circular revenues: 24.4% of total 2024 revenue (~EUR 4.4 billion) come from products, services and solutions contributing to circularity
• EcoHero revenues: 21.9% of hardware revenues come from EcoHero-leadership propositions
• All NPIs (100%) are EcoDesigned

Refurbished and remanufactured systems:

• Closing the Loop: more than 8,600 large medical equipment systems/pieces sent through Philips' refurbishment and parts reuse program in 2024

End-of-use management:

• Take-back program on professional medical equipment (commitment: all professional medical equipment by 2025)
• Parts reuse from field and factory returns

Recoverability and recyclability of products

Philips' EcoDesign program embeds:

• Low-weight design and material substitution
• Sustainable materials including recycled content
• Material reuse design
• Packaging optimization Products identified as Green/EcoDesigned/EcoHero meet leadership performance against peer benchmarks for recyclability and material efficiency.

Estimation uncertainty

Resource outflow data relies on the same Material Flow methodology (version 2024) used for inflows. Reasonable assurance is provided by EY on selected outflow datapoints including Circular Revenue and Closing the Loop.

Waste

Reference: page 203 (Resource use and circular economy: Waste).

Zero Waste to Landfill commitment

Philips committed to embed circular practices at its sites and put zero waste to landfill by 2025. The 2024 performance was 0.0% of total regular waste sent to landfill (2025 target: less than 0.5%; 2020 baseline: 2.6%).

Waste generation – by region (2024)

Manufacturing sites reported the following waste tonnages:

Treatment hierarchy

Philips manages waste in line with the waste hierarchy (prevent, reuse, recycle, recover, dispose), as part of the Environmental Policy. Manufacturing sites are individually certified to ISO 14001 by external bodies: 100% of reporting manufacturing sites certified in 2024 (2023: 96%). The Plymouth site achieved certification in 2024.

Hazardous substances

Hazardous substances emissions: 1,216 kg in 2024 (2023: 1,300 kg; 2022: 1,548 kg). Managed via the Classified Substances List (CSL) and 5-year chemical reduction program (2021–2025).

Environmental incidents 2024

• 1 environmental incident at a Diagnosis & Treatment site (sinkhole reopening, remedial actions ongoing)
• 2 incidents at Personal Health sites (wastewater leakage in past year remediated 2024; fires near a factory)
• 0 incidents at Connected Care sites

Policies related to own workforce

Reference: page 180 (Double Materiality Assessment: Policy Overview); page 215 (Social information: Policies, metrics and targets).

General Business Principles (GBP)

Scope: All employees globally; cascaded as the minimum standard expected from business partners. Forms an integral part of labor contracts.

Key content: Integrity at work, integrity in the market, professional integrity outside work; prohibits discrimination, harassment, retaliation; addresses anti-bribery and anti-corruption (Anti-Bribery and Anti-Corruption Policy referenced and integral to GBP). Updated in 2024.

International standards: UN Universal Declaration of Human Rights; UN Convention against Corruption.

Approval/oversight: Executive Committee responsible for deployment; Audit Committee of Supervisory Board informed twice a year on GBP metrics.

Public availability: www.philips.com/gbp

Monitoring: 97% (~54,200) of assigned employees completed annual GBP e-learning in 2024.

Human Rights Policy

Scope: Applies to the activities of the Philips group, including all Businesses, Regions and Functions, and extends to business partners, suppliers and customers.

Key content: Commitment to identify, prevent, and mitigate adverse human rights impacts. Aligned to International Bill of Human Rights and ILO Declaration on Fundamental Principles and Rights at Work. Follows UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises.

Monitoring: Human Rights Saliency Assessment conducted 2023–2024; management gap analysis; Human Rights impact assessments at at-risk sites (100% target met since 2023).

Fair Employment Policy

Details the ethical and social principles governing Philips' relationship with employees and other workers. Promotes transparency, accountability, fair and equal workplace; free from forced/bonded/child labor (extends to human trafficking); free from discrimination/harassment. Provides fair and equal development opportunities.

Diversity & Inclusion Policy

Commits to inclusive workplace reflecting community diversity. Prohibits discrimination on race, color, ethnicity, age, gender, gender identity/expression, sexual orientation/identity, marital status, language, background, religion, health, pregnancy, political opinion, disability, national/social origin/birth.

Occupational Health & Safety Policy

Reviewed and republished December 2024. Objectives: prevent injuries/illnesses; compliance with legal requirements; systematic continuous improvement. Applies to everyone working for or on behalf of Philips worldwide. 64 Philips Corporate Safety Standards (PCSS) deployed by end 2024.

SpeakUp Policy

Grievance mechanism for employees and third parties; aligned with Directive (EU) 2019/1937. Prohibition of retaliation. Concerns hosted in single database outside Philips servers for confidentiality.

Engaging with own workforce

Reference: page 46 (Social: Our organization, people and culture); page 216 (Workforce of the future); page 220 (Employee engagement).

People Engagement Survey (PES)

• 2024 response rate: 84% (almost 58,000 employees participated)
• Quarterly cadence (H1/H2 measurement waves)
• Analyzed by leadership level, geography, gender, Business Unit/Region/Function, tenure, corporate grade – ensures representation of underrepresented groups
• Results reviewed by Executive Committee and cascaded for follow-up actions

Employee Engagement Index (EEI) – 2024

• Favorable: 78% (2023: 73%; 2022: 77%)
• Neutral: 15%, Unfavorable: 7%
• 2025 ambition: above high-performance norm (currently 2% below)

Workers' representation

• Works Councils in the Netherlands and other applicable jurisdictions per S1-8
• Local labor representatives engaged per local CLAs (Belgium Paritair Committee 200, France Metallurgie, Germany IG Metall, etc.)
• Customer Experience Index inputs incorporated for cross-functional engagement

Biennial Business Integrity Survey

• Last conducted 2023; next in 2025
• 22,500+ employees provided views on integrity
• 79% feel comfortable addressing concerns related to GBP

Specific engagements with vulnerable workers

• Refugees: in 2024, hired 120 refugees globally (first in US; rolled out in Mexico); Mentorship Program for Hispanic Refugees in US; Refugee Women in US and EMEA
• WGP (Werkgelegenheidsplan) in Netherlands for vulnerable groups (60 new candidates in 2024; 9 refugees participated; total 13,475 since 1983, ~80% find regular jobs)

Channels for own workforce to raise concerns and remediation

Reference: page 51 (Governance: General Business Principles); page 237 (Governance information: Philips SpeakUp (Ethics Line)).

Philips SpeakUp (Ethics Line)

• Aligned with EU Directive 2019/1937 on whistleblower protection
• 24/7 availability
• Available in multiple languages
• Externally hosted single database outside Philips servers to ensure confidentiality and security
• Anonymous reporting permitted
• Extends to internal stakeholders and external stakeholders (customers, end-users, suppliers)
• Network of around 70 GBP Compliance Officers globally

2024 case statistics

• 805 concerns reported (2023: 764; +5.4% year-on-year)
• 1.7 reports per 100 employees
• 865 reports closed in 2024; 212 substantiated (25%); 653 unsubstantiated (75%)
• 48 of 653 unsubstantiated cases resolved via newly-introduced Alternative Dispute Resolution (ADR) procedure for de minimis concerns

Case mix (2024)

• 'Treatment of employees': 529 reports (66%; 23% substantiation rate)
• 'Business Integrity': 16% of total (45% substantiation rate)
• Geographic distribution: North America 44%, APAC 25%, EMEA 19%, Latin America 12%

Follow-up actions in 2024

• 150 cases with disciplinary action
• 198 cases with remedial action (training, monitoring, process improvement)
• Severity from written warnings to termination of employment

Effectiveness measurement

• Biennial Business Integrity Survey (next 2025) tests effectiveness
• 79% of employees (2023 survey) feel comfortable addressing GBP concerns
• Formal investigation guidelines updated in 2024
• No material fines, penalties or damages paid in 2024 for incidents of discrimination, harassment, or severe human rights incidents

Actions on material impacts on own workforce

Reference: page 51 (Governance: General Business Principles); page 237 (Philips SpeakUp); pages 215–223 (Social information).

Talent attraction, retention and development

• 11,391 positions filled in 2024; 30% internal hires
• 1,555 strategic priority roles (R&D, Patient Safety & Quality, Clinical, Informatics) filled
• 2,111 interns; 330 offered permanent employment after internship
• Total Workforce Strategy delivered EUR 7 million in 2024 savings
• Graduate Development Program: 91 participants in 2024 (up from 40 in 2021); 2-year program with rotations

Diversity, Inclusion & Well-being

• Women in senior management positions: 33% in 2024 (2023: 31%; 2020 baseline: 27%; 2025 target: 35%)
• Recognitions in 2024 include Forbes Best Employers for Women, Forbes World's Best Employer, Financial Times Best Employer for Diversity, top rating on Human Rights Campaign Corporate Equality Index
• Diversity & Inclusion Index in PES around industry benchmark
• Mental Health Champion program

Living wage and adequate wage (entity-specific)

• 100% of Philips employees received at least Living Wage for an individual in 2024
• ~98% of Philips employees received Living Wage for a family (WageIndicator reference data)
• 100% of employees received at least Adequate Wage per ESRS S1-10

Health and Safety

• TRC rate 0.11 per 100 FTE in 2024 (Philips Group; 2023: 0.12; 2020: 0.12)
• LWIC rate 0.11 per 100 FTE in 2024 (2023: 0.12)
• 9 H&S audits performed across manufacturing, R&D, offices, field service
• 64 Philips Corporate Safety Standards (PCSS) deployed; updated 11 in 2024
• ISO 45001 certified at 25 manufacturing locations and 19 non-manufacturing organizations; covers more than 47% of workforce including 3rd-party workers
• 2024 H&S strategic programs identified: leadership-led safety culture, PCSS standardization, Safety by Design, EHS digital platform

Workforce reductions

• By end 2024, Philips completed previously-announced plans to reduce workforce by 10,000 roles globally by 2025
• Support offers included: social plan/severance policy, outplacement services, employee assistance program, work placement agency, redeployment where possible

Engagement programs

• People Engagement Survey: EEI 78% in 2024 (target above high-performance norm)
• AI-based digital talent marketplace; LinkedIn Learning; mentoring, coaching, Development Centers

Targets related to own workforce

Reference: page 166 (Sustainability statement: Tracking our 2025 ESG program); page 215 (Social information: Policies, metrics and targets).

2020–2025 ESG program targets relating to own workforce

Methodology

• Women in leadership positions: % of total senior management roles (Corporate Grade 80+) held by women
• EEI: composite of four engagement statements on a 5-point scale (favorable + neutral + unfavorable; reported quarterly)
• Living wage: % of employees whose wages meet or exceed the minimum living wage standard (Anker/Anker definition; WageIndicator reference data)
• TRC rate: total recordable cases per 100 FTE per year
• Training hours: average per employee, calculated from training records

Stakeholder involvement in target setting

The Executive Committee approves targets. Inputs include review of Philips' existing performance, customer engagement, international standards (WEF International Business Council Common Metrics, GRI), and local rules/regulations.

Characteristics of the undertaking's employees

Reference: page 225 (Social statements: Workforce details).

Total workforce (end of 2024)

• Philips employees: 66,678 (2023: 69,656) – a decrease of 2,978 reflecting completion of the 10,000-role reduction plan
• Contingent workers (non-employees): 1,741 (2023: 2,163*)
• Total own workforce: 68,419 (2023: 70,202*)

*EY did not provide assurance over the 2023 comparative information.

Employees per segment (FTEs at year-end)

Employment changes 2024 (FTEs)

• Acquisitions: – ; Divestments: (227); Other changes: (1,606)
• Voluntary turnover: 7.5%; Total turnover: 14.8% (2023: 17.6%; voluntary 9.5%)

Geographic distribution

The Netherlands is the largest single country for headcount, with manufacturing and R&D operations in Eindhoven/Best/Drachten/Veldhoven. Significant presence in the US, Greater China, Germany, and the Indian Subcontinent. (Detailed geographic FTE breakdown disclosed in Workforce details.)

Gender breakdown by job grade (excerpt)

• Staff: 4,592 total reported
• Professionals, Management, Executives broken out by gender (Female, Male, I choose not to self-identify) in the workforce details tables.

Methodology: All Philips employees including ASML Berlin GmbH-style consolidations; FTEs reported on a payroll basis.

Characteristics of non-employee workers in Philips' own workforce

Reference: page 225 (Social information: Workforce details).

Total non-employees (contingent workers)

• End of 2024: 1,741 in headcount (end of 2023: 2,163*)
• *EY did not provide assurance over the 2023 comparative information.

Worker types

Philips' Total Workforce Strategy covers three worker types: employees, contingent workers (hired via agencies, contractors and their respective employees), and external services. Non-employees include:

• Agency-placed workers
• Self-employed individual contractors
• Contractor companies' employees performing work on Philips premises
• Interns (counted separately under workforce development metrics)

Direct sourcing of contingent workforce talent

Direct sourcing of contingent workers has been expanded to 26% in the Netherlands, 40% in the US, and 11% in India (rolled out in 2024). Philips employer value proposition is utilized to attract directly-sourced contingent workers.

Health and safety scope

The Occupational Health & Safety Policy applies to everyone working for or on behalf of Philips, covering contractors and visitors. ISO 45001 certifications cover more than 47% of the total Philips workforce including 3rd-party workers. Hours worked include payroll FTE-based estimates.

Collective bargaining coverage and social dialogue

Reference: page 227 (Workforce details: Collective bargaining coverage and social dialogue).

Methodology

Collective bargaining and social dialogue data is collected manually from countries where Philips operates, using headcount figures. Coverage based on the scope stipulated in the respective collective bargaining agreements.

Social dialogue arrangements

• Works Councils in the Netherlands (multiple sites including Eindhoven/Best) – regular consultative meetings with the 'Bestuurder' and Board of Management
• Works Councils and labor representatives in other applicable European jurisdictions per local law
• Industry-level engagement via Metalektro CLA in the Netherlands (the metals/electronics CLA covers nearly all NL Philips employees)
• Belgium: Paritair Committee 200 (the cross-industry CLA)
• France: Metallurgie industry agreement; Cymer Light Sources employees covered by Commerces de Gros CLA
• Germany: company CLA negotiated with IG Metall (for relevant Berlin operations)
• Italy: CCNL for commerce
• South Korea: CLA with the Chemical, Textile and Food Industrial Union

Coverage scope

Collective bargaining coverage rates are reported per significant employment country (within EEA) or region (outside EEA) in proportion to the total number of employees within the country or region. The Netherlands has high coverage given Metalektro CLA scope; other countries vary.

Freedom of association

Philips strives to comply with the relevant legislation in every country where it operates. Philips has no indication that it operates in countries where freedom of association and collective bargaining are restricted for Philips employees.

Social protection

Unemployment, employment injury/disability, parental leave, and retirement social protection coverage detailed per country in Note XII Workforce details. Philips enhances government social protection in 8+ countries where governmental schemes are absent.

Diversity metrics

Reference: page 218 (Social information: Diversity, Inclusion and Well-being); page 219 (Diverse representation of talent); page 220 (Philips diversity metrics methodology).

Women in leadership positions

Senior management defined as Corporate Grade 80+ (broadly equivalent to senior director and above).

Gender by category (sample, 2024)

(Full gender x grade matrices available in Workforce details Note XII.)

Age distribution

The distribution of employees by age group is split into bands (under 30, 30–50, over 50) and disclosed in Workforce details.

Recognitions in 2024

• Forbes Best Employers for Women
• Forbes World's Best Employer
• Financial Times Best Employer for Diversity
• Top rating on the Human Rights Campaign Corporate Equality Index

Targets and stakeholder context

Gender diversity target of 35% women in senior management by 2025 is part of the LTI compensation. The Philips ESG plan extends to addressing the under-representation of women across all leadership levels and to attracting/retaining diverse talent through partnerships with diverse professional network organizations.

Adequate wages and Living Wage

Reference: page 222 (Social information: Living Wage and Adequate Wage); Philips living and adequate wage methodology (page 222).

Adequate wage assessment outcome (2024)

100% of Philips employees received at least an Adequate Wage per ESRS S1-10 definition.

The Adequate Wage is defined per ESRS S1-10 as 'A wage that provides for the satisfaction of the needs of the worker and his/her family in the light of national economic and social conditions.' Philips compared employee wages against the relevant Adequate Wage reference data, following the principles outlined in ESRS S1-10 as closely as possible.

Entity-specific Living Wage results (2024)

• 100% of Philips employees received at least the minimum Living Wage standard for an individual
• ~98% of Philips employees received at least the minimum Living Wage standard for a family

Reference data: WageIndicator (a reputable independent third party). Living Wage definition follows Anker and Anker (2017): 'Remuneration received by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. Elements include food, water, housing, education, healthcare, transport, clothing, and other essential needs, including provision for unexpected events.'

Pay equity context

• Labor rates and pay for manual workers globally aligned with – and ideally exceed – the local living wage standard
• Targeted at fostering economic equity in line with local conditions
• Pay differentials between countries reflect differences in economic development, labor market conditions, and cost of living

Methodology

• Adequate wage analysis performed using employee payroll data
• Annual assessment for each location where Philips operates
• Compared ASML lowest annualized wage paid against the adequate wage benchmark (higher of local minimum and local living wage)
• Annual basic wage on a full-time equivalent basis plus fixed payments guaranteed at the time of assessment

Social protection

Reference: page 227 (Workforce details: Social protection).

Coverage by social protection event

Philips employees are covered against major loss-of-income events by a combination of government schemes and Philips-enhanced benefits.

Unemployment

• In line with local practices, employees are not covered for loss of income in the event of unemployment in: Bangladesh, Colombia, Costa Rica, Egypt, Ghana, India, Indonesia, Kenya, Lebanon, Mexico, Panama, Peru, Philippines, Qatar, Sri Lanka
• Israel: only employees with tenure of 18 months or longer eligible
• Japan, UAE: only employees with 12 months or longer eligible
• Malaysia, Saudi Arabia: foreign employees not eligible

Employment injury and acquired disability

• All employees covered against loss of income in event of employment injury and/or acquired disability
• China: not directly covered, but all enrolled in a government-required insurance plan
• France: only employees with tenure of 12 months or longer eligible

Parental leave

• Employees covered against loss of income during parental leave in all countries where Philips employs people
• In 8 countries where government does not cover loss of income, Philips enhances in line with local practices
• In Egypt, Ghana, Kenya, Lebanon, Saudi Arabia, Serbia, South Africa, Turkey, UAE: only maternity leave available
• Colombia, France, Hungary, Sweden: only employees with tenure of 12 months or longer eligible
• Romania: only employees with at least 12 months work experience (last 24 months, including outside Philips)

Retirement

• Employees in Ghana, Kenya, Myanmar not covered for retirement loss of income neither by government nor by Philips (in line with local practices)
• Saudi Arabia: foreign employees not eligible for retirement benefits

Methodology

Social protection data applies to Philips employees; collected in the countries where Philips operates; based on local legislation and Philips policy.

Other employee benefits

• Disability insurance and health insurance arrangements per country
• Employee Assistance Program (EAP) available globally
• Defined contribution and defined benefit pension plans (including PME multi-employer union plan in NL)

Persons with disabilities

Reference: page 218 (Social information: Diversity, Inclusion and Well-being).

Philips' Diversity & Inclusion Policy explicitly prohibits discrimination on the basis of disability and commits to creating an inclusive workplace that reflects community diversity. The policy explicitly references reasonable accommodations and inclusion of people with disabilities, including neurodiversity, as part of broader D&I focus areas.

Programs supporting persons with disabilities

• WGP (Werkgelegenheidsplan) employment scheme in the Netherlands offers work experience placements to vulnerable groups including people with disabilities. Since launch in 1983, 13,475 people have participated; ~80% find regular jobs afterward. 2024: 60 new candidates, total participants 118.
• Reasonable accommodations approach embedded in Fair Employment Policy

Disclosure of headcount

Philips does not separately disclose the percentage of own workforce persons with disabilities. The Workforce details (Note XII) tables provide demographic breakdowns by gender, age band, and segment, but not by disability status, recognizing data privacy considerations and country-by-country variation in disability self-identification.

Methodology

Philips' workforce metrics are based on payroll and HR system records; specific disability-related quantitative metrics rely on voluntary self-identification subject to local data protection rules.

Training and skills development metrics

Reference: page 217 (Workforce of the future: Career development); page 218 (Workforce of the future: Learning).

Average training hours per employee

Total Quality Management Learning (QML) training hours

Programs supporting skills development

• Graduate Development Program (GDP) – 2-year program with 2 rotations; 91 participants in 2024 (up from 40 in 2021)
• AI-based digital talent marketplace – internal mobility platform for skill-building in new areas outside core jobs
• LinkedIn Learning and best-in-class learning content via online platforms
• External education and certifications supported
• Development Centers – identify talent and develop using mentoring, coaching, just-in-time support
• People-leader-specific training – on coaching and continuous feedback
• People-leader specific goal on people development – introduced in 2024, requiring leaders to develop teams and nominate for succession plans

Performance and career development reviews

Through the annual Develop & Perform cycle, employees set development items in personal development plans. Continuous feedback embedded through regular check-ins.

Recruitment context

• 11,391 positions filled in 2024 (30% internal hires)
• 1,555 strategic priority roles filled (R&D, Patient Safety & Quality, Clinical, Informatics)
• 38% of external recruitment secured candidates with Medical Technology expertise
• 2,111 interns; 330 offered permanent employment after internship

Methodology

Training hours based on training completion records in Philips University and external platforms. QML hours specific to patient safety and quality training curriculum.

Health and safety metrics

Reference: page 223 (Social information: Health and Safety).

Coverage

• Health & Safety reporting covers all manufacturing locations, R&D sites, field service organizations and offices worldwide. Total coverage above 98% (remainder small offices excluded as immaterial).
• 100% of reporting manufacturing sites covered by Philips' Occupational Health & Safety management framework
• ISO 45001 certifications at 25 manufacturing locations and 19 non-manufacturing organizations – covering more than 47% of total workforce including 3rd-party workers

Total Recordable Case (TRC) rate (per 100 FTE)

Lost Workday Injury Cases (LWIC)

• 77 LWICs in 2024 (2023: 90), a 14% decrease
• LWIC rate: 0.11 per 100 FTE in 2024 (2023: 0.12)
• D&T: 21 LWICs in 2024 (down from 36 in 2023; LWIC rate 0.16)
• CC: 4 LWICs (down from 8); LWIC rate 0.07
• PH: 7 LWICs (comparable to 2023)

Methodology

• H&S data reported globally via the sustainability reporting system, validated monthly
• TRC rate defined as work-related cases per 100 FTE where an employee is injured or becomes ill
• OSHA-aligned definitions

Fatalities

No work-related fatalities reported in 2024.

Strategic programs for 2025–2030 H&S roadmap

• Leadership-led safety culture
• Standardization and simplification of 64 Philips Corporate Safety Standards (PCSS)
• Safety by Design
• EHS digital platform
• 9 H&S audits performed in 2024 across manufacturing, R&D, offices, and field service organizations

Work-life balance metrics

Reference: page 220 (Social information: Diversity, Inclusion and Well-being); Note XI (Health and Safety).

Philips supports work-life balance through flexible work arrangements, mental health support, employee well-being programs, and parental leave (S1-11 details).

Family-related leave

All Philips employees are entitled to family-related leave (maternity, parental, paternity) consistent with local legislation; Philips enhances coverage in 8+ countries where government schemes are absent (see S1-11).

Well-being programs

• Mental Health Champion program
• Employee Assistance Program (EAP) available globally for personal and work-related concerns affecting mental or emotional well-being
• Flexible work arrangements per local practice

Engagement-related work-life proxies

The People Engagement Survey (PES) tracks employee perceptions of work-life balance as part of the Diversity & Inclusion Index, which scored around the industry benchmark in 2024. Engagement Index: 78% favorable in 2024.

Methodology

Data on entitled employees who took family-related leave is collected from the largest countries by headcount and further estimated. Detailed percentage of employees taking family-related leave by gender is not disclosed in the inspected excerpts. Methodology aligns with ESRS S1-15 definitions of work-life balance metrics.

Compensation metrics – Pay gap and total compensation

Reference: page 83 (Supervisory Board: Remuneration report 2024); page 221 (Social information: Equal opportunities and equal pay).

Unadjusted gender pay gap

2024 is the first year Philips publishes an unadjusted gender pay gap (raw difference in average hourly earnings between men and women, without adjusting for job role, experience, education, hours, or country).

*EY did not provide assurance over the 2022 and 2023 comparative information for pay gap.

Key drivers

• Higher proportion of male Staff in higher-cost-of-living countries
• Country-by-country Staff pay gaps remain approximately flat over the years
• Underrepresentation of women in senior leadership – 33% women in senior management in 2024 (2025 target 35%)
• Professional, Management, Executive grade groupings show small or improving pay gaps

Actions to address

• Targets to increase female representation overall and in leadership positions (35% by 2025)
• Targeted hiring partnerships with diverse professional network organizations
• Living wage and Adequate Wage policies ensure floor remuneration globally
• Pay decisions based on merit, qualifications and performance

Total compensation context

• Compensation policy aims to ensure fair and balanced salaries and benefits
• Compliance with applicable wage laws including living wages and equal wages for all genders
• Pay decisions monitored against local living wage standards
• Average Employee (FTE) Total Remuneration Costs disclosed in Remuneration report (page 76+)

Methodology

Gender pay gap calculation: comparing average hourly pay for men vs. women across employee groups, without adjustment. EU Pay Transparency Directive preparation noted as a focus area for upcoming years.

Incidents, complaints and severe human rights impacts

Reference: page 237 (Governance information: Philips SpeakUp (Ethics Line)).

SpeakUp activity (2024)

• 805 concerns reported via Philips SpeakUp (Ethics Line) and through the network of GBP Compliance Officers (2023: 764; +5.4% YoY)
• 1.7 reports per 100 employees
• 865 reports closed in 2024; 212 substantiated (25%); 653 unsubstantiated (75%)
• 48 of unsubstantiated cases resolved via newly-established Alternative Dispute Resolution (ADR) procedure for de minimis 'Treatment of employees' concerns

Breakdown by category (2024)

• 'Treatment of employees': 529 reports (66% of total; 23% substantiation rate; 48% from North America)
• 'Business Integrity': 16% of total (45% substantiation rate; APAC 36%, NAM 23%, LATAM 22%, EMEA 19%)
• 'Health & Safety', 'Legal', 'Quality', 'Procurement', 'Security', 'Other': remaining 18%

Severe human rights incidents

• Examples of severe human rights incidents include forced labor, human trafficking, and child labor
• No material fines, penalties or damages paid in 2024 for incidents of discrimination, harassment, or severe human rights incidents (e.g., forced labor, human trafficking, child labor)
• Philips did not identify any incidents of child labor or forced labor in 2024
• No convictions or fines for anti-bribery or anti-corruption violations (directly or through value chain actors)

Follow-up actions

• Disciplinary action in 150 cases
• Remedial action in 198 cases (training, monitoring, process improvement)
• Severity ranges from written warning to termination of employment
• Effectiveness tracked via Business Integrity Survey (next 2025)

Geographic spread (2024)

• North America: 44% of total reports (2023: 47%)
• APAC: 25% (2023: 20%) – noted increase
• EMEA: 19% (2023: 18%)
• Latin America: 12% (2023: 15%)

Methodology

• Alleged GBP violations registered in web-based reporting tool; followed up per SpeakUp Policy
• Cases substantiated/unsubstantiated based on investigation outcomes
• Severe human rights incidents defined per International Bill of Human Rights, ILO Declaration on Fundamental Principles and Rights at Work, UNGPs

Policies related to value chain workers

Reference: page 180 (Double Materiality Assessment: Policy Overview); page 228 (Supplier Sustainability & Workers in the value chain: Policies and Standards).

Human Rights Policy (extending to value chain)

Philips' Human Rights Policy commits to identify, prevent, and mitigate adverse human rights impacts in Philips' activities and extends to business partners, suppliers and customers. Anchored to:

• International Bill of Human Rights
• ILO Declaration on Fundamental Principles and Rights at Work
• UN Guiding Principles on Business and Human Rights (UNGPs)
• OECD Guidelines for Multinational Enterprises
• UN Global Compact (Philips signatory since 2007)

Supplier Sustainability Declaration (SSD)

Scope: All upstream and downstream Philips suppliers (approximately 4,400 product/component suppliers and 15,100 service providers).

Key content: Based on the Responsible Business Alliance (RBA) Code of Conduct plus Philips-specific behaviors. Covers Forced Labor, Child Labor, Human Trafficking, Health & Safety, Environment, Ethics, and Management Systems. Philips is a Regular member of the RBA and must publicly commit to and actively pursue conformance to the RBA Code.

Implementation: Compliance is committed via the Sustainability Agreement integrated in Philips' purchasing agreements. Suppliers required to provide additional information and evidence upon request.

Regulated Substances List (RSL)

Specifies chemical substances regulated by legislation. Substances marked as restricted or declarable. All suppliers required to comply.

Position Paper on Responsible Sourcing of Minerals

Focuses on conflict minerals (3TG – tin, tantalum, tungsten, gold) and cobalt. Philips committed to not purchasing raw materials, sub-assemblies or supplies known to contain conflict minerals from Conflict-Affected and High-Risk Areas (CAHRAs) including the Democratic Republic of Congo and adjoining countries. Complies with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

Risk Assessment Platform methodology

Dynamic scoring across five supply chain pillars: Labor, H&S, Environment, Business Ethics, Management Systems. Data sources include Workers Rights Index (ITUC), Children's Rights in the Workplace Index (UNICEF/Global Child Forum), Global Slavery Index (Walk Free). Regions classified into Extreme, High, Medium, Low risk.

Engaging with value chain workers

Reference: page 234 (Supplier Sustainability & Workers in the value chain: Stakeholder dialogs and multi-stakeholder initiatives).

Direct supplier engagement

• Procurement and supplier information sessions on an ongoing basis – sharing ESG expectations and clarification
• Training courses to support suppliers in meeting expectations
• Individual training on ESG performance vs. industry peers
• ESG indicators evaluated during sourcing process; suppliers with better ESG performance considered favorably

Beyond Auditing program

• Strategic shift from traditional audit to capability-building approach
• Active enrollment of suppliers from Extreme-risk countries
• Leverages AI and predictive analytics for maturity assessments
• More than 1,600 assessments conducted to date
• In 2024, 8 zero tolerances found (Health & Safety, Labor, Environmental); 4 successfully closed after corrective action; 4 still in progress (found in H2 2024)

Worker representation in supply chain

• Worker grievance mechanisms required at suppliers per Code of Conduct
• Identity protection and non-retaliation
• Suppliers' grievance mechanism awareness, effectiveness and trust evaluated in Human Rights Impact Assessments
• 2024: Philips adopted effectiveness checks of grievance mechanisms into the Code of Conduct assessment

Multi-stakeholder initiatives

• Responsible Business Alliance (RBA) – Regular membership
• Responsible Minerals Initiative (RMI) – cross-industry leverage on smelter due diligence
• CDP Supply Chain – 504 suppliers engaged in 2024 (88% response rate)
• Tent Partnership for Refugees – workforce-related supply chain initiatives

Vulnerable groups focus

Philips' risk model identifies vulnerable groups (children, migrants, minorities, indigenous populations, refugees, persons with disabilities). Beyond Auditing engagements deliberately enrolled to address these groups' welfare. Conflict minerals due diligence applies an OECD five-step framework.

Remediation and grievance channels for value chain workers

Reference: page 230 (Supplier Sustainability & Workers in the value chain: Selection and classification; Governance and Grievance mechanisms).

Philips SpeakUp (Ethics Line) extends to external stakeholders

The Philips SpeakUp Service is available not only to internal stakeholders (employees) but also explicitly extends to external stakeholders, including customers, end-users, suppliers, and workers across the value chain. Reports can be made 24/7 in multiple languages via:

• External hosted online platform (database outside Philips servers)
• Toll-free phone lines
• Anonymous reporting permitted
• Network of around 70 GBP Compliance Officers globally

Supplier-level grievance mechanism requirements

• Code of Conduct requires suppliers to have grievance mechanisms in place
• Suppliers must provide protection of identity and non-retaliation
• In Code of Conduct assessments, presence of grievance mechanisms is checked
• In Human Rights Impact Assessments, the awareness, effectiveness and trust in the mechanism are evaluated
• In 2024, Philips adopted the effectiveness check to the Code of Conduct assessment as well
• Whenever improvements in supplier mechanisms are required, progress evaluated via the regular Beyond Auditing engagement approach

Remediation in 2024 supplier engagements

• 8 zero tolerances found in 2024 (Health & Safety, Labor, Environmental)
• 4 cases successfully closed in 2024 after confirmation of corrective action plan completion
• 4 zero tolerances found in H2 2024 still being addressed in ongoing corrective actions

Beyond Auditing

A capability-building, continuous-improvement engagement model with suppliers (rather than one-off audits). Used as the primary remediation vehicle following risk identification.

Actions on material impacts on value chain workers

Reference: page 228 (Supplier Sustainability & Workers in the value chain; Actions and resources).

Lives improved in the supply chain (entity-specific metric)

As part of Philips' commitment to improve the lives of 1 million workers in the supply chain by 2025, the impact of Beyond Auditing engagements is measured via the number of lives improved in the supply chain – derived from improvements suppliers make in their performance.

Supplier Sustainability Program (SSP) operations

• Implementation by Philips' supplier sustainability team with representatives in different parts of the world
• No material standalone CapEx or OpEx required beyond standard Procurement operations; no significant changes expected short-/medium-/long-term
• Application of AI and machine learning to make SSP more efficient – maturity and improvement predictions in development based on data from 1,600+ assessments

Supplier decarbonization

• 50% target of suppliers (by spend) committed to Science Based Targets by 2025 – 48% achieved in 2024 (2023: 46%; 2022: 41%)
• CDP Supply Chain program: 504 biggest suppliers engaged (88% response rate); 59% of responders in emission-reduction initiatives; 51% with committed targets; 37 Mt CO2-e suppliers' improvement project savings reported in 2024

Conflict Minerals Due Diligence

• OECD Five-Step Framework applied
• 2024: Response rate of suppliers 97% (2023: 95%); CMRTs meeting acceptance criteria 78% (2023: 65%); Non-listed smelters in supply chain 0 (2023: 0; 2022: 0)
• Conflict Minerals Report filed annually with the SEC
• Active participation in RMI (Responsible Minerals Initiative)

Beyond Auditing rollout in extreme-risk countries

Workers impacted at suppliers participating in the Beyond Auditing program: ~936,000 in 2024. Continuous improvement and corrective action embedded.

Recognition

Philips Supplier Sustainability approach secured finalist position for Philips in Fortune's 2024 Change the World list.

Targets related to value chain workers

Reference: page 166 (Sustainability statement: Tracking our 2025 ESG program); page 231 (Supplier Sustainability & Workers in the value chain: Results).

2020–2025 ESG program targets relating to value chain workers

Methodology

• Lives improved in the supply chain: Counted as workers impacted at suppliers participating in the Beyond Auditing program; derived from supplier performance improvements
• Suppliers committed to Science Based Targets: Includes suppliers communicating commitment via SBTi, CDP disclosures, or public websites/announcements; Spend defined as product, component, and relevant service providers (logistics, IT)
• Human Rights impact assessments at at-risk sites: % of own at-risk sites that have undergone Human Rights Impact Assessment as part of the Saliency Assessment follow-up

Stakeholder involvement in target setting

Targets aligned with Philips' commitments announced at COP26 (October 2021). Reviewed by Executive Committee. Inputs include customer expectations, peer benchmarks, SBTi guidance, and CDP scoring methodologies.

Policies related to consumers and end-users

Reference: page 51 (Governance: General Business Principles); page 171 (Policies overview); page 180 (Double Materiality Assessment: Policy Overview); page 237 (Philips SpeakUp (Ethics Line)).

General Business Principles (GBP) and Anti-Bribery and Anti-Corruption Policy

Applies to interactions with customers, patients, and consumers. Sets the minimum standard for business conduct. Anti-Bribery and Anti-Corruption Policy referenced and integral to GBP. Updated in 2024.

Quality and Safety Standards

Patient safety and product quality are foundational to Philips' purpose. Governance through:

• Chief Patient Safety and Quality Officer – Executive Committee member, reports to CEO
• Quality & Regulatory Committee of the Supervisory Board – quarterly reviews
• Quality Management Systems aligned to global regulatory expectations (FDA, EMA, China NMPA, EU notified bodies, etc.)
• Corrective and Preventive Action (CAPA) tracking
• External audits for compliance and standards certification
• Internal audits
• Philips Safety Board (implemented 2024) – independent cross-functional forum chaired by Chief Medical Officer for pre- and post-market product safety/risk evaluations

Stakeholder Engagement Policy

Governs engagement with consumers, end-users (patients), customers (healthcare providers), and other stakeholders.

Privacy and cybersecurity policies

Govern processing of personal data of consumers, patients, employees, customers, intellectual property, suppliers and other partners. Compliance with applicable laws and regulations. Group Security Function oversees framework.

Public availability

GBP and underlying policies publicly available at www.philips.com/gbp. SpeakUp Service available to consumers and end-users worldwide.

International standards

Aligned with UN Guiding Principles on Business and Human Rights (UNGPs), OECD Guidelines, ILO core conventions, UN Global Compact.

Engaging with consumers and end-users

Reference: page 46 (Social: Improving people's lives); page 51 (Governance: GBP); page 54 (Working with stakeholders and advocacy); page 237 (Philips SpeakUp).

Customer-facing engagement

• Direct customer engagement via Business Unit account teams (Diagnosis & Treatment, Connected Care, Personal Health)
• Sales, clinical and technical consultants engage daily with healthcare professionals
• Customer Experience Index measured internally; inputs exchanged with the Customer Experience team
• Complaint management framework: centralized system collects, manages, addresses and stores feedback from customers
• CAPA (Corrective and Preventive Action) approach used to address and resolve complaints

Patient/consumer engagement

• Medical Office – global team of medical and scientific experts; clinical and economic evidence generation
• Patient voice integrated through Medical Affairs
• Consumer studies and product testing (Personal Health)
• Philips Foundation programs for underserved communities

Working with stakeholders and advocacy

• Global health advocacy via DITTA, World Health Assembly, COP, UN General Assembly
• Health Systems Sustainability and Resilience initiatives (ATACH partnership)
• Innovation policy/medical devices regulation engagement (EU, US, China)

Philips SpeakUp (Ethics Line) for external stakeholders

Available 24/7 to customers, end-users, suppliers, workers across the value chain, and any third party. Multilingual; external hosted; anonymous reporting available.

People Engagement Survey – consumer impact perception

EEI 78% in 2024; high score on Customer Experience Index used to align employee focus with customer needs.

Remediation channels for consumers and end-users

Reference: page 46 (Social: Improving people's lives); page 50 (Governance: Patient safety, quality and regulatory); page 51 (Governance: GBP); page 237 (Philips SpeakUp (Ethics Line)).

Complaint management framework

• Centralized system collects, manages, addresses and stores feedback from customers
• CAPA (Corrective and Preventive Action) approach used to investigate and resolve customer complaints
• Customer feedback investigated as necessary as part of the complaint management framework

Patient safety governance

• Chief Patient Safety and Quality Officer – Executive Committee member, reports to CEO
• Quality & Regulatory Committee of the Supervisory Board – quarterly reviews
• Philips Safety Board – cross-functional forum implemented in 2024, chaired by Chief Medical Officer, for pre- and post-market product safety and risk evaluations
• Regulatory Affairs engages with FDA, EMA, China NMPA, EU notified bodies and other competent authorities

Philips SpeakUp (Ethics Line) extends to consumers and end-users

• 24/7 availability via online and toll-free phone lines
• Multiple languages
• Anonymous reporting permitted
• External hosted database
• 805 total reports in 2024 (across all stakeholders); 1.7 reports per 100 employees

Field corrective actions, recalls and regulatory reports

• Tracked through quality management system; reported quarterly to Board of Management and Supervisory Board
• Regulated by applicable health authorities

Effectiveness measurement

• Complaint management metrics tracked via Quality Management System
• Internal and external audits
• Quality Management Learning (QML) – 2.44 million training hours in 2024

Actions on material impacts on consumers and end-users

Reference: page 46 (Improving people's lives); page 50 (Patient safety, quality and regulatory); page 236 (Consumers and end-users: Product responsibility and safety).

Lives improved (entity-specific positive impact KPI)

2024 increase in lives improved was driven mainly by Monitoring, Enterprise Informatics and Image Guided Therapy businesses, and by teams in Greater China, Latin America, Indian Subcontinent and Middle East/Türkiye/Africa.

Access to (quality and affordable) care actions

• Partnerships with Philips Ventures, Philips Foundation, and partners to deliver healthcare in underserved communities
• Local manufacturing presence and partnerships in emerging markets
• Educational and skills-building programs for healthcare workers
• Affordable propositions across Connected Care and Personal Health

Patient safety & quality actions

• Implementation of the Philips Safety Board (2024) – independent cross-functional forum chaired by Chief Medical Officer
• Quality Management Learning (QML) training: 2.44 million hours in 2024 (2023: 2.33 million)
• CAPA program tracked across portfolio
• Field corrective actions and regulatory notifications managed by Quality & Regulatory Committee oversight
• Ongoing remediation of legacy product issues (e.g., sleep & respiratory care product recall) tracked separately under Litigation

Cybersecurity actions

• Group Security Function maintains security management framework
• Quarterly cybersecurity reports to Board of Management and Supervisory Board
• Mandatory yearly security training for all employees (including phishing simulations multiple times a year)
• Risk, vulnerability and penetration assessments
• Global Security Operations Center monitoring and response

Effectiveness

• Lives Improved methodology (version 2024) – external assurance scope item with significant measurement uncertainty noted in Basis for preparation
• Customer Experience Index used to align employee focus with customer needs
• No material breaches of cybersecurity identified as of report date

Targets related to consumers and end-users

Reference: page 166 (Sustainability statement: Tracking our 2025 ESG program); page 171 (Double Materiality Assessment).

2020–2025 ESG program targets relating to consumers and end-users

Methodology – Lives Improved

Lives Improved methodology (version 2024) is published on the Philips ESG downloads page. The methodology has been identified as subject to a high level of measurement uncertainty in the Basis for preparation; it is part of EY's limited assurance scope. The Lives Improved model is country-by-country, aligned with UN Sustainable Development Goal 3, allowing Philips to shape strategies 'to ensure healthy lives and promote well-being for all at all ages'.

Stakeholder involvement in target setting

Targets were set through the Executive Committee, reviewing existing performance, engaging with customers as representatives of consumers and end-users, and reviewing international standards (WEF International Business Council Common Metrics, GRI). Aligned with UN SDG 3.

Business conduct policies and corporate culture

Reference: page 49 (Governance: The Philips integrated operating model); page 51 (Governance: General Business Principles); page 237 (Philips SpeakUp (Ethics Line)).

General Business Principles (GBP)

Scope: All Philips Businesses and employees globally; serve as reference for business conduct expected from all business partners. Forms an integral part of labor contracts and business partner agreements. Translations available in 30 languages.

Key content (updated 2024):

• Integrity at work – respect, fairness, anti-discrimination, anti-harassment, anti-retaliation
• Integrity in the market – fair competition, anti-bribery and anti-corruption, anti-facilitation payments, gifts/entertainment restrictions, insider trading prohibition
• Professional integrity outside work – conflicts of interest, intellectual property protection
• Includes principles aligned with the UN Convention against Corruption and the Universal Declaration of Human Rights
• Anti-Bribery and Anti-Corruption Policy referenced and integral to GBP
• Financial Code of Ethics and Procurement Code of Ethics for finance and procurement staff (with annual signed commitment)

Approval and oversight:

• Executive Committee responsible for effective deployment and promoting culture of compliance/ethics
• Audit Committee of the Supervisory Board informed at least twice a year on relevant GBP metrics, cases, trends and learnings
• Each quarter, key Regions convene market compliance committees
• Supervisory Board trained annually on GBP through dedicated online course
• GBP program office plus worldwide network of around 70 GBP compliance officers

Public availability: www.philips.com/gbp

Monitoring:

• 54,200 (~97%) of assigned employees completed annual GBP e-learning in 2024
• Functions at risk (sales, marketing, clinical consultants, customer-facing trainers) receive additional tailored training on anti-bribery and anti-corruption practices and healthcare compliance
• Biennial Business Integrity Survey – 2023: 22,500+ employees; 79% comfortable addressing GBP concerns; next 2025 (with updated GBP e-learning)
• Annual signed commitment for executives and finance/procurement staff
• GBP monitoring and reporting program embedded in internal control framework

SpeakUp Policy

Aligned with EU Directive 2019/1937. 24/7 reporting via externally hosted platform. Anonymous reporting permitted. 805 concerns received in 2024 (1.7 per 100 employees). Detailed investigation guidelines updated in 2024.

Human Rights Policy

Governed by Human Rights Committee chaired by Head of Ethics & Business Integrity and Human Rights. Aligned with UNGPs, OECD Guidelines, ILO core conventions, UN Global Compact (signatory since 2007).

Other GBP-underlying policies

• Anti-Bribery and Anti-Corruption Policy (explicitly referenced and integral to GBP)
• Gifts & Entertainment rules
• Insider trading rules of conduct (compliance with EU Market Abuse Regulation)
• Conflicts of Interest policy

Management of relationships with suppliers

Reference: page 23 (Business: Supply chain and procurement); page 48 (Social: Supplier sustainability); page 230 (Supplier Sustainability & Workers in the value chain: Selection and classification).

Supplier base

• Approximately 4,400 product and component suppliers
• Approximately 15,100 service providers
• Top 35 of ~5,000 strategic suppliers represent ~80% of total sourcing spend

Selection and classification

• All suppliers required to commit to the Supplier Sustainability Declaration (SSD) based on the RBA Code of Conduct plus Philips-specific behaviors
• All suppliers required to commit to the Regulated Substances List (RSL)
• Sustainability Agreement integrated in purchasing agreements
• ESG indicators evaluated during sourcing; better ESG performers considered favorably
• Capability maturity assessments

Risk Assessment Platform

Dynamic scoring across regions, industries and commodities on five pillars: Labor, Health & Safety, Environment, Business Ethics, Management Systems. Data sources include Workers Rights Index (ITUC), Children's Rights in the Workplace Index (UNICEF/Global Child Forum), Global Slavery Index – Proportion in Slavery and Vulnerability (Walk Free Foundation). Regions classified Extreme / High / Medium / Low risk.

Beyond Auditing

• Capability-building, continuous-improvement engagement with suppliers (replacing one-off audits)
• Active enrollment of suppliers from Extreme-risk countries
• More than 1,600 assessments to date
• AI and predictive analytics used for maturity prediction
• 936,000 lives improved in supply chain in 2024 (936k from 723k in 2023)
• Recognition: finalist position in Fortune's 2024 Change the World list

Supplier engagement and capability building

• Procurement and supplier information sessions on an ongoing basis
• Training courses for suppliers and for the Supplier Audit team
• Individual ESG performance vs. peer benchmarks shared with suppliers
• CDP Supply Chain program: 504 biggest suppliers engaged 2024 (88% response rate)

Payment practices

Please refer to G1-6 for detailed payment terms by region and supplier type.

Prevention and detection of corruption and bribery

Reference: page 51 (Governance: General Business Principles); page 237 (Philips SpeakUp (Ethics Line)).

Anti-Bribery and Anti-Corruption Policy

Scope: Applies to all employees and to business partner relationships both upstream and downstream in the value chain.

Key content:

• Strict rules around giving and accepting gifts and entertainment
• Prohibition of facilitation payments and political contributions on behalf of the company
• Prior approval requirements for particular categories of third-party gifts and entertainment
• Aligned with UN Convention against Corruption and OECD principles
• Explicitly referenced and integral to the General Business Principles (GBP)

Training programs

• Mandatory annual GBP e-learning includes anti-bribery and anti-corruption content – 97% (~54,200) of assigned employees completed in 2024
• Functions at risk (sales, marketing, clinical and technical consultants, customer-facing trainers) receive additional tailored case studies and annual training on anti-bribery, anti-corruption and healthcare compliance
• Dedicated anti-bribery and anti-corruption training programs continuously updated, improved and expanded
• Computer-based and in-person sessions tailored to specific stakeholder groups

Governance and detection

• Network of around 70 GBP compliance officers globally
• GBP monitoring and reporting program part of internal control framework
• Global Ethics and Business Integrity team expanded in 2024 with representation in South Korea, Japan, China and Veldhoven
• Compliance, Ethics, Security and Risk (CESR) Committee receives quarterly updates on the ethics program
• CESR Ethics Committee chaired by Chief Legal Officer; facilitated by Head of Ethics & Business Integrity and Human Rights; investigates significant notifications of potential GBP breaches
• Third-party risk management (TPRM) screening of vendors, customers and third parties

Whistleblower protection

Philips SpeakUp Service aligned with EU Directive 2019/1937. Protects reporters from retaliation. 727+ reports in 2023, 805 reports in 2024 (1.7 per 100 employees). Externally hosted single database for confidentiality.

Effectiveness measurement

• Biennial Business Integrity Survey – next in 2025 (2023: 22,500+ employees; 79% comfortable addressing GBP concerns; 70%+ agreed company shows commitment to ethical business decisions and conduct)
• 2024 SpeakUp data show 16% of cases related to Business Integrity (45% substantiation rate)
• Disciplinary action in 150 cases, remedial action in 198 cases in 2024

Confirmed incidents of corruption or bribery

Reference: page 51 (Governance: General Business Principles); page 237 (Philips SpeakUp (Ethics Line)).

2024 incidents

'Business Integrity' category accounted for 16% of total SpeakUp cases in 2024 (down from 18% in 2023). The majority of 'Business Integrity' reports related to potential fraudulent behavior. The category also includes concerns related to alleged violations of anti-corruption and anti-bribery laws.

In 2024, Philips was not convicted or fined for any violation of anti-bribery or anti-corruption laws (either directly or through actors in the company's value chain).

Convictions and fines

• Number of convictions for violation of anti-corruption and anti-bribery laws: 0
• Monetary value of fines for violation of anti-corruption and anti-bribery laws: €0

Substantiated/unsubstantiated 'Business Integrity' cases (closed in 2024)

• 2024: 69 substantiated, 84 unsubstantiated (45% substantiation rate)
• 2023: 71 substantiated, 77 unsubstantiated
• 2022: 60 substantiated, 90 unsubstantiated

Geographic distribution of 'Business Integrity' reports (2024)

• APAC 36%
• North America 23%
• Latin America 22%
• EMEA 19%

Follow-up actions

In 2024 across all categories: 150 cases with disciplinary action; 198 cases with remedial action. Disciplinary measures can range from written warnings to termination of employment. Remedial actions include strengthening business processes and procedures, enhanced monitoring, training and coaching, and increasing awareness of expected standard of business conduct.

Methodology

Alleged GBP violations registered in web-based reporting tool. Reports closed when investigation complete; classified as substantiated when investigation confirms breach of GBP. Investigation guidelines updated in 2024.

Political influence and lobbying activities

Reference: page 238 (Advocacy activities and expenses); page 241 (Advocacy Expenses).

Approach

• Anti-Bribery and Anti-Corruption Policy prohibits political contributions on behalf of Philips
• Advocacy activities focus on health technology and policy issues directly relevant to Philips' mission and operations
• GBP compliance is primarily safeguarded through training and the SpeakUp channels (rather than separate lobbying-specific governance)

Advocacy focus areas

• Health Systems Sustainability and Resilience – active participant in ATACH (Alliance for Transformative Action on Climate and Health) via DITTA trade association; contributed to the historic World Health Assembly 2024 resolution recognizing climate change as imminent health threat
• UN Sustainable Development Goals advocacy (especially SDG 3, SDG 12, SDG 13)
• Sector-specific positions on innovation policy, medical devices regulation, AI in healthcare, cybersecurity, and trade/supply chain resilience

Priority regions (2024)

• European Union – innovation policy, medical devices regulations, AI in medical technology, geopolitical tensions and trade, roadmaps for NCDs (cardiovascular, stroke, oncology)
• United States – AI and cybersecurity in healthcare; innovation/tax/reimbursement/market access policies; geopolitical tensions and trade
• China – clinical partnerships, decarbonization of healthcare, geopolitical tensions and trade, localization strategy

Participation in global platforms (2024)

World Health Assembly, COP29, COP16, UN General Assembly.

Advocacy Expenses 2024

Advocacy Expenses are reported on page 241 of the annual report. Lobbying per the ESRS definition is monitored alongside GBP compliance. Detailed monetary breakdown by region and topic is provided in the report's Advocacy activities and expenses section.

Payment practices

Reference: page 234 (Supplier Sustainability & Workers in the value chain: Payment practices).

Philips strives to ensure timely cash flows to its business partners (vendors), especially with respect to Small and Medium-sized Enterprises (SMEs).

Standard payment terms by region

• APAC, North America, Latin America: 95 days EOM (end of month in which correct invoice received); 55% of suppliers based here
• Europe, Middle East, Africa: 65 days EOM; 45% of suppliers based here

Exceptions: country rules legally binding on Philips; Non-Purchasing Spend categories (taxes, sales-related cost, customs, personnel, banks, donations, charities); specific supply market conditions.

2024 payment practice performance

Legal proceedings

Number of legal proceedings during 2024 for late payments: 0. Of these, the number relating to SMEs: 0.

Methodology

Philips suppliers are categorized as SME (EU definition: <250 employees and turnover ≤€50m or balance sheet total ≤€43m) and No SME. Payment practice monitoring based on a sample size of 50,000 payments across regions and supplier types, with the same relative distribution as total Philips. Average actual payment term for 2024 calculated from invoices posted and paid within the fiscal year. Payment terms calculated from date the correct invoice is received.