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Philips Corporate Strategy in Response to Climate Change

Philips Corporate Strategy in Response to Climate Change. Dr. Wolfgang Richter. General Manager Governmental Affairs Philips GmbH. 25 th October 2007. Agenda. 1. Sustainability as part of Philips global strategy. 2. Marketing / Communication: www.asimpleswitch.com.

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Philips Corporate Strategy in Response to Climate Change

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  1. Philips Corporate Strategy in Response to Climate Change Dr. Wolfgang Richter General Manager Governmental Affairs Philips GmbH 25th October 2007

  2. Agenda 1. Sustainability as part of Philips global strategy 2. Marketing / Communication: www.asimpleswitch.com 3. Energy saving and business opportunities through efficient lighting technologies

  3. Agenda 1. Sustainability as part of Philips global strategy 2. Marketing / Communication: www.asimpleswitch.com 3. Energy saving and business opportunities through efficient lighting technologies

  4. AwarenessPolitical, Corporate & Public Awareness

  5. Product development/ technology Advanced markets Emerging markets Developing markets The role of business in a sustainable world Economically viable Socially responsible Environmentally sound

  6. Paradigm changes

  7. Ever since our company was founded, 116 years ago, we have dedicated ourselves to improving the quality of life through meaningful innovation. Sustainability is part of our heritage Anton and Gerard Philips, 1891

  8. Philips recognized as sustainable entrepreneur

  9. Huge investments in green technologies • Investments of about 400 Mln Euros for R&D of green lighting solutions within last 5 years  Extension of SSL-business  Significant investments in OLED-Technology Wasserreinigung mit UV-Licht LED für angenehmere Untersuchungen Philips is setting the pase in the industry LED für schönere Städte

  10. Green Focal Areas: Energy consumption Packaging Hazardous substances Weight Recycling and disposal Lifetime reliability Turnover of Green products EUR 4 billion in 2006 Green products: creating value

  11. Communicating to our customersThe Philips Green Logo • Consumers will find the Philips green logo on our most environmentally friendly products, enabling them to make the right environmental choice. • Green logo products have been certified by external auditors that they are more than 10% more efficient than other products on the market within a given product category. • The Green logo programme enables consumers to make informed decisions about Philips products within the context of their environmental considerations.

  12. Activities in „Green“ • Lightmaster • Eco-Calculator (C02, €) • Energy-Efficiency-Projects with the cities of Hamburg and Bremen • Projects with municipalities • Cooperation with energy suppliers • Activities as part of the European lighting industry to force phase out of inefficient lighting solutions (incandescent lamps, concentinal gears, high-pressure mercury lamps…) via European directives (Eco-Design and Energy Service Directive) • …

  13. LightMASTER successfully used by…

  14. LightMASTER – Best Practice Project:Hospital: Asklepios Clinic Barmbek (Hamburg) Projektbeschreibung General Information • Pitch with luminaires • Inclusions of TL-D Eco lamp • 18,883 integrated Lampen • Each room is recovered in the LightMASTER‘s strucutre • Europe‘s state-of-the-art hospital • 500 rooms • 676 beds • New building of 2 years • Asklepios Chain: 21,000 beds • 15 operating rooms • 35,000 stationäre und • 40,000 ambulant cares/treatments

  15. Effort for lighting Before renovation After renovation Energy costs kwh CO (kg) Car (km) Energy costs kwh CO (kg) Car (km) 2 2 5 years 1,147,896 € 12,754,405 7,652,643 47,829,017 1,040,900 € 11,565,560 6,939,336 43,370,852 1 year 229,579 € 2,550,881 1,530,529 9,565,803 208,180 € 2,313,112 1,387,867 8,674,170 1 month 19,132 € 212,573 127,544 797,150 17,348 € 192,759 115,656 722848 Savings through more efficient illuminants Costs % kwh CO (kg) Car (km) Trees p.a. 2 5 years 106,996 € 1,188,844 713,306 4,458,165 35,665 9.3% 1 year 21,399 € 237,769 142,661 891,633 7,133 1 month 1,783 € 19,814 11,888 74,303 594 Energy Savings / Environmental Aspects

  16. Outdoor: Street Lighting - a global success • CosmoPolis globalisation projects today in Anyang City, Seoul, Shang Hai, Singapore, Jakarta, Perth, Melbourne, Panama City, Kiev and Recife • CosmoPolis European sales spread over 35 OEMs design-inover 75 luminaire families availableover 50 european cities applied CosmoPolisover 50,000 systems currently installed

  17. Best Practice Outdoor-Projects around the globe Milan, Italy Vechta, Germany An-yang city, Korea Holbæk, Denmark South Tyneside, UK Madrid, Spain

  18. Ambisound SoundBar Home Theatre System HTS8100 Energy 50% less than closest competitor Green Flagships: green products in every PD Cosmopolis, energy efficient street lighting 2GB* Flash audio video player SA5125 42” LCD Widescreen FlatTV with Pixel Plus 2 HD 42PFL7562D Energy 36% & Packaging 15% less than closest competitor Achieva 1.5 T R2 MRI system: Smarter products with lower operating costs

  19. Agenda 1. Sustainability as part of Philips global strategy 2. Marketing / Communication: www.asimpleswitch.com 3. Energy saving and business opportunities through efficient lighting technologies

  20. Launch: in July 2007

  21. Tracking user participation Exposed to ads Clicked on ad Pledge to switch Register as user Invite friends I promote the cause, I am an ambassador I saw / could have seen I am interested I participate I care as a participant 0 I II III IV • # of impressions • Logo’s • Banners • Video ads • Received emails # of clicks -on logo’s -On banners -On video ads -on emailed links # pledges # switches # registrations # emails out -total of all email addresses that were left on the site by registered users 535 mio impressions 800 k clicks 845 k pledges 3,3 mio switches 16k registrations 14k invitations

  22. Comparing to other ‘switch’ sites we have attracted more people to pledge/switch Nr. Of people making these pledges ~ 650.000

  23. Live Earth – The Media Event for the Environment • 7 concerts…at ecologically responsible & politically important venues • 6 continents…each with its own environmental concerns • 150+ artists…performing in support of a global call to action • 60+ films…& PSAs messaging critical environmental issues during the show • Live Earth’s “SOS” online community…engaged by rich content & interactivity before and after the concerts • 2 million audience members…across all Live Earth shows will be inspired by the event experience • 2 billion viewers…mobilized to take action with corporate partners

  24. Awareness campaigns:Mr. Al Gore recognizes leading role of Philips

  25. New legislation:Climate Change is now at the top of political agenda BRUSSELS EUROPEAN COUNCIL 8/9 MARCH 2007 PRESIDENCY CONCLUSIONS The European Council: invites the Commission to rapidly submit proposals to enable increased energy efficiency requirements on street and office lighting to be adopted by 2008 and on incandescent lamps and other forms of lighting in private households by 2009;

  26. Partnerships will change the business models • Utility Funded Schemes (Public Energy Suppliers) • Exploring public & private funding for street lighting • PFI: Private Finance investment • PPP: Public Private partnership • Carbon Trading methodology Partnerships: PPP contract with VINCI –Example: City of Rouen • 120 000 inhabitants (Area: 450 000 inh.); Normandy Regional Urban Pole • VINCI’s PPP contract amount: 100 M€ , a large 18-years Design, Build, Finance, Operate & Maintain contract in the area of: • Public lighting (15 000 public lighting points) • Wireless local lop in the old center • Traffic management equipments

  27. PES Business: Two ways to the customer Cooperation Retailer/PES Public Energy Supplier (PES) distribution partner direct distribution Domestic Household

  28. TL-D Super 80 (840/865) TL-D ECO New Product Concept: MASTER TL-D Eco • Simplicity Change of lamp • Result:>10 % energy savings 58W 51W 36W 32W

  29. TL5 Campaign, WWF partnering The new lighting product: MASTER TL5 Lamp • Campaign: • July - Mid-September • Throughout Europe • The NGO WWF as campaign partner: • Philips donates 5Euro-Cent per • TL5 lamp sold

  30. Solid State Lighting business developmenttowards general lighting General lighting mass market (new LED products, ambience, retrofit lamps) Customized general and special lighting (‘design-in’, e.g. surface/wall washing) Projects (outdoor, stage, etc.) Special applications (traffic lights, backlights, automotive backlight etc.) Innovation Philips 1995 2000 2005 2010

  31. Agenda 1. Sustainability as part of Philips global strategy & Green Flagship Approach 2. Marketing / Communication: www.asimpleswitch.com 3. Energy saving and business opportunities through efficient lighting technologies

  32. How much energy can we save? Photograph: NASA

  33. Power consumption per market segment source: GLiMF 070118

  34. Kyoto-Target: radical reduction in CO2-emission Kyoto-target for the EU • Electrical drive systems 39 Million t CO2 • Office appliances, in private and • service sector34 Million t CO2 Lighting 24 Million t CO2 • Consumer electronics 14 Million t CO2 • Heat production 12 Million t CO2 • Domestic appliances 12 Million t CO2 • Commercial heating, ventilation, air condition8 Million t CO2 Lighting 14% This target can already be reached by using energy efficient lighting solutions in domestic households within the EU: Annual savings of 25 Mio t CO2possible !* Others 86% * Calculations based on: 10 Euro-Cent/kWh 370g CO2/kWh By using innovative technologies Share of electric power consumption in Europe

  35. Saving potentials for Lighting More than 50 % of lighting is old, inefficient technology Saving potential cost savings p.a. energy savings p.a. ecological savings p.a. Street/City 3 billion €* 15 power plants à 2 TWh 10 million tons of CO2 Office 6 billion €* 30 power plants à 2 TWh 20 million tons of CO2 Private Households 10 billion €* 35 power plants à 2 25 million tons of CO2 More than 30 % of all streets in Europe are still equipped with old, inefficient technology from the 1960s - installed over 20 years ago More than 75 % of office lighting in Europe is not state-of-the-art * Calculation based on: 10 Euro-Cent/kWh 370g CO2/kWh By using the most innovative technology

  36. The technologies do already exist Calculation based on a CO2-emission of 420 g/kWh

  37. … but switch rates are too low… • Lacking awareness of economical and ecological potential • Technical uncertainty • Shortage in financing • Contractual commitments • More than 50 % of lighting is old, inefficient technology • Example street lighting: 3 % switch rate p.a. • Example office lighting: 6 % switch rate p.a. • => switch takes > 1 Generation! Reason for slow switch over rate

  38. We focus on Outdoor, Indoor and Home lightingPotential Energy Savings through Energy Efficient Lighting Potential savings in segment * % of total CO2 emission Main Product Realistic Ambitious Segment Segment Product Savings Savings 18% Outdoor: Street lighting 25% HID HID 35% 35% 45% 20% Office & Industry Indoor: Buildings TL TL 35% 35% 25% 50% Homes Homes GLS GLS 70% 70% Lighting total 40% Biggest opportunity Professional applications * Savings takes % of segment that uses old technology into account

  39. Outdoor: street lighting • 56 Mio street-lighting light points in Europe • 18 Mio still using 1930`s technology • High-Pressure Mercury Lamps (HPL) • Alternatives available: • High Pressure Sodium • Ceramic Metal Halide (Cosmopolis) 50 lm/W 100 lm/W

  40. Outdoor: street lighting - Pay Back improvementHigh Pressure Mercury 125W vs Cosmo White 60W Number of lamps 100 Burning hours 4000 • Acceleration of renewal rate at shorter pay back periods • Pay-back times are becoming more attractive with increasing energy prices

  41. We take initiatives to increase switch-over ratee.g. street lighting: current changeover rate 3% per year; office lighting 7%. • Hurdles for target groups • No pressure to switch • Lack of awareness • Investment (initial; renovation) • Acceleration of switch over via: • Awareness Campaigns (public / private) • New legislation (e.g energy-certification for buildings) • Partnerships (public / private / NGO`s / utilities) • Innovation of product portfolio

  42. Summary: New, higher quality, lighting technology available This energy saving technology offers a unique triple win • Users / tax payers save costs & have better light quality • The environment benefits from lower energy/CO2-emissions • European competitiveness is being strengthened A triple effort needed • Accelerate the switch to new energy saving lighting solutions • More awarenessand partnershipbetween stakeholders including financial institutions • Implement new legislation

  43. Thank you for your attention!

  44. Back Up

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