Methodology for calculating the  
Environmental  
Proﬁt & Loss 
Account

At Philips, our purpose is to improve people’s health 
and well-being through meaningful innovation.  
Our goal is to improve the lives of 2.5 billion people  
a year by 2030.  
We launched our ESG commitments, with ambitious targets to be achieved by the end of 
2025, in 2020. Besides our social impact, focusing on SDG 3, we have an environmental 
impact through our global operations (including our supply chain), but even more so 
through our products and solutions. This is where we contribute to SDG 12 (Ensure 
sustainable consumption and production patterns) and SDG 13 (Take urgent action to 
combat climate change and its impacts). 
The Philips Environmental Proﬁt & Loss (EP&L) account guides our eﬀorts on the 
environmental dimension. It is an economic valuation in EUR of the impact that Philips has 
on the environment, or in other words: an environmental footprint of Philips’ complete 
value chain expressed in monetary terms.
Our EP&L account is based on Life-Cycle Assessment (LCA) methodology. Philips has been 
performing LCAs since 1990. The assessments are used to steer our EcoDesign eﬀorts and to 
determine the Green Focal Areas (GFAs) of the Philips product portfolio. The GFAs are 
product characteristics like energy eﬃciency, weight and product lifetime that determine 
the environmental impact of our product portfolio. They form the basis of our steadily 
growing Green/EcoDesigned solutions portfolio.
The EP&L account is a logical next step to extend the scope from individual product value 
chains to Philips’ complete value chain. It will support the direction of our sustainability 
strategy by providing insights into the main environmental hotspots from an overall 
business point of view and it will guide Philips in its efforts to deliver on its commitment to 
reduce its full value chain emissions in line with a 1.5-degree global warming scenario.
The current EP&L account only includes the hidden environmental costs that are associated 
with our activities and products. It does not include the beneﬁts (‘proﬁt’) to society that 
Philips generates by improving people’s lives through our products and solutions, e.g. our 
healthcare solutions. We have a well-established methodology to calculate the number of 
lives we positively touch with our products and solutions. We aim to look into valuing these 
societal benefits in monetary terms in the future.
This document describes the methodology we used to calculate the 2021 EP&L account, 
including information on the scope, assumptions and data sources. The ‘EP&L‘ metric is part 
of the assurance assignment of EY. EY’s assurance report can be found in chapter 13.6 of the 
Annual Report 2021.
Scope
The scope of the EP&L account comprises three parts:
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Business activities
All business activities and markets are included in scope except  
software, hardware servicing during use phase (parts replacement), 
consumables and accessories 
Value chain 
The scope of the EP&L account is ‘cradle to grave’. It includes raw 
naterial and componenet production and processing. Philips’ own 
operations (manufacturing, offices, business travel and logistics, 
usage of our products and disposal at the end of life.)
Environmental impact
The choice of environmental impacts is related to the LCA metho-
dology ReCiPe and the monetary valuation methodology that has 
been chosen. Further explanation is given under ‘Methodology’.
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Philips Group
Scope of Environmental Profit& Loss Account, 2021
Business activities
For Personal Health, 96% of the product portfolio revenue is covered in the EP&L. Non 
covered products consist of accessories, spare parts and products with relatively low sales 
revenue.  Consumables that are directly connected to consumer electronic products, such as 
brush heads for toothbrushes, have been included. Consumables not directly attached to the 
product (e.g. shaving gel or toothpaste) are not included.

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With the disentanglement of Domestic Appliances business in 2021, the business activities of 
this business have been excluded from the scope. This business manufactures energy 
consuming products like steam irons, vacuum cleaners and airfryers meaning that Philips’ 
environmental is being reduced significantly by the disentanglement (refer to the Annual 
Report 2021 for details).
For Precision Diagnosis, Connected Care and Image Guided Therapy 38% of the revenue is 
included in scope.  All medical systems and monitors are included in the calculation with the 
exception of Lumify, catheters, and product (spare) parts. 
Consumables, accessories and hardware upgrades are excluded from the scope with the 
exception of masks. Reason for the exclusion of consumables (e.g. sensors, cuffs, ECG cables 
etc.) and accessories is that due to the large variety it is not yet possible to accurately 
determine the overall material composition and weight. 
Hardware upgrades and parts replacement (repair) of medical equipment during the use 
phase of medical equipment are difficult to trace back to material composition and are thus 
not included yet in the scope.  However, the environmental impact of business travel of the 
service engineers is included in scope. 
Value chain
The scope of the EP&L addresses the key environmental contributors. For extraction and 
processing of raw materials and production of components (e.g. plastics and printed circuit 
boards), generic environmental impact data from the LCA database Ecoinvent 3.4 have been 
used. Forming of metal and plastic materials into parts, e.g. with metal extrusion or injection 
moulding, is excluded from scope.
Energy consumption of our products (> 80%) is dominating Philips’ environmental impact. 
The energy consumption during the full lifetime of the products sold in 2021 is included. For 
example, the environmental impact of electricity needed to use a Diamond Clean toothbrush 
during its full lifetime of an estimated four years, so until 2025, is included in the 2021 EP&L 
account. This is a signiﬁcant overestimate of the 2021 impact, however as the life-cycle impact 
is ‘generated’ in 2021 it has been decided to account for this impact in the year that the 
products are sold.
The use-case scenarios, defined by the power consumption, duration and frequency of use, 
has a significant impact on the result, especially for consumer products, which have large 
sales volumes, long lifetimes and frequently high energy consumption (e.g. haircare 
products).
As of 2020 we measure the impact of the electricity consumption of our products based on 
the specific energy mix of the market where the products are sold. As markets of sales (e.g. 
CentraL Europe) often consists of several countries, e.g. Poland and Romania, the energy mix 
is used of the country with the highest sales in that market and/or the country for which an 
Ecoinvent dataset is available for electricity production.
For all Healthcare diagnostic imaging equipment, we aim to calculate the energy 
consumption according to the COCIR standard. This standard describes how a measurement 
should be carried out and what use case scenario to apply as to number of hours per day in 
ready-to-scan, standby, off and scanning mode.  In the current EP&L account, this standard is 
applied for the MR and CT equipment. 
The total energy impact is also determined by the number of days that a medical system is 
used per year and the total lifetime. For the frequency of use we apply 250 to 365 days per 
year for diagnostic medical systems assuming usage during normal working hours only (5 
days per week and including 2-week holiday) or usage every day of the year. Actual number 
of days that diagnostic equipment is being used will depend on patient schedules and 
emergency situations which will differ per hospital. As to lifetime, an average of 10 years is 
used for patient monitors, X-ray, CT-, MR- IGT- and Ultrasound equipment and 5 years for 
Respironics equipment. The lifetime is based on our guaranteed service lifetime.
For Personal Health products, the applied lifetime is aligned with the lifetimes as used in the 
Lives Improved calculation
Philips 
Environmental impact 2021
EUR 2.16 billion
Customer use phase
EUR
3 M
Product 
disposal
Materials & 
component
supply chain
EUR 
289 M
Packaging
EUR
11 M
EUR
20 M
Business 
travel
EUR
4 M
Philips 
sites
Logistics
EUR
82 M
90% 
electronics 
& metals
10% 
plastics
EUR
1.74 B

Environmental impacts
The choice of environmental impacts is related to the LCA methodology (ReCiPe) and the 
monetary valuation method that has been chosen. Further explanation is found under 
‘Methodology’.
Out of scope
Not included in the EP&L, besides the above mentioned out-of-scope 
business activities, are inputs- and outputs that are difficult to assess and have a relatively 
low contribution:
•	 Inbound transport of raw materials, components and subassemblies1
•	 Purchased materials that do not end up in ﬁnal products (e.g. cutting wastes in our 	
	
	
factories)
•	 Emissions to air and water, waste, consumption of water and process chemicals at Philips 	
	
manufacturing sites
•	 Waste and water consumption of non-industrial Philips sites (e.g. oﬃces and warehouses)
Philips uses mostly off the shelf components in its products which means that the net Bill of 
Materials (BOM) of products as used in the EP&L calculation will not deviate much from the 
gross purchased materials. 
Methodology
The method used to calculate the EP&L account is the internationally recognized ReCiPe 
methodology2 , in combination with environmental pricing as provided by CE Delft. The LCA 
software used for the environmental impact assessment is EcoChain. Data models are based 
on the Swiss national LCI database Ecoinvent v.3.4, for background as well as foreground 
data. The insights we derived from the EP&L results when expressed in ReCiPe end scores 
(mPts) do not deviate from the results expressed in EUR. 
Environmental impacts included in the assesment
•	 Climate change
•	 Ozone depletion
•	 Human toxicity
•	 Eutrophication (fresh/marine water)
•	 Photochemical oxidant formation
•	 Particulate matter formation
•	 Acidification
•	 Ionizing radiation
•	 Ecotoxicity (marine and freshwater/land)
•	 Land use
The environmental pricing methodology of CE Delft is based on the ReCiPe 2008 
methodology for LCA. The prices (see table 1) are so-called damage costs (as opposed to 
prevention or abatement costs) and represent the willingness of citizens to pay for not 
having to be exposed to an additional 1 kg of environmental pollution, expressed in EUR 
per 1 kg of emissions. The environmental prices are included as conversion factors 
(‘weighing factors’) in the LCA software at the midpoint level of environmental impacts.
In our LCA software, ReCiPe 2008 can only be used with the Ecoinvent 3.4 database. 
Preferably we would use the more recent ReCiPe 2016 methodology in conjunction with a 
more up to date EcoInvent database e.g. 3.6. This is however not possible as the CE Delft 
environmental prices are only valid for the ReCiPe 2008 method.
The CE Delft pricing methodology does not yet include environmental prices for depletion 
of water, fossil fuels and metals and natural land transformation and hence these 
environmental impacts are excluded from the scope. The explanation why these 
environmental prices are not available in the pricing methodology can be found in Chapter 
5 of the CE Delft Handbook. 
The environmental prices have been calculated for Dutch territory only. Many 
environmental impacts like human toxicity and ecotoxicity are speciﬁc to the local context. 
This means that the environmental prices cannot be automatically extrapolated to other 
regions outside The Netherlands.
CE Delft also has European environmental prices available. However, as that would also not 
represent Philips’ global sales, it has been decided to continue using the (higher) Dutch 
environmental prices and await the publication of the global set of country specific prices.
1 	For materials, the Ecoinvent ‘market for’ datasets are used which include all required logistics to make a material available 	
	 on the market. However, the last mile transport from tier 1 suppliers to Philips is not included in our EP&L calculation
2	 Goedkoop, M. et al., 2013. R. ReCiPe 2008, A life cycle impact assessment method which comprises harmonised category 	
	 indicators at the midpoint and the endpoint level; First edition (version 1.08) Report I: Characterisation, Den Haag: 
	 Ministerie van Volkshuisvesting, Ruimtelijke Ordening en Milkieubeheer (VROM).
Table 1: Environmental prices of environmental impacts in the Netherlands
Theme
Unit
External  
costs
Weighting  
factor
Climate change
EUR/kg CO2-eq
EUR 0.06
EUR 0.06
Ozone depletion
EUR/kg CFC-eq
EUR 30.40
EUR 123.00
Human toxicity
EUR/kg 1.4 DB-eq
EUR 0.16
EUR 0.16
Photochemical oxidant formation
EUR/kg NMVOC-eq
EUR 2.10
EUR 2.10
Particulate matter formation (chimney >100m)
EUR/kg PM10-eq
EUR 35.12
EUR 35.12
Ionizing radiation
EUR/kg kBq U235-eq
EUR 0.05
EUR 0.05
Acidification
EUR/kg SO2-eq
EUR 5.40
EUR 8.12
Freshwater eutrofication
EUR/kg P-eq
EUR 1.90
EUR 1.90
Marine eutrophication
EUR/kg N
EUR 3.11
EUR 3.11
Terrestrial ecotoxicity
EUR/kg 1.4 DB-eq
EUR 8.89
EUR 8.89
Freshwater ecotoxicity
EUR/kg 1.4 DB-eq
EUR 0.04
EUR 0.04
Marine toxicity
EUR/kg 1.4 DB-eq
EUR 0.01
EUR 0.01
Land use 
EUR M2* year
EUR 0.03
EUR 0.04
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As can be derived from table 1, particulate matter formation (main contributor to results) has 
a relatively high weighting factor. This is due to the rather unique Dutch situation with 
relative low air quality and a high concentration of ammonia in the air. Ammonia is an 
important source of particulate matter formation. As mentioned, due to lack of 
environmental prices that are geographically diﬀerentiated, we used the Dutch data. 
However, CE Delft does provide a differentiation in environmental price for particulate matter 
formation related to the source of emission. The environmental price for particulate matter 
formed via transportation exhaust gasses is higher than particulate matter formed via high 
chimneys of electricity generation plants. Given the fact that electricity consumption is the 
main contributing factor to the Philips EP&L 2021 (81%), with particulate matter formation 
and climate change as the main environmental impacts, we used an adapted environmental 
price of particulate matter formation as provided by CE Delft (35.12 EUR/kg PM10 eq).
  
 
Data quality
Several factors are inﬂuencing the bandwidth of the ﬁnal EP&L account results:
•	 Accurateness of generic datasets
•	 Scope of data included
•	 Assumptions made (e.g. the choice of reference products as proxies to cover all product 	
	
categories and the pattern of use of products to derive the electricity consumption)
Availability and quality of data is a challenge inherent to LCA and results in uncertainty of the 
EP&L outcome. Uncertainty also results from the LCA and monetary valuation methodology 
used, which is based on assumptions that will vary over time.
The ﬁgures reported are Philips’ best possible estimate. As we gain new insights and retrieve 
more and better data, we may enhance the methodology and accuracy of results in the 
future. The inherent uncertainties relevant to the further development of the EP&L are 
expressed in the related disclosures in the annual report.
Data 
Source
Remark
Material extraction and processing 
upstream
Generic data from Eco-invent (LCA) database (industry 
averages)
No specific environmental data from suppliers have been collected. 
Geographical scope of Ecoinvent datasets:
Global (GLO) data for materials, unless country of origin is known, or if only European dataset (RER) is available. 
Environmental data Philips sites 
Energy consumption as registered in Credit360 software 
(used by Philips sites)
Waste, emissions to air and water, consumption of water and process chemicals excluded Geographical scope of used 
Eco-invent datasets: country-specific datasets used for energy processes. For example, for China-based plants, the Chinese 
electricity mix is used.
Outbound transportation supplied 
and (semi)final goods
Invoices from our logistic providers
This includes transportation between Philips sites and from Philips sites to customers. 
Material composition and weight 
Philips products
Bill of materials (BOM) of reference products (Article 
Groups: AGs) and product documentation Philips website 
For each business, within the mentioned scope, representative reference products with high sales were identified and the 
material composition of these products derived. These data were used as proxy for comparable other product categories.
Net BOM data have been used. 
Production amounts 
Sales data
Business travel
Internal declaration system as used by Philips employees
As reported in our operational Carbon Footprint
Energy consumption office buildings
Invoices from our energy providers
As reported in our operational Carbon Footprint
Use phase
Based on power (W) and duration of usage per day or 
week; lifetime based on Lives improved data
If data was not available, assumptions were made based on use cases of similar products.
Geographical scope of used Eco-invent datasets: region-specific datasets used for electricity generation
Final disposal
WEEE disposal scenario in Eco-invent database.
Assuming 50 km transportation by truck from disposal location (e.g. retailer or hospital) to waste treatment/ 
recycling facility
To be inserted in Use phase row
Lifetime for Personal Health products is based on our  
Lives Improved data. For Health Systems it is based on  
the guaranteed service lifetime
Geographical scope of used Ecoinvent datasets for electricity consumption: country-specific datasets are used based  
on our market of sales (e.g. Nordics, France, Benelux, Greater China, North America, and LATAM)
Table 2: Data sources

Next steps
In next year’s EP&L calculation we aim to:
•	 apply a more harmonized use frequency across the medical diagnostic portfolio
•	 introduce more reference products within the hairdryer portfolio to account for variation 	
	
in power consumption between the models
Furthermore, we will continue to closely follow (inter)national developments in the EP&L 
methodology, e.g. the EU Product Environmental Footprint (PEF) and Organizational 
Environmental Footprint (OEF) project aimed at the development of an EU harmonized LCA 
method, and the Value Balancing Alliance that aims to develop a standardized methodology 
to measure and monetize corporate environmental impacts.
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