Economic Growth

Stepping up to the challenge of sustainable and inclusive growth

A veteran tours the World War Two Memorial in Washington October 1, 2013. Despite the U.S. government shutdown affecting the site, a barricade was removed to give veterans access to the memorial. Up to one million federal workers were thrown temporarily out of work on Tuesday as the U.S. government partially shut down for the first time in 17 years in a standoff between President Barack Obama and congressional Republicans over healthcare reforms.    REUTERS/Kevin Lamarque  (UNITED STATES - Tags: POLITICS BUSINESS CONFLICT) - GM1E9A209HS01

Philips has been working with the US Department of Veterans Affairs for 45 years. Image: REUTERS/Kevin Lamarque

Frans van Houten
Chief Executive Officer, Co-Chair PACE, Royal Philips
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Economic Progress

This article is part of: World Economic Forum Annual Meeting

The day after I was born, my grandfather wrote me a letter welcoming me as a new citizen of the world. “You will need courage and optimism,” he wrote, “to tackle the many challenges that you will face in your lifetime – courage to dream, to use your talents to explore new ways of solving challenges; and optimism that together, we will find solutions that everyone can benefit from.”

So what does it mean to be a world citizen in these times, in a world that is in a state of fragility, with climate change, trade tensions, geo-political unrest, uncertain prospects for the global economy, and the list goes on? For me, it means looking through a long-term lens and taking responsibility, both individually and collectively, to make a positive impact on the health of the planet and of its inhabitants.

For a start, I strongly believe that the solution to the vast majority of the world’s challenges resides in people, or human capital. With the right, sustained investments in education, training and health, it should be possible to realize the full potential of a productive, more inclusive and healthier society.

In my home country of the Netherlands, I’m applying these insights through NL2025 – a collaboration platform set up by leaders from the business, cultural and sports worlds, to work together with the aim of shaping a better future.

We share our knowledge, expertise and network to support and scale-up a broad range of initiatives that help connect people and ideas, based on the “pay-it-forward” principle – repaying a good deed to others instead of to the original benefactor.

I am also convinced that businesses have an important role to play in addressing global challenges. Since its foundation in 1891, Philips has committed itself to doing sustainable business. We have a clear “North Star” approach – our fixed and guiding vision of making the world healthier and more sustainable through innovation, with a goal of improving the lives of 3 billion people a year by 2025. We fully embrace sustainability principles not only because of the benefits for society, but also because we believe that it is a driver for innovation and value.

Our “Healthy people, sustainable planet” programme enables us to deliver on that commitment by creating value for our customers through sustainable products and services, leading by example in our sustainable operations, and driving sustainability through our supply chain.

Our work is aligned with three of the United Nations’ Sustainable Development Goals (SDGs) – Health and well-being for all (SDG 3), Sustainable consumption and production (SDG 12), and Climate action (SDG 13) – they provide a fantastic lens through which to unite stakeholders and shareholders in a long-term approach.

Health and well-being for all

Social inclusiveness is a prerequisite for ensuring sustainable growth, and it is well established that economic growth and good health go hand in hand. This is why extending access to healthcare and the ability to lead a healthy life are fundamentally important challenges for all countries to address.

Yet, according to the World Health Organization and the World Bank over half the population of our planet still lacks access to essential health services. Universal Health Coverage is not only a problem for people in emerging economies, but also in countries with a well-developed health system, where for a wide range of reasons, including affordability and geographic remoteness, patients may experience very different levels of care.

The drive for affordable and effective healthcare delivery is also fuelling a shift from fee to value-based care – a system that aims to extend access to care and improve patient outcomes at lower cost. We believe technology is foundational to value-based care, whether it be an informatics infrastructure that allows us to actually measure value by systematically tracking outcomes and costs, or telehealth platforms that bring care closer to the patient, wherever they reside.

As an example – Philips’ relationship with the US Department of Veterans Affairs (VA) goes back 45 years, with over 50% of all VA Medical Centres and clinics using our healthcare solutions. The VA operates the largest telehealth programme in the country, with 700,000 Veterans receiving telehealth services last year.

Together, we recently announced a new programme, whereby at 10 rural and remote locations across the US, veterans will be able to interact with healthcare professionals, leveraging connected care technology, aiming to reach more people and improve their experience with the health system, at a lower cost.

Digitally-enabled solutions are also compatible with the healthcare access needs faced in developing economies. One such example is the Philips Community Life Center (CLC) platform, which takes a community-driven, holistic approach to strengthening primary healthcare. Philips is working with key partners across the African continent, including Amref Health to understand how connected care can improve health access for 20,000 residents of Makueni County, Kenya.

So, both in developed and emerging economies we’re shaping the future of health and healthcare to enable people to lead healthier lives and access the care they need to fulfil their potential – making sure that all people are on board.

Sustainable consumption and production – from a linear to a circular model

For a healthy, sustainable world for all, the transition from a linear to a circular economy is essential. We collaborate closely with our customers, suppliers, peer groups, governmental and non-governmental organizations and other stakeholders to accelerate the adoption of “circular” thinking, moving away from the linear model of Take>make>dispose to a circular model of Make>use>return.

Image: Ellen MacArthur Foundation

At last year’s World Economic Forum Annual Meeting, I strengthened Philips’ commitment to the circular economy by pledging to take back and repurpose all the large medical systems that our customers are prepared to return to us. We actively pursue the trade-in of equipment such as MRI, CT and interventional X-ray systems and take full control to ensure that all traded-in materials are repurposed in a responsible way.

As co-chair of the PACE (Platform for Accelerating the Circular Economy) initiative, I’m driving the necessary change and implementation, and trying to assemble a coalition of like-minded organizations to make similar capital equipment pledges.

In just one year, a growing group of industry leaders – including ASML, Cisco, Dell, HP, KPN, Mitsubishi Elevators and Vanderlande – is also starting to take full responsibility for the reuse, refurbishment and recycling of the capital equipment they sell. This will incentivize extending the life of products and stopping waste at the end of product use, while capturing the economic value of materials.

Aligning corporate purpose and long-term strategies behind social impact

From my standpoint as Philips’ CEO, there is a clear opportunity for the private sector to step up and deliver meaningful, measurable progress against the global goals. More now than ever, an inclusive relationship between private sector players, local communities, and the customers we all serve, is critical to making sure that we leave no one behind. This is why I support the WEF Compact for Responsive and Responsible Leadership – a vision statement for all-round stakeholder management in the societies we serve.

As my grandfather rightly taught me: it is all about courage and optimism – courageous leaders must make complex dynamics and transformation issues discussable in a way that is open and engaging, which means going beyond just the financials.

By focusing on relevance, and aligning corporate purpose and strategy behind social impact, I am certain that we all can be competitive whilst also unlocking sustainable value and inclusive growth, not only for our generation, but also for our children and grandchildren.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Economic GrowthCircular EconomyNature and Biodiversity
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