It's a Sustainable World After All

Barbara Kux, who chairs the Sustainability Board at Philips Electronics, talks about the global giant's green products

by William J. Holstein

Chief executive officers of multinational companies should regard climate change and looming energy shortages as business opportunities (BusinessWeek.com, 4/24/08), particularly in emerging markets, says Barbara Kux, a member of Royal Philips Electronics' (PHIA) group management committee. Kux, who chairs the company's sustainability board and is also the company's chief procurement officer, makes a distinction between emerging countries, which are getting richer, and developing countries, which will remain poorer.

Kux, a Swiss national based at Eindhoven in the Netherlands, is consistently ranked one of the most influential women in business. Here are edited excerpts from a recent conversation:

You believe that climate change is not necessarily a threat to major businesses but rather could be an opportunity?

It's a fantastic opportunity because it takes great technology and new solutions to cope with it. Today 70% of carbon dioxide (CO2) emissions are coming from so-called mature markets. But the developing and emerging markets are going to increase in importance simply because of pure demographics. The International Energy Agency estimates emerging markets will account for three-quarters in the rise of CO2 emissions up to 2030.

How are you helping position Philips to take advantage of these trends?

We have established sustainability as a green business opportunity. When I took over the chairmanship of sustainability in 2004 we asked, what are the topics and issues that have a high relevance to society at large where Philips has technological capabilities? Of course, the whole area of energy efficiency is a big one.

In addition, we created an interesting matrix. One axis was the human development index (HDI), which doesn't just measure [countries'] gross domestic product but also well-being by education and health levels of the population as well as purchasing power. The other axis was the ecological footprint of various countries. As a result, you can conclude there are three kinds of economies: developed economies, with 15% of global population; emerging economies, with 44% of the population; and developing economies, with 41% of the population.

We need products for each. For developed economies, we want to help them keep their high human development index and even improve it with cleaner technologies. For emerging economies, we want to help them leapfrog existing technologies with clean technologies. The developing economies need lower-cost technologies.

What does all that mean in terms of your product offerings?

We have our lighting solutions, which are on average 40% more efficient than older-generation incandescent lighting. Lighting, by the way, accounts for 19% of total energy use of the planet. This is a very concrete example of how climate change is not a threat.

What's the technological key to how your lighting systems use 40% less power?

In old lighting technology, 90% of electricity is wasted as heat produced by the lightbulb. So there has been a continuous drive to make lightbulbs that produce light, not heat. To that end we have developed the compact fluorescent lightbulb, designed to replace incandescent bulbs. And we've made considerable progress in light-emitting diode technology, which is very different from either incandescent or fluorescent lighting.

In general, did you develop new technologies when you took over the sustainability effort or use already existing ones?

Both. We have green technologies not only in lighting but also in health care, where we have a magnetic resonance imaging (MRI) scanner that uses 30% less energy than its predecessor. We also have consumer products that use 36% less energy or more. All our businesses are embracing products and solutions that consume less energy.