Philips Has Introduced More Than One Hundred Green Flagship Products

AMSTERDAM, the Netherlands -- Feb. 28, 2005 -- Royal Philips Electronics (NYSE:PHG, AEX:PHI) today published its third annual sustainability report. Based on its environmental program “EcoVision”, Philips introduced 21 new Green Flagship products to the market in 2004, bringing the total number of green flagships to more than one hundred. Philips Green Flagship products offer a proven better environmental performance than their predecessors or closest commercial competitors in the green focal areas of weight, energy consumption, hazardous substances, packaging and recycling and disposal.

“The year 2004 was a year in which we have made further progress in embedding sustainability throughout the company by setting clear targets,” said Gerard Kleisterlee, President and CEO of Royal Philips Electronics. “Sustainability is nothing new for Philips, it has been in our DNA since the company was founded. We see sustainability as our way of doing business, involving all levels of our own organization as well as including our suppliers,” Mr. Kleisterlee added.

Embedded in the company strategy

Philips’ ’embedded model’ aims to drive sustainability throughout the whole organization. As promised in the 2003 Sustainability Annual Report, in 2004 we established company-wide Sustainability Key Performance Indicators (KPIs) in line with the GRI recommendations. Achieving top place in the DJSI in Cyclical Goods & Services for a second consecutive year confirms the company’s determination to meet its goals. In particular, it was noted for strengthening its sustainability governance and integrating sustainability management in all its businesses, regions and functions.

EcoVision program drives positive environmental performance results

Philips is constantly looking for ways to improve the production processes and product innovation from a sustainability perspective. In 2004 Philips launched 21 products that have achieved Green Flagship status, compared with eight in the previous year, adding to the more than 100 Green Flagships already on the market.

Examples of Green Flagships in 2004 are Philips Medical Systems’ iU22 ultrasound system for next generation, real-time 4D imaging. Compared with its predecessors, the iU22 weighs 22% less, eliminates 82% of the hazardous substance mercury, reduces energy consumption by 37%, uses 20% less packaging and offers a 30% improvement in total weight of recyclable material. Another example is CosmoPolis 6600, an innovative luminaire for outdoor lighting. CosmoPolis Gold weighs 37% less, eliminates the less hazardous substance lead and is 29% more energy efficient than its predecessor.

New business opportunities

In addition to the environmental achievements, Philips has intensified its focus on new business opportunities with sustainability as key driver at all levels of the economic pyramid. In terms of providing sustainable solutions for the base of the economic pyramid, the company is working on several pilot projects.

A typical example of such an initiative is the DISHA (Distance Healthcare Advancement) pilot project in India. Through DISHA high quality, low-cost diagnostics will be provided to those people in India who are not addressed by the existing healthcare system. Together with local partners, governments and NGOs, these people will have access to a customized ’teleclinical’ truck, equipped with diagnostic equipment, doctors and specialists providing free consultations.

Supplier involvement

Acting sustainable also requires having sustainable suppliers. Through its Supplier Sustainability Involvement Program, the initial group of key suppliers who received the Philips Declaration on Sustainability agreed to adhere to its principles. The document outlines the minimum expectations of behavior in the area of sustainability. This process is reviewed via supplier audits for which a team of 400 Philips auditors has been trained. Sustainability has also been integrated in the global supplier measurement and audit system.

About Royal Philips Electronics

Royal Philips Electronics of the Netherlands (NYSE:PHG, AEX:PHI) is one of the world’s biggest electronics companies and Europe’s largest, with sales of EUR 30.3 billion in 2004. With activities in the three interlocking domains of healthcare, lifestyle and technology and 161,500 employees in more than 60 countries, it has market leadership positions in medical diagnostic imaging and patient monitoring, color television sets, electric shavers, lighting and silicon system solutions. News from Philips is located at www.philips.com/newscenter.

Forward-looking statements

This release may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.

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