Signify: decarbonising the lighting market

What was the plan?

Lighting accounted for one-fifth of global electricity consumption in 2006, according to calculations made by Signify (formerly Philips Lighting). To become compatible with a climate secure future, Signify took the bold decision to phase out traditional incandescent light bulbs and advocate for light-emitting diode (LED) lighting. They issued a global call to the lighting sector as a whole to transition towards net zero by adopting LED lighting, amongst other strategies (CISL, 2020).

What was the challenge?

At the time, Signify was the market leader in lighting. Incandescent bulbs made up two-thirds of the company’s sales volume and LED lighting was not commercially available. Signify set itself the challenge of developing more energy-efficient lighting solutions while advocating for a global market transition to climate-friendly lighting.

While senior management supported the climate-based arguments internally, the transition was complex for Signify as it required rethinking their business model. Another challenge consisted of overcoming hurdles to the industry-wide uptake of LEDs.

What strategies did Signify use?

Signify’s internal challenges prompted the development of a restructuring plan using scenario planning and life cycle analysis tools. This plan included a major reprioritisation in Signify’s innovation strategy. Sales revenues from its heritage products were used to finance next-generation alternatives.

In the immediate term, the decision to phase out incandescent light bulbs caused Signify to reprioritise and enhance its research and development work (R&D). This enabled it to rapidly transform its nascent LED technology into a market-ready and ultimately market-shifting product.

Improving uptake of LEDs involved:

  • proving the superiority of LEDs to industry peers in terms of technical viability, cost savings and environmental advantages
  • involving policymakers in the development of regulatory reforms that would speed up the transition, widening the argument beyond the topic of climate change alone to persuade policymakers
  • innovating to improve the quality of LED lighting
  • sharing Signify’s transition scenarios to provide impetus for policy action and encourage buy-in from industry peers by highlighting the need to act and illustrating how to do so.
What were the outcomes?

Drawing on empirical evidence, Signify was able to show policymakers that the use of LEDs for street lighting improved illumination levels and gave city residents a greater sense of safety. In 2007 and 2008 respectively, US and European policymakers announced a phase-out of incandescent light bulbs, stirring other countries and lighting companies into action.

This ambition loop between government and business was essential for driving decarbonisation and low carbon innovation in the context of lighting. Signify’s Head of Global Public and Government Affairs, Harry Verhaar, explained, “The transition to highly energy-efficient lighting is now well underway and it has happened through a combination of business innovation and government ambition” (CISL, n.d.c:2).

Over time, Signify’s strategy also led the company to move into new business areas, such as digital solutions linked to the Internet of Things, and leasing light as a service (rather than selling lighting hardware).

Today, Signify remains the world leader in lighting for professionals and consumers. The company claims to have achieved carbon neutrality in its operations in 2020, and it launched a new plan – Brighter Lives, Better World 2025 – which aims, among other goals, to accelerate its 2030 1.5°C pathway target to 2025.

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The Signify case study demonstrates how innovation in R&D can play a central role in driving the transition to net zero. Implementing new technology to increase the resilience and sustainability of an organisation’s operations and its end products or services is essential for disrupting the status quo of the high carbon economy.

Johnson Matthey is a British multinational that creates fuel cells to help decarbonise the energy and transport sectors. Hydrogen fuel cells convert chemical potential energy to electrical energy, generating only water, electricity and heat. They are seen as having significant potential in decarbonising the transport sector, particularly the long-distance haulage sub-sector (Wyatt, 2021).

These case studies highlight some key strategies, challenges and approaches of decarbonisation initiatives. The following web pages explore more examples: