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In today's rapidly evolving economic landscape, companies are making commitments to more sustainable and ethical practices.

The extent to which such commitments are implemented successfully is also reflected on the decisions made on products and services throughout their lifecycles.

As product and services are at the core of each business and main source of company revenues, Environmental, Social, and Governance (ESG) factors need to be incorporated in the decision-making processes.

Whether your aim is including sustainable features in existing products or services, setting expectations for your suppliers in terms of ethical business practices or designing carbon neutral products and services, having made an ESG commitment is not enough, and the real challenge is in execution and delivering tangible results.

In this blog I share some insights on both, what ESG commitments are and some practical recommendations for product leaders to remain competitive and stay ahead of the emerging ESG risks and opportunities.

What are Environmental, Social, and Governance commitments?

ESG commitments are pledges made by companies to prioritise and integrate ESG factors into their products and services, business operations, decision-making processes, and overall corporate strategy. These commitments signal a departure from traditional business models focused solely on profit maximisation, towards a more holistic approach that considers the long-term impact on the planet and communities.

ESG commitments often have implications for products and services and supply chains.

Typical examples are:

• Environmental commitments around minimising the product's ecological footprint, promoting environmental stewardship, and addressing climate change. This involves actions such as reducing greenhouse gas emissions, conserving natural resources, managing waste responsibly, and adopting sustainable practices throughout the supply chain.
• Social commitments that focus on fostering positive relationships with stakeholders, promoting diversity and inclusion, ensuring fair-labour practices, minimising modern slavery risks in supply chains and contributing to the well-being of communities. Companies may commit to supporting employee welfare, respecting human rights, promoting diversity in the workforce and leadership positions, and engaging in philanthropic initiatives.
• Governance commitments that pertain to ensuring transparency, accountability, and ethical conduct in corporate governance structures and practices. This involves maintaining high standards of corporate governance, preventing corruption and bribery, protecting shareholder rights, and adhering to regulatory requirements and industry best practices.

To be successful, ESG commitments need to have well-defined metrics, targets and action plans as well as be supported by the right technology.

The collaboration of everyone within an organisation and its stakeholders is paramount.

What does this mean for Product Leaders?

As product and services are at the core of each business, gaining oversight over their lifecycles and recognising the importance of monitoring not only financial metrics but also non-financial ones such as ESG is crucial.

Lifecycle management is the key ingredient that can significantly enhance efficiency and accountability. It helps streamline workflows, identify bottlenecks, and ensure timely delivery of outcomes. By implementing regular monitoring of ESG metrics and creating ESG-focused product reviews followed by risk mitigation and action plans, product leaders can enhance product performance, drive innovation, and achieve the ESG targets and commitments.

Get started by implementing 3 steps.

The first step in leveraging ESG metrics for enhanced product performance is to identify manageable metrics and targets that align with ESG standards. To effectively manage ESG performance, product leaders must identify key metrics that are relevant to their products and business operations.

Examples of manageable ESG metrics and targets include:

• Environmental: Carbon emissions, energy consumption, waste generation, water usage.
• Social: modern slavery risk, diversity and inclusion metrics, fair labor practices, community engagement.
• Governance: ethical business conduct, compliance with regulations.

By setting specific, measurable, achievable, relevant, and time-bound (SMART) targets for these metrics, product leaders can track progress and demonstrate commitment to ESG principles.

While ESG metrics can at times be difficult to quantify, it is good practice to start collecting data that support the sustainability-related goal. This will also help to provide ground for any environmental or sustainability claim that is made and avoid greenwashing risk. ESG data can be either qualitative or quantitative. It is either produced internally in the organisation or gathered directly by external parties or public sources. Don’t be discouraged by the fact that the quality and accuracy of such data may not initially be high, simply start with the best evidence available and improve it over time!

Once manageable ESG metrics and targets have been established, product leaders should conduct regular product reviews to monitor progress against the identified ESG goals. Product reviews should evaluate the environmental, social, and governance impacts of products throughout their lifecycle, from design and manufacturing to use, disposal and recycling.

During product reviews, product leaders should:

• Assess the environmental impact of products, including resource consumption and emissions.
• Evaluate the social impact of products on communities and stakeholders.
• Review compliance with products’ sustainability obligations.

By monitoring progress against ESG goals, product leaders can identify areas for improvement and take corrective actions to ensure alignment with ESG standards.

Digital tools and technology can help streamline ESG monitoring, reporting and decision-making processes. This is extremely useful given the complexity of this space.

The benefits may include:

• Data management and analysis.
• Real-time monitoring of key ESG metrics and indicators.
• Automated alerts and notifications for deviations from targets or thresholds.
• Team collaboration.
• Data sharing with suppliers and partners.

By leveraging automation, product leaders can enhance efficiency, accuracy, and transparency in ESG monitoring and management, ultimately driving improved product performance and business outcomes.

Conclusion

Incorporating ESG metrics into lifecycle management is essential for product leaders looking to drive revenue, innovation, and sustainability. By identifying manageable metrics and targets, performing regular product reviews, and leveraging technology, product leaders can keep faith to ESG commitments, enhance performance, mitigate risks, and seize opportunities in an increasingly ESG-conscious marketplace. As the importance of sustainability continues to grow, product leaders must prioritise ESG principles to build resilient, responsible, and successful products for the future.

About Skyjed 

Skyjed’s AI-powered end-to-end lifecycle and governance platform is mission control for product management. Bringing together every data point across your entire product portfolio and lifecycle into a single source of product truth, it gives our clients a new perspective to make more strategic lifecycle decisions to launch, monitor, optimize, and win with brilliant products.  

Our industry-leading platform has received numerous awards and recognition from clients and industry bodies, demonstrating our commitment to innovation and excellence. 

Watch our Skyjed demo. 

If you want more information, Contact the Skyjed team.