ESG in Product Management
by Teoh Yoke Yong • 3 September 2024
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From clothing brands like Patagonia and Stella McCartney, consumer goods such as Tesla and Unilever, and F&B (Food and Beverage) companies like Ben & Jerry’s, several industries have seen a steady surge in focus on Environmental, Social and Governance (ESG) across an impressive number product categories.
What exactly does this trend mean for budding product managers like yourself? Let’s take a deeper dive into the ESG sector!
Explaining the Basic Components of ESG
Explaining the Basic Components of ESG
As the name suggests, ESG is a framework used by companies in order to assess their contributions to 3 specific areas; namely, Environmental, Social, and Governance. Environmental impacts gauge to what extent a product or company can affect the ecosystem around us, and place great emphasis on emerging issues like resource management and waste generation. Social refers to ways in which the company interacts with different stakeholders of society such as customers, beneficiaries and the community as a whole. Depending on how they may value-add to, or harm the interests of these parties, they may be considered to be socially responsible or otherwise…. Lastly, Governance focuses on the company's internal structure, from leadership styles to internal control mechanisms. When evaluated together, these 3 metrics provide a holistic understanding of the impact that a product or company can have on the world around it.
PwC survey on consumer behaviour trends conducted in 2021
How does it link to PM?
How does it link to PM?
In the context of product management, ESG principles can be integrated into each stage of the product lifecycle framework as a way to ensure that the products craft a brand that is ethical, socially responsible and environmentally sustainable.
As part of evolving consumer behaviour and expectations, PwC found that, amid the Covid-19 pandemic in early 2021, consumers demonstrated a renewed desire for brands and companies to go beyond simple compliance with existing regulations. Rather, they wished to see companies make use of their time and resources to make sustained investments across all 3 sectors of ESG, and are willing to reward said companies accordingly based on their degree of perceived effort. In this way, an understanding of ESG can allow product managers to actively and consciously create products with a strong brand reputation that benefits product growth.
Case Study: Patagonia (Stages of the PM lifecycle)
Case Study: Patagonia (Stages of the PM lifecycle)
One company that has long been touted as an ESG champion is Patagonia, and we can analyse their comprehensive and multi-faceted efforts by looking at a few stages within their products’ lifecycles.
Introduction
Introduction
In this stage, Patagonia strives to achieve sustainable operations by literally building environmental responsibility into their product narrative; using 87% recycled materials to produce fabrics like wool, nylon and polyester. In fact, since the company’s inception in 1973, their core mission has always been to “take care of the planet” by endeavoring to minimise emissions and carbon footprint, while reducing waste generated. Their Fair Trade Program ensures that all employees at Fair Trade-certified factories are paid a fair and liveable wage, while also receiving premiums for each Patagonia item made. In a stage characterised by a need for exposure, such efforts lay the foundation for a strong brand reputation, while also leveraging upon a socially responsible image to pave the way once the Growth stage is reached.
Patagonia's online selection of apparel
Maturity
Maturity
As market competition begins to intensify, Patagonia continues to set itself apart from rivals through its Ironclad Guarantee, more commonly known as their lifetime warranty. By marketing their products based on ESG values, they are able to achieve longer product longevity while also fostering fierce customer loyalty, thus also aiding in defending its market share from competitors, even as the inevitable Decline stage approaches.
Wrap-up
Wrap-up
As the ESG wave continues to ripple throughout industries, understanding and integrating ESG principles into products have proven to no longer be an option, but rather a necessity. Product managers have to ensure that as they begin to create brands that are socially responsible and sustainably, they emphasise the 3 sectors equally through comprehensive strategies. This will ensure that they can reap maximum benefits throughout each and every stage of the product lifecycle.
About the Author
About the Author
#48: Teoh Yoke Yong
#48: Teoh Yoke Yong
Starting off as a Research & Strategy Executive at NUS Human Capital Society in his freshman year, Yoke Yong is a new welcome addition to NUS Product Club’s Publicity Team - leveraging his past expertise in article drafting and content creation to write exploratory articles for our students and educate them more about product management. Besides his academic background in business administration and psychology, Yoke Yong has also previously been involved in organising various events for NUS Students’ Business Club, before moving on to an Events Executive role at MINT @ NUS Business School, further exploring his prospective career interests in both product management and marketing while studying in NUS.
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