Forbes India – Blockchains, ESG: Explainable product design can ensure ESG goals are met


Explainable product design will be a key driver of accountability not only for business leaders, but also for political leaders to track their sustainability commitments in time after the COP26 summit. Image: Shutterstock


Business leaders see the growing demand for sustainable products as an opportunity for growth. To meet this demand, they focused their efforts on two important trends that strongly influence product design. The first is conscious consumption or a shift in consumer preference towards sustainable products. Sustainable investing is the second trend, where investors view ESG (environmental, social and governance) metrics as indicators of reduced business risk and improved financial performance.

Explainable Product Design (xPD) is a holistic framework we offer to ensure ESG objectives are met. The five principles of xPD are responsible, ethical, sustainable, environmentally friendly and traceable design – RESET in short. RESET helps analyze, document and communicate key decisions made in a product’s life cycle. This helps to explain the rationale for decisions to aware stakeholders.

The RESET frame

Explainable AI is today an answer to the growing problem of the “black box” of artificial intelligence. What does it take to make all product decisions explainable? We illustrate the effectiveness of RESET with examples from the automotive industry, specifically for a cost-effective transition from current internal combustion engine (ICE) vehicle technology to more sustainable electric vehicles (EVs). These principles are also applicable in other industries. Following the RESET principles requires a cultural change. Digital technologies are key enablers for the actual deployment of RESET.

  • Responsible refers to the optimal use of critical resources (energy, water, consumables, labor) to manufacture safe and secure products. AI and IoT should be used with the aim of achieving a zero carbon footprint situation, monitoring the use of natural resources and plugging leaks where necessary.
  • Ethics is a strict “no” to dishonesty, allowing no bias to interfere with our decisions, nor any compromise on confidentiality in product management. Cognitive biases are common in decision making. For example, an automotive company may delay EV adoption due to a sunk cost bias stemming from its incumbent ICE investments. Additionally, confirmation bias can cause the CEO to first cite the high cost of EVs and lack of charging infrastructure to support their point of view, and then ignore factual evidence to the contrary, such as the efficient and clean energy conversion offered by EVs.
  • Sustainable aims to enable a circular economy through products that are repairable, reusable, recyclable and refurbished, with safe disposal at end of life. The right to repair is gaining momentum, where customers are allowed to repair their products.
  • Ecological the design aims to create non-polluting products, with a minimal carbon footprint. Utilities, automakers, cities, and EV charging providers should work together to enable the use of renewable energy for EV charging.
  • Traceable products maintain their lifetime history with transparency for key events. Blockchains are a technology for keeping immutable records of product history. Cobalt is a key battery material with questionable practices in its extraction. Maintaining its source is important for reliable supply chains.

Opportunities for applying the RESET framework throughout a product’s lifecycle can be divided into two broad categories: pre-sales and post-sales. From a financial metrics perspective, the two broad categories are revenue and profit, revenue, and net income. Figure 1 is a representation of a 2×2 showing the combinations of these two parameters.

ESG objectives

MIT professor Yossi Sheffi, in his book on sustainability, talks about the Akerlof effect: if customers can’t judge a product responsible, they won’t pay for it. Just adding labels is not enough. If customers do not pay, companies will gradually lose interest in investing in sustainable and responsible products. Instead, following the RESET principle will avoid the Akerlof effect and help organizations in both their revenue and profitability aspects. Regularly sharing explanations in the form of questions and answers in annual reports and press releases on why key decisions have been made for sustainability will build confidence in the minds of all stakeholders, which will ultimately lead to better financial indicators.

The five principles of the RESET framework should be applied at every stage of a product’s life cycle, from conceptualization and design through manufacture, operation, repair and end of life (see Figure 2).

Conception phase: During the design phase, the focus is on managing product attributes. Goal setting for product performance is done with two main inputs, namely customer expectations and competitive benchmarking. Sometimes unrealistic customer needs need to be pushed back. For example, 250 to 300 miles of travel on a single EV charge may be unrealistic expectations of an urban customer. A more realistic and practical range can be 100 miles for commuting between home and office. Reducing vehicle weight is important to improve the fuel efficiency of current ICE vehicles and the range of electric vehicles.

Manufacturing: The use of natural resources such as water, raw materials and electricity for manufacturing should be minimal and sustainable for manufactured and purchased parts. For example, Mahindra & Mahindra’s engine plant in Igatpuri (Maharashtra, India) has achieved zero waste status.

Service and end of life: Focusing on the operational end of life of the product, there are many best practices in the automotive industry. Caterpillar has been remanufacturing used parts since 1973, backed by the same warranty as new parts. Cummins reconditions its used engines with rigorous cleaning processes and quality guidelines in Pune. Reusing end-of-life parts reduces the use of virgin materials in new products.

ESG objectives

Explainable product design will be a key driver of accountability not only for business leaders, but also for political leaders to track their sustainability commitments in time after the COP26 summit. These commitments have a medium to long term horizon. Documenting key decisions made during this trip will ensure continuity whenever there is a change in direction at the national or business level. Responsible, ethical, sustainable, eco-friendly and traceable design has its own benefits. But they have a cumulative effect and lead to greater benefits when practiced in tandem.

About the Authors: S Ramachandran is a Consultant and Manufacturing and Engineering Lead with the Infosys Knowledge Institute Thought Leadership Team. Dr. Shankar Venugopal is Vice President and Dean of Mahindra Technical Academy, Mahindra & Mahindra.

The thoughts and opinions shared here are those of the author.

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