Society’s transition towards a sustainable state entails rapid and disruptive change in all sectors. This change is the source of profound uncertainty. From a company perspective, it can either pose existential threats if current practices or products enforce unsustainable development, or it can present opportunities if the company can provide solutions to the sustainability challenges humanity is facing. Such sustainability-related threats and opportunities, i.e., risks, can be related to, for example, reputation, legislative change, litigation, the ability to attract and retain talented employees, or the ability to meet customer needs on increasingly sustainability-driven markets. While more and more companies recognize the importance of building capabilities for sustainable product development to remain competitive, the relation between social and environmental aspects and economic performance is still oftentimes viewed as a trade-off where some profit must be sacrificed to be sustainable.Based on an interactive qualitative research approach, this thesis shows how a risk management lens can be used to support decision-makers at product development companies in understanding the dynamic interplay between socio-ecological sustainability aspects and business implications. The conceptual understanding of sustainability risks was advanced by identifying their characteristics and by proposing a new definition, utilizing literature review and the Framework for Strategic Sustainable Development. In the next step of the research, today’s situation and preconditions at some product development companies in Sweden were studied. Using multiple data collection methods, current risk management practices were investigated and hypotheses for sustainability integration were derived. Based on interviews with industrial and academic experts, the hypotheses were further developed into key aspects for sustainability risk management that can be used as recommendations for practitioners. Utilizing the newly developed definition and key aspects, a conceptual approach for strategic risk management within the sustainability transition was conceived. This approach was then adapted and operationalized as a workshop method for multifunctional teams in the context of product portfolio planning. Finally, the Sustainability Impact and Effects Analysis was developed and tested through an action research approach to provide decision-makers in early phases of the product innovation process with practical support for identifying, assessing, and managing sustainability risks. Uncertainty is neither good nor bad – it is just an inherent part of reality. This thesis showed how a risk management approach can be used to guide decision-making in uncertainty within the sustainability transition in a product development company context. Thereby, companies can take the strategic leadership that is required to benefit from the opportunities that can be found in this time of deep uncertainty.

During the last decade, manufacturing companies have experienced an increased demand for solutions that promote socio-ecological sustainability. To succeed in the sustainability transformation, companies need to systematically and strategically implement sustainability performance in their product portfolios. Many companies decide which services, products, and technologies to include in their product portfolios using evaluation criteria related to, for example, cost, quality, risk, revenue, time, and market position. However, often, sustainability aspects are not integrated into such criteria. Incorporating sustainability aspects in the portfolio evaluation criteria could ensure the development of sustainability-promoting solutions. This should be done in the early stages of the product development process, where there is more room for innovation than later in the process. 

The aim of this research is to provide a better understanding of how sustainability performance can be implemented in the product portfolio process of manufacturing companies and thereby support the companies’ sustainability transformation. The research has focused on: 1) how to define the concept of sustainability product portfolios based on the state of the art and the state of practice, 2) determining the current situation in industry related to implementation of sustainability performance in product portfolios, 3) identifying the most used criteria and tools for product portfolio evaluation, and 4) determining how product portfolios are planned, implemented and managed. 

Literature reviews, interviews and workshops were used to collect data from seven large manufacturing companies located in Sweden, one small company located in Colombia, and several research groups and master level student groups. The collected data from industrial cases was organized, processed, analyzed, and verified to provide academic and industry background, to guide the implementation of sustainability performance in the product portfolio

The results from the studies provided a basis for creating guidance in developing a sustainability product portfolio in a company. The guidance includes: i) a definition of the sustainability product portfolio concept; ii) a list of common product portfolio evaluation criteria to be used for a  selection of  portfolio components; iii) key factors to succeed with the integration of sustainability aspects in portfolio development and to implement sustainability performance in the product portfolio; iv) an initial conceptualization model to support the sustainability implementation process in product portfolios; and, v) a digitalized and game-based prototype of the strategic layered double-flow scenario modeling for sustainability risk and portfolio management (STARDUST) method, to guide companies in the implementation of sustainability in their product portfolio. 

With the outcome of this research, practitioners can be supported in their decision-making, especially in the planning stages, with a strategic sustainability perspective to identify sustainability hotspots. Moreover, evaluate portfolio components with a sustainability-informed market-success perspective, compare solutions, and identify benefits and risk that might modify the product portfolio over time.