This is the 7253rd most frequent Japanese word.
不良
"Delinquent" or "bad/unpleasant condition."
In this sentence, '不良品' (defective product) is used as a noun compound where '不良' describes an item as defective or flawed.
この商品は不良品ですから、返品をしたいです。
This product is defective, so I want to return it.
Here, '不良' is used as a standalone noun meaning a person, typically a youth, involved in delinquent or deviant behavior.
彼は学校で不良として知られています。
He is known as a delinquent at school.
In this usage, '不良な' acts as an adjective to describe '環境' (environment) as being poor or inadequate.