Clean Earth Project and the Responsibility Gap in Sustainable Manufacturing A Final Case Study Report

Case Description:

Clean Earth Project (CEP) is a Philippine circular home-care brand co-founded by Czarina Regino. The company was established with a clear ethical and environmental mission: to reduce household chemical exposure while promoting circular consumption through eco-enzyme–based cleaning products. CEP’s value proposition rests on effective cleaning performance comparable to conventional products, natural and non-toxic formulations safe for families and pets, and a long-term commitment to circular value creation.

From its inception, CEP framed its mission as deeply Filipino. The brand’s narrative emphasized responsibility toward local communities, particularly Filipino farmers, who were envisioned as future participants in a circular system where value could be created locally through responsible manufacturing. This orientation reflects a stakeholder-based view of the firm, where ethical responsibility extends beyond customers and shareholders to communities affected by long-term strategic decisions (Freeman, 1984).

CEP began as a small social enterprise and gradually evolved into a nationally distributed brand. By 2025, CEP had launched eight products in household categories in partnership with a manufacturer based in Vietnam that enabled their products to meet international safety and quality standards and were well accepted in the market. CEP did not face technological limitations in producing eco-enzyme formulations because the Philippines itself is abundant in Pineapple farms and the technology is easily accessible with no IPO.

CEP’s decision to manufacture in Vietnam created the central ethical dilemma of this case. The choice was not driven by cost efficiency or technical incapacity in the Philippines. Instead, it was shaped by institutional conditions in the home market. During exploratory efforts to assess domestic manufacturing pathways, CEP encountered bureaucratic complexity, fragmented regulatory authority, and opaque permitting processes. More critically, informal expectations of facilitation payments were implied as a means of accelerating approvals. Such conditions are characteristic of what scholars describe as institutional voids, where formal market-supporting mechanisms are weak or unreliable (Khanna and Palepu, 2010).

For CEP’s leadership, participation in such practices would directly contradict the ethical foundations of the company. Avoiding corruption was treated not merely as a compliance requirement, but as a core element of responsible business conduct. Manufacturing in Vietnam was therefore viewed internally as an ethical necessity that allowed CEP to operate transparently and lawfully, consistent with international standards of responsible enterprise behavior (OECD, 2011).

This decision, however, created a responsibility gap. While CEP preserved governance integrity by avoiding corrupt systems, it delayed the realization of local economic benefits, particularly for Filipino farmers. Domestic manufacturing could have generated employment, strengthened local value chains, and anchored circularity within the Philippine economy. CEP acknowledged this responsibility and formalized a five-year roadmap for technology transfer and eventual localization of manufacturing. This roadmap reflected strategic intent, where long-term vision guides present decisions despite structural constraints (Hamel and Prahalad, 1989). However, localization was not immediate and depended on improvements in regulatory clarity and governance beyond CEP’s direct control.

Manufacturing abroad also introduced an additional ethical consideration related to environmental impact. Eco-enzyme concentrates were transported from Vietnam to the Philippines through international logistics networks. These logistics generated greenhouse gas emissions classified as Scope 3, which are indirect, dispersed across third-party carriers, and difficult to trace precisely. Environmental accounting literature recognizes that Scope 3 emissions are often estimated rather than directly measured, creating uncertainty in disclosure and reporting (GHG Protocol, 2011).

CEP could approximate logistics-related emissions using industry averages, but exact attribution per product was not possible due to shared freight routes and consolidated shipments. As a result, logistics-related emissions were not prominently featured in CEP’s sustainability communications, which focused instead on ingredient safety, toxicity reduction, and long-term circular intent. Research on greenwashing suggests that ethical risk often arises not from false claims, but from selective disclosure and omission under conditions of uncertainty (Delmas and Burbano, 2011).

The ethical dilemma confronting CEP’s leadership is therefore multi-layered. Avoiding corruption preserves ethical governance but delays local value creation for Filipino farmers. Manufacturing abroad introduces climate externalities that are real but difficult to quantify precisely. The company’s long-term intent to localize production is genuine, yet it does not resolve the immediate gap between aspiration and operational reality.

The central problem facing CEP is how a sustainability-driven enterprise should act when ethical principles conflict in practice. How should CEP balance integrity, responsibility to local stakeholders, and environmental transparency when institutional constraints make immediate alignment impossible? The case places executives in a situation where ethical judgment, rather than rule-based compliance, is required.

Executive Learning Questions:

1. How should a sustainability-oriented company ethically manage its responsibility to local stakeholders, such as Filipino farmers, when institutional constraints prevent immediate local manufacturing?

2. When corruption and bureaucratic opacity dominate a firm’s home market, is offshoring production an ethical failure to support national development, or an ethical obligation to preserve organizational integrity?

3. What level of transparency is ethically required when environmental impacts, such as logistics-related greenhouse gas emissions, are real but difficult to measure and attribute precisely?

Rationale for Case and Questions:

This case was selected because it reflects a realistic and increasingly common ethical dilemma faced by sustainability-driven firms operating in emerging markets. Unlike cases involving clear misconduct or regulatory violations, the Clean Earth Project case presents an ambiguous moral landscape where ethical intentions coexist with structural constraints. It demonstrates that ethical business decisions often involve trade-offs rather than clear right-or-wrong outcomes.

The case is designed to develop executive understanding of several important theories and practical issues. Institutional theory explains how weak regulatory systems, corruption, and bureaucratic opacity constrain ethical choices and shape strategic behavior (Khanna and Palepu, 2010). Stakeholder theory highlights CEP’s competing responsibilities to Filipino farmers, consumers, employees, regulators, and future communities, emphasizing that ethical responsibility may require sequencing rather than simultaneity (Freeman, 1984).

The case also draws on legitimacy theory and CSR scholarship related to transparency and greenwashing. It shows how ethical risk can arise from omission and uncertainty rather than deliberate deception, particularly when aspirational sustainability narratives outpace operational reality (Delmas and Burbano, 2011). Strategic intent theory provides a framework for evaluating CEP’s five-year technology transfer roadmap and assessing when long-term vision can ethically justify present compromise (Hamel and Prahalad, 1989).

Executives need to understand these issues because ethical leadership increasingly requires judgment under imperfect institutional conditions. Global supply chains, governance asymmetries, and climate accountability create situations where ethical responsibility cannot be reduced to legal compliance. The questions were chosen to help executives conceptualize ethics as an ongoing strategic responsibility embedded in governance, stakeholder relationships, and communication practices.

References and Resources

Delmas, M.A. and Burbano, V.C. (2011) ‘The drivers of greenwashing’, California Management Review, 54(1), pp. 64–87.

Freeman, R.E. (1984) Strategic management: A stakeholder approach. Boston: Pitman.

GHG Protocol (2011) Corporate value chain (Scope 3) accounting and reporting standard. Washington, DC: World Resources Institute.

Hamel, G. and Prahalad, C.K. (1989) ‘Strategic intent’, Harvard Business Review, 67(3), pp. 63–76.

Khanna, T. and Palepu, K. (2010) Winning in emerging markets: A road map for strategy and execution. Boston: Harvard Business Press.

OECD (2011) Guidelines for multinational enterprises. Paris: OECD Publishing.

Transparency International (2024). Corruption Perceptions Index: Philippines. Berlin: Transparency International.