Stakeholder analysis of Clorox's Green Works and Sierra Club endorsement

1 Stakeholder Analysis: Clorox The Sierra Club’s controversial endorsement of Clorox’s Green Works products—“99% petrochemical-free” products which were deemed to be environmentally safe—was meant to be a win-win for stakeholders; and for Clorox it certainly was, as Green Works sales boomed (Kamenetz, 2008). For the Sierra Club, however, the blowback of endorsing a product put out by Clorox has caused many in the environmentalist community to accuse the club of selling out. There are a variety of very different stakeholders involved in this case, as Clorox and the Sierra Club consist of two very different types of organizations, each representing something fundamentally different. Clorox is a for-profit corporation, whose stakeholders include executives like Don Knauss, CEO of Clorox and former Coca-Cola executive, employees of the company and its outlets—from R&D employees to shelf-stockers of retailers like Wal-Mart, and consumers of the Clorox brand along with the communities in which its products are produced and sold. Clorox is also a publicly-traded company on the New York Stock Exchange and thus has investors as stockholders as well. Thus, its stakeholders range from moms who purchase the company’s products to Wall Street executives who buy, sell, and trade Clorox’s shares on the stock market exchanges. The stakeholders in the Sierra Club are different, as it is a non-profit organization whose aim has been for decades to boycott producers of environmentally dangerous products. These stakeholders include community members, activists, and executives in the club. Carl Pope, executive director of the Club, wanted to change its vision from “stop bad things” to the more positive-sounding “make good things happened” (Kamenetz, 2008). That orientation alarmed some as the Club had always been more of an agonist to companies that polluted the environment in the past. Now, under Pope’s guidance, it would be working with these same companies to advocate for green products. The concern among some stakeholders was that the Club was selling out its endorsement in return for an unspecified percentage of the profits from green product sales. Thus, the primary stakeholders in the case are the investors and employees of Clorox and its vendors, its consumers, and the workers, members and supporters of the Sierra Club. The secondary stakeholders are community members who live in areas where Clorox products are produced, sold and used and who may be impacted by pollutants that enter into local watersheds. One less obvious stakeholder in this case would be children who are neither investors nor consumers nor supporters of the business or activist group, but who are nonetheless indirectly impacted by the choices that each of these organizations make: the products that Clorox produces will impact the environment to some degree and the level of support that the environmental watchdog Sierra Club gives to the corporation will impact the consciousness of consumers who may be interested in only purchasing products that appear to have been vetted by “green” organizations and given the all-clear. Children’s clothing, their homes, their environment and their way of life may be indirectly impacted by the extent to which Clorox Green Works get the seal of approval from an organization like Sierra Club, as that seal might influence the way children’s parents approach the products and make a difference as to whether or not those consumers introduce them into their children’s environment. The stakeholder who is most important to Clorox in this case is the consumer interested in purchasing only “approved” green products. The entire Green Works label is geared toward attracting this consumer segment—which, as Kamenetz (2008) notes is highly untapped even still by major corporations. The green movement is a serious trend that indicates a shift in the consciousness of consumers regarding organic and all-natural products. If Clorox can capture this market segment with its own line of green products, it can beat out the competition and obtain market dominance, thus rewarding all of its investor stakeholders with financial gains as the share price of its stock climbs, paying dividends to shareholders. Without the interest of the “green” consumer, Clorox is unlikely to maintain its market dominance, especially if other corporations offer a product that is more suited to the needs of the “green” consumer. Thus, obtaining the support of this “green” consumer stakeholder is essential to Clorox’s success. The stakeholder who is most important to the Sierra Club in this case is the organization’s base, which is concerned about the role that the Club is playing in facilitating Clorox’s financial gain. The base supporter of the Sierra Club vision has, for decades, enabled the Club to fight the tyranny of corporate pollution and create an atmosphere in which communities could become more conscious of how products affect the environment. If the Club is now supporting corporations’ products that have not been verifiably vetted or that still produce other products that are harmful, the Club’s vision may have changed—and its base supporters may be obliged to pull out their support. If that happens, the integrity of the Club and the appeal of its “seal of approval” may lose its value and be worthless in the long run. I would recommend that these two organizations work together to find a real win-win solution that benefits both firms and their most important stakeholders—the “green” consumer for Clorox and the base supporter for Sierra Club. The way in which these two organizations should work together is this: they should find a manner of settling the controversy that has erupted over Sierra Club’s endorsement of Clorox’s Green Works products. The way to settle this controversy is to satisfy both firms’ stakeholders—the “green” consumer and the base supporter. The way to do that is to adopt a position or strategy of openness, honesty and transparency. The major complaint of Sierra Club’s main stakeholders are that the Club is not being transparent about how it benefits from its relationship with Clorox. From the standpoint of utilitarian ethics and virtue ethics theories, the point of transparency is the most vital one, as it shows the truth of the exchange, which alone will settle the matter. If the Sierra Club’s integrity is at stake with its own base supporters, then it must show why it is supporting the Green Works products and provide the justification needed by its base. It can show how it is no different from the Club’s endorsement of the hybrid vehicles of the auto industry. Clorox’s “green” products are in the same line—all that the base supporters of the Club want to know is the extent to which the product has been validly tested—and what the Club’s percentage of the profits are. Settling the matter would enable Clorox to utilize the Club’s seal of approval, which would generate support for the product from green consumers and which would ease the consciences of the Club’s base. From the standpoint of utilitarian ethics, transparency leads to a win-win situation because it allows both sides to show their most important stakeholder the good things that are being accomplished through the production of Green Works and the products’ endorsement by Sierra Club. Utilitarian ethics concern what is in the best interest of the common good and in this case, the best interest of the common good is that the truth of the relationship be known. Even if it turns out that the product was not properly vetted, the Club’s base will be satisfied (vindicated) and will be able to apply pressure to the executive director to cancel the endorsement. For Clorox, the company is better off in this case breaking ties with the Club and finding a friendlier endorsement from an alternative green organization—one which does not have such a particularly antagonistic stance toward corporations. From a virtue ethics point of view, transparency of the relationship falls in line with the need for truth in all interactions and relationships. Hiding the truth leads to misjudgments, mistakes, and conflicts—all of which can easily be avoided or prevented by having the truth known at the outset. If there is nothing to hide, then there is nothing to lose. If one side in the relationship is being unjustifiably antagonistic and unrealistic, then the relationship players are probably not well-suited for one another in the first place. As the expression goes, there are always more fish in the sea—and Clorox is under no obligation to honor a relationship with the Sierra Club, especially if its base does not support Clorox’s green initiative out of bias for Clorox’s other products. If Clorox’s green products are indeed not chemical free, then the firm should address that issue in order to keep its green consumer stakeholders happy. The truth is always the best policy no matter what system of ethics is employed—but from a utilitarian and virtue ethics system perspective, the truth is especially important and should be made known through a policy of transparency on both ends so that both sides’ most important stakeholders can judge for themselves the worth and value of the relationship. References Kamenetz, A. (2008). Clorox goes green. 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