Business Model Red Flags 
Leadership, Governance, & Culture 
Tool for Indicator Design 
Quality of Relationships 
RED FLAG # 4
The business’s commercial success substantially depends upon offering privatized access to public goods and services, such as water, health, security and housing, where profit-maximization affects
access or quality
For Example
- Offering private water or sanitation services where profit-maximization affects access or quality of service
- Offering nursing home services and engaging in cost-cutting activities at the expense of quality of service
- Offering for-profit daycare or education services and engaging in cost cutting activities at the expense of quality of service
- Providing private prisons or detention centres and reducing qualified staff or cutting maintenance or essential programs to achieve cost savings
- Privatization of public transport, where profit-maximisation results in reduction in frequency of services or access for isolated communities
- Investing in companies engaged in essential services where profit maximisation conflicts with quality of service
- Private sector involvement in public sectors through Public Private Partnerships or Private Finance Initiatives, e.g. for infrastructure and maintenance services for hospitals and schools where quality or access is adversely affected
- Providing consulting services to governments where advice on profit maximisation risks affecting access or quality of essential services
- Financial institutions contributing to the financialization of housing — for example, through mortgage policies that favor speculative investment over owner-occupation, such as high-leverage or interest-only loans and bulk sales of foreclosed properties to institutional investors — and by subsequently driving up prices through securitization of those mortgages and other property-backed financial instruments.
- Financial institutions contributing to the financialization of food commodities or water by speculating on debt of companies in these sectors, including through credit default swaps and other financial derivatives
Higher-Risk Sectors
- Water and sanitation services
- Agriculture industry
- Healthcare
- Care industry, e.g. nursing homes, children’s homes, assisted living facilities
- Private prison industry
- Education
- Public transportation services and infrastructure
- Waste management
- Capital and Advice concerning essential service:
- Private equity (esp. external, leveraged financing)
- Financial institutions, including banks, private equity and other providers of capital
- Management consulting
