Business Model Red Flags 
Leadership, Governance, & Culture 
Tool for Indicator Design 
Quality of Relationships 
RED FLAG # 15
Structuring business partnerships in ways that limit the company’s ability to influence decisions or actions that affect the rights of stakeholders.
For Example
- Structuring JV partnerships such that the company situates control over decisions on land, employment and/or responses to community concerns with the business partner
- Structuring client-advisor relationships such that then scope of advice excludes consideration of impacts on people
- Structuring multi-bank syndicated loans such that a participating bank relies on the due diligence of a lead arranger or E&S (environment and social) coordinating bank
- Utilizing franchise models in which labor, land acquisition and other rights-relevant issues are not covered by franchise contracts
Higher-Risk Sectors
- Finance industry
- Law firms
- Mining industry
- Franchised food and beverage companies
- Construction industry
- Hospitality and restaurants
- Oil and Gas
- A variety of services provided in the context of large extractive industry projects, pipelines, energy projects, agribusiness and forestry projects that take place on indigenous and marginalized communities’ land around the world, in both developed and developing countries.
