Business Model Red Flags 
Leadership, Governance, & Culture 
Tool for Indicator Design 
Quality of Relationships 
RED FLAG # 15
Structuring business relationships in ways that limit the company’s ability to influence decisions or actions that affect the rights of stakeholders
For Example
- Structuring joint venture (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 the 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
- Structuring AI and other technology business relationships such that responsibility for identifying and managing impacts on people is allocated to other commercial actors despite the company retaining significant influence over system design, deployment conditions or commercial incentives
- Structuring outsourced platform moderation or trust and-safety operations such that responsibility for worker wellbeing or grievance handling sits with third-party vendors despite the company retaining significant influence over how the work is performed
Higher-Risk Sectors
- Finance industry
- Law firms
- Mining industry
- Franchised food and beverage companies
- Construction industry
- Tourism, Hospitality and Entertainment
- AI development and deployment
- Online platforms
- Companies in various sectors expanding into geographies where conditions of entry only allow non-operating stakes in JV
