Business Model Red Flags 
Leadership, Governance, & Culture 
Tool for Indicator Design 
Quality of Relationships 
RED FLAG # 19
The business’s commercial success substantially depends upon trading or sourcing agricultural commodities that are priced independently of production costs, such that farmers are unlikely to be able to sustain a living income.
For Example
Food and beverage (manufacturers, distributors and retailers), pharmaceutical and cosmetics companies sourcing, and traders trading:
- Price-volatile agricultural commodities supplied by small-holder farmers (cocoa, coffee, palm oil, tea, milk)
- Price-volatile labor-intensive commodities (bananas, cotton)
- Capital-intensive commodities for which the price does not reflect the cost of production and that require large agricultural land areas (soy, wheat, corn, biofuel feedstocks)
Higher-Risk Sectors
- Food and beverage companies (manufacturers and retailers) sourcing from developing/ emerging markets
- Agricultural trading companies
- Pharmaceutical and cosmetics
- Textile and apparel companies
- Energy and transportation companies (e.g., those using biofuels)
