Five ways governments can help state-owned enterprises lead on sustainability

State-owned enterprises sit at the heart of many strategic sectors, from energy and transport to heavy industry. This central role gives them, and the governments that own them, a unique opportunity to shape more sustainable economies.  

The new OECD report State-Owned Enterprises and Sustainability: Leading by Example aims to help state-owned enterprises (SOEs) act as major drivers in the climate transition and other sustainability objectives. Here are five ways governments can help their SOEs lead the way. 

The weight of SOEs in the global economy has expanded significantly in recent years. Today, as much as 25% of the largest 500 enterprises by revenue worldwide are SOEs - four times more than in 2000. With this comes increased leverage over sustainability matters.

SOEs are also well-placed to lead by example because of the sectors they often operate in. Nearly two-thirds of SOEs in the 500 largest by revenue operate in greenhouse gas (GHG) intensive sectors, including mining, utilities, energy and construction. According to the OECD Global Corporate Sustainability Report 2025, the public sector is also a major shareholder in the top 100 emitting listed companies globally (Figure 1).  

SOEs’ capacity to lead on sustainability is amplified when governments align their role as enterprise owners with their overall sustainability commitments. This supports SOEs in developing a clearer understanding of their role in achieving these commitments.

Governments invested around USD 1 trillion in the energy sector through SOEs in 2024. Yet, according to the OECD report Ownership and Governance of State-Owned Enterprises, only a quarter of the countries surveyed explicitly include climate goals in their state ownership policies.

However, more and more governments are updating their ownership policies to clarify their objectives as owners and set a consistent “tone from the top”. For example, Finland, Norway and Sweden not only set specific sustainability expectations for their SOEs, they also expect them to align with international frameworks such as the OECD Guidelines on Corporate Governance of State-Owned Enterprises and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. 

Sustainability should also be at the centre of corporate strategy and operations. Globally, boards of directors are rising to the occasion: in 2024, directors in 70% of companies by market capitalisation oversaw climate-related issues, up from 53% in 2022.

Effective board oversight requires an appropriate governance structure and board composition. Recent trends show an increased focus on diversity, independence and competitive and transparent nomination procedures. Such considerations can help ensure boards have the expertise needed to address complex environmental and social issues. Several countries, including Austria, Australia, Costa Rica, Ireland, Costa Rica, have also included explicit sustainability criteria in SOE board nomination processes.

Boards can also play an important role by establishing governance mechanisms to support the effective oversight of sustainability risks and opportunities. For example, many boards set up sustainability committees, sometimes as a result of clear state expectations (e.g. France, Norway). Globally, around two-thirds of companies by market capitalisation now have a board-level committee whose mandate include overseeing sustainability risks.    

Sustainability reporting is no longer just a “nice-to-have”, it is now an essential element of good corporate governance. Between 2022 and 2024, the global share of companies (by market capitalisation) disclosing sustainability-related information rose from 86% to 91%. However, this number was much lower for SOEs (63%), with the energy sector notably underreporting Scope 3 GHG emissions.

What’s more, disclosure is only credible if consistent, comparable and reliable. For this, independent verification separates meaningful information from ‘box-ticking’. Yet less than half of listed SOEs (by market capitalisation) that disclose sustainability information have it independently verified.

Given their public mandates and heightened public scrutiny, high-quality reporting and assurance is of particular importance for SOEs.  Not only can it help them keep pace with evolving regulatory requirements and improve internal decision-making, it can also help build stakeholder confidence in SOEs’ accountability and integrity.

As SOEs become increasingly active in global value chains, their approach to responsible business conduct (RBC) is under growing scrutiny. RBC goes beyond mere compliance and entails avoiding and addressing negative impacts on people, the planet and society, while contributing positively to sustainable development.

For SOEs, this is both a business imperative and a public responsibility. The SOE Guidelines recommend that state owners set expectations for SOEs to observe RBC standards and put in place mechanisms to make them effective.

One particularly relevant dimension for SOEs is stakeholder engagement. Globally, 86% of listed companies (by market capitalisation) disclose shareholder engagement policies. To build trust and legitimacy, this must translate into genuine two-way dialogue with stakeholders, as is good practice. 

The road to 2030 will test governments’ capacity to turn ambition into impact. Achieving the climate transition will, among many conditions, require SOE leadership on sustainability. With their unique position at the intersection of public policy and business, SOEs and their owners have an opportunity - and a responsibility - to act decisively in achieving sustainability goals.

The new OECD report on State-Owned Enterprises and Sustainability: Leading by Example is designed to help policymakers leverage state ownership for sustainability. With effective ownership, SOEs can become frontrunners in building more sustainable and resilient economies.