State-owned enterprises (SOEs) are major players in the global economy and key to advancing sustainability goals. In 2023, SOEs made up 126 of the world’s 500 largest companies by revenue and accounted for 12% of global market capitalisation. Many of these enterprises operate in strategic sectors, such as energy, transport or heavy industry, that are vulnerable to environmental, social and governance-related risks, but they are also active in other areas critical to advancing sustainability, including finance and public utilities.
Given their scale and sectorial concentration, SOEs are faced with unique risks and opportunities to advance sustainability and responsible business conduct. They face a broad range of sustainability-related risks – from climate change and resource use to shifting regulatory expectations – which, if poorly managed, can strain public budgets, disrupt infrastructure and service delivery, and expose the state to reputational harm. At the same time, SOEs are well placed to lead by example on sustainability through responsible practices, innovation and strong governance.
In response, a growing number of countries recognise that governments as owners and SOEs themselves should lead by example and manage risks and opportunities in a way that contributes to sustainability, resilience and long-term value creation. To support these efforts, the OECD Guidelines on Corporate Governance of State-Owned Enterprises (SOE Guidelines) were revised in 2024 to include a dedicated chapter on sustainability. This new chapter offers targeted recommendations, primarily for state ownership entities and, where relevant, SOE boards, to ensure coherence with and enable national and international sustainability commitments.
This report aims to support the implementation of the SOE Guidelines by exploring how governments are starting to put these recommendations into practice. Drawing on a collection of international experiences, it highlights steps taken to embed sustainability-related considerations into SOE policies and practices. The insights are organised around the four main pillars of the SOE Guidelines’ sustainability chapter, namely the role of the state in setting ambitious and concrete sustainability expectations; the role of SOE boards in implementing such expectations; sustainability reporting and disclosure; and responsible business conduct.
The report’s main findings demonstrate that:
State ownership entities can ensure coherence with and support the achievement of national sustainability objectives and commitments by setting concrete and ambitious expectations for SOEs. In particular, four steps are identified to build a robust and accountable ownership framework that integrates sustainability considerations in a meaningful way. These include:
incorporating sustainability into state ownership policies and practices
setting concrete and ambitious sustainability-related expectations for SOEs
monitoring and assessing SOE performance against these expectations
ensuring transparent reporting and disclosure of sustainability outcomes.
Strong SOE board leadership is essential to develop and effectively embed sustainability into corporate strategies and operations. Boards are accountable for long-term performance and should ensure that material sustainability risks and opportunities are addressed through the corporate strategy, management oversight and within the risk management and internal control system. This requires not only a clear mandate, but also a board composed of an appropriate mix of independent members, with diverse expertise and sustainability-relevant skills. Some countries have taken measures to include sustainability criteria in their SOE board nomination processes to support SOE boards shape corporate culture, hold management accountable, and translate sustainability commitments into action.
Effective sustainability reporting and disclosure enhances transparency and builds trust among investors, business partners and stakeholders. Sustainability reporting and disclosure by SOEs has grown significantly, and the state can reinforce this trend by setting clear expectations on content (aligned with international standards), applicability, accessibility and independent assurance. State owners and SOEs should also monitor market developments such as mandatory disclosure requirements, convergence of global frameworks (e.g. IFRS) and increasing emphasis on interoperability.
To advance sustainability, SOEs should embed responsible business conduct into their strategies and operations through stakeholder engagement and high standards of integrity. Stakeholder dialogue is particularly important for identifying material sustainability-related risks and opportunities, and for preventing or addressing negative impacts of SOE operations, including across supply chains. Given their role and proximity to the state, SOEs are also vulnerable to corruption and integrity-related risks, which can hinder the achievement of sustainability goals. To address these risks, state ownership entities and SOEs should take action to ensure high standards of integrity in the state-owned sector.
