Sustainability reporting and disclosure enhances transparency, support risk management and help state-owned enterprises (SOEs) attract financing – especially as they increasingly access capital markets. It is also essential for demonstrating long-term value and aligning with national sustainability goals. This chapter examines how state owners can set expectations for timely and credible sustainability disclosures, aligned with internationally recognised standards. It also reviews emerging global trends and provides practical guidance to support improved reporting practices across SOEs.
State‑Owned Enterprises and Sustainability
Leading by Example
Abstract
Sustainability reporting and disclosure are key components of good corporate governance. They provide crucial information on corporate performance and transparency on how enterprises identify, manage and communicate their sustainability-related risks and opportunities, contributing to improved internal decision making and enhanced risk management. As perceptions of sustainability evolve, these issues are no longer seen as purely non-financial. Enterprises, and particularly SOEs, are now expected to report both on how sustainability risks affect them and on the impacts of their activities on people, the planet and broader stakeholder groups.
The state should expect SOEs to be subject to appropriate sustainability reporting and disclosure requirements, based on consistent, comparable and reliable information (Guideline VII.C).
Primary users of sustainability reporting are generally shareholders and investors, who have been demanding better disclosure from companies around sustainability-related matters that are material to their assessment of a company’s business perspectives and risks. It also benefits stakeholders, who are placing greater emphasis on transparency and accountability in how enterprises manage environmental and social issues. For SOEs, which typically face heightened public scrutiny, the case for high-quality sustainability reporting and disclosure is particularly strong. Given their public mandates, SOEs should demonstrate how they maximise long-term value for the state, other shareholders and society.
In this context, the SOE Guidelines recommend that states set clear expectations for SOEs to disclose material sustainability-related information. As this is a fast-evolving field, state ownership entities should aim to keep abreast of key trends and developments and align their national reporting obligations and expectations accordingly. This chapter examines trends and developments in sustainability reporting, with a particular focus on SOE practices (Section 4.1) and identifies good practices to guide what sustainability disclosures should contain and how they can be strengthened (Section 4.2). To note, while Chapter 2 focuses on disclosure by SOE owners regarding their broader portfolios, the emphasis here is on the disclosure practices expected of SOEs themselves.
Clear and consistent expectations around sustainability reporting and disclosure are essential for improving the quality, comparability and credibility of disclosures by SOEs. The SOE Guidelines recommend SOEs to be “explicitly required to adequately report and disclose clear, accurate and complete material information on sustainability-related policies, activities, risks, objectives and performance metrics in a timely and accessible manner, in line with high-quality internationally recognised standards.” To establish such expectations, it is important to first understand their sources, often grounded in existing legal and regulatory, or voluntary frameworks. This chapter reviews existing requirements and frameworks and provides examples of how they are applied in practice to guide SOE disclosure.
4.1.1. Corporate sustainability reporting trends
The disclosure of sustainability-related information has considerably increased over the last two decades, with a notable uptake in sector and industry-specific reporting, in particular for the extractives, mining and financial sectors (Van der Lugt, Van de Wijs and Petrovics, 2020[1]). Out of nearly 44 000 listed companies globally with a total market capitalisation of USD 98 trillion, almost 9 600 disclosed sustainability-related information in 2022 or 2023 (Figure 4.1). The companies that disclosed sustainability-related information represented 86% of global market capitalisation. Among the 479 listed state-owned enterprises identified in that sample, 441 disclosed sustainability-related information in 2022 (representing 98% of the market capitalisation of state-owned enterprises in the sample).1 This higher share reflects the fact that several jurisdictions either mandate through laws and regulations or strongly encourage sustainability-reporting for their SOE portfolios (OECD, 2024[2]). In some cases, state owners have established higher expectations on sustainability reporting through their state ownership policies or voluntary guidelines, often going beyond legal minimums and focusing on areas where the state has set ambitious goals (e.g. climate), warranting closer scrutiny of SOE performance.
Some notable examples include:
Sweden: Since 2007, all SOEs are mandated to undertake sustainability reporting and disclosure with requirements being stricter than for private-sector companies (see Box 4.1).
Finland: SOEs must report annually on their direct and indirect scope 1, 2 and 3 emissions.
Spain: SOEs are required to publish annual sustainability reports, and those with more than 1 000 employees must also submit a CSR report to a national council (Consejo Estatal de Responsabilidad Social de las Empresas – CERSE) which is an advisory and consultative body of the government (Sustainable Economy Law, 2011[3]).2
European Union: The Corporate Sustainability Reporting Directive (CSRD) requires large EU companies, including SOEs, to report in line with the European Sustainability Reporting Standards (ESRS) with obligations phased in over time.3 Some non-EU companies operating in the EU may also be subject to the CSRD.
Source: OECD Corporate Sustainability dataset, LSEG, Bloomberg.
It is expected that the adoption of mandatory disclosure requirements in some jurisdictions, applicable to both private and state-owned enterprises, will continue to shape corporate disclosure outcomes including for SOEs (see Section 4.2.2).
In addition to regulations on sustainability reporting for the private sector, Sweden became the first country to issue a specific regulation mandating sustainability reporting and disclosure for SOEs. These mandatory guidelines were developed in 2007 with the objective to increase the transparency and level of ambition regarding sustainability of SOEs, as well as to improve the monitoring of related objectives. These guidelines (known as the “Principles” since 2020) are mandatory and enforced on a comply or explain basis. According to the Swedish Ministry of Finance, all companies are expected to take responsibility for sustainability issues, with SOEs leading and setting an example in this field.
The guidelines apply to all SOEs that do not fall under the new CSRD standards - irrespective of their size (currently 73 SOEs). They consist of stricter requirements than for private-sector companies. SOEs are required to develop a sustainability report based on GRI standards or another internationally-accepted framework, and to publish it on their website – either as a stand-alone document or integrated within their annual reports. The sustainability report should provide “a good description of the operations, opportunities and challenges of SOEs, and provide input for continuous tracking and evaluation of the enterprises’ operations and targets.” It must include the following information (which is the same as for large enterprises according to the Annual Accounts Act):
A materiality assessment identifying the sustainability issues that are most material to the enterprise’s operations, its value chain and its stakeholders
The enterprise’s management of sustainability issues, including key policies, strategic priorities and short- to long-term targets
A stakeholder analysis or clear information on the implementation of a stakeholder dialogue
Activities carried out during the year to address material sustainability issues (i.e. to reinforce positive impacts and minimise negative adverse impacts)
An account of relevant quantitative and qualitative performance indicators that are linked to the priorities and targets set
An account of the climate-related financial risks and opportunities in operations
The sustainability report must be quality assured by an independent auditor appointed by the general shareholder meeting.
Note: GRI reporting requirements will be replaced by ESRS where applicable.
Source: Interview with Government Offices of Sweden, 2024
4.1.2. Reporting frameworks
While legal and regulatory requirements with regards to sustainability reporting are evolving, a related question concerns which frameworks companies should use. A number of internationally recognised frameworks are now converging to support more standardised corporate sustainability disclosures. Relevant examples include:
IFRS Sustainability Disclosure Standards (S1 and S2): Focused on investor-relevant financial materiality, these standards are being adopted internationally with IFRS S1 addressing general sustainability-related disclosures and S2 focusing on climate-related risks. They are the result of the merging of several reporting frameworks under the direction of the International Sustainability Standards Board (ISSB) (see also Box 4.2).
GRI Reporting Standards: Widely used by SOEs, the GRI framework is based on double materiality and includes universal, sector-specific and topic-specific standards. In May 2024, the Global Sustainability Standards Board (GSSB) announced plans to strengthen its work with the ISSB, in view of identifying and aligning common disclosures that address information needs with respect to thematic and sector-based standard setting. An initial outcome of the collaboration will involve a methodology pilot to adequately scope impacts on biodiversity and ecosystems (GRI, 2024[4]).
Efforts to align existing standards are underway. In 2024, GRI and the IFRS Foundation announced plans to ensure interoperability of their standards which should help support implementation while reducing reporting burden for companies. In addition, the new IFRS Sustainability Disclosure Standards will be interoperable with the new mandatory European Sustainability Reporting Standards (ESRS). The IFRS Foundation and the European Financial Reporting Advisory Group (EFRAG) have recently published guidance aimed at illustrating the high level of alignment between the IFRS and ESRS reporting frameworks (IFRS Foundation, 2024[5]).
In June 2023, the International Sustainability Standards Board (ISSB), including representatives of six of the main standard-setting institutions (IFRS, CDP, CDSB, GRI, IIRC, and SASB), released two new sustainability disclosure standards based on financial materiality only:
The General Requirements for Disclosure of Sustainability-related Financial Information (IFRS – S1): sets out general sustainability-related disclosure requirements with a focus on governance, strategy, risk management, metrics and targets.
Climate-related Disclosure (IFRS – S2): focuses on climate-related physical and transitional risks and opportunities.
IFRS S2 serves as an add-on to IFRS S1, while IFRS S1 can be used on its own. The new standards require public companies to report on sustainability-related risks and opportunities that could “reasonably be expected” to affect their “prospects” which IFRS defines as their cash flow, access to finance and cost of capital. They entered into effect for annual reporting periods on 1 January 2024. IFRS S1 entails the reporting of information on a range of risks and opportunities beyond climate. It connects and merges work done by several other international standard setting bodies, including;
Sustainability Accounting Standards Board (SASB) standards, which set out industry-specific sustainability metrics.
Climate Disclosure Standards Board (CDSB)’s framework, which integrates climate and environmental information into financial reporting.
Value Reporting Foundation's Integrated Reporting Framework, whose concepts are incorporated into IFRS S1 to promote connectivity between financial and sustainability information.
World Economic Forum's Stakeholder Capitalism Metrics, whose metrics have also been considered to ensure comprehensive sustainability reporting.
Source: IFRS Foundation, (2024[5]), IFRS Foundation and EFRAG publish interoperability guidance, https://www.ifrs.org/news-and-events/news/2024/05/ifrs-foundation-and-efrag-publish-interoperability-guidance/, IFRS, (2024[6]), Jurisdictional sustainability consultations, https://www.ifrs.org/ifrs-sustainability-disclosure-standards-around-the-world/jurisdiction-consultations-on-sustainability-related-disclosures/
For SOEs, the selection of reporting frameworks is often influenced by their dual accountability to their shareholders and the public. Frameworks such as GRI are commonly used in jurisdictions that emphasise double materiality and stakeholder accountability. For instance, Chile, Finland, Netherlands, and Sweden require or encourage their SOEs to report in line with GRI Standards (Box 4.3). The GRI’s widespread adoption and alignment with the EU’s Corporate Sustainability Reporting Directive, which also adopts the double materiality principle, may further reinforce their relevance for SOEs (OECD, 2022[7]).
The GRI Standards are a modular system comprising three series of standards: the GRI Universal Standards, the GRI Sector Standards and the GRI Topic Standards. Each comprises general principles and indicators that an enterprise can use to report on the impact of its activities. It is designed for use by organisations of any size, sector or location. The GRI Standards were revised in 2021 to account for latest developments.
The GRI Universal Standards comprise:
GRI 1: Foundation 2021, which sets out the requirements that an organisation must report in accordance with the GRI Standards. It also specifies certain principles, such as accuracy, balance and verifiability, which are fundamental to good-quality reporting.
GRI 2: General Disclosures 2021, which detail the contextual information about an enterprise that should be reported (e.g. governance, strategy, policies, stakeholder engagement).
GRI 3: Material Topics 2021, which guide an enterprise in identifying, analysing and responding to the impacts related to material topics.
Sector-specific standards. They intend to increase the quality, completeness and consistency of reporting by organisations. Standards are currently being developed for 40 sectors, starting with those with the highest impact, such as oil and gas, agriculture, aquaculture, and fishing. The Standards list topics that are likely to be material for most organisations in a given sector and indicate relevant disclosures to report on these topics. If an applicable Sector Standard is available, an organisation is obliged (‘required’) to use it when reporting with the GRI Standards.
Topic-specific standards. The GRI Topic Standards contain disclosures for providing information on topics. Examples include Standards on waste, occupational health and safety, and tax. Each Standard incorporates an overview of the topic and disclosures specific to the topic and how an organisation manages its associated impacts. An organisation selects the Topic Standards that correspond to the material topics it has determined and uses them for reporting.
In preparing sustainability reports, enterprises apply the three universal Standards, and then choose from the topic-specific Standards and sector supplements to report on their material topics.
Source: GRI, (2024[8]), The GRI Standards, https://www.globalreporting.org/how-to-use-the-gri-standards/gri-standards-english-language/
While many legal and voluntary frameworks exist, it is important to define the minimum expectations for disclosure. In line with the SOE Guidelines, state expectations, often shaped by existing regulations and frameworks, should clearly specify the type of information to be disclosed, including sustainability-related policies, risks, objectives and performance metrics. Good practices also involve using internationally recognised frameworks and, where relevant, independent assurance. These measures help improve the quality and comparability of disclosures, reinforce the state’s role as an active owner, and support aggregate-level reporting (see Section 2.2, Step 4).
4.2.1. Coverage of sustainability reporting
Based on the SOE Guidelines, SOEs should report and disclose all material issues regarding the enterprise, in line with high-quality, internationally recognised accounting and disclosure standards. The OECD/G20 Principles and SOE Guidelines define material information as any data whose omission or misstatement could reasonably be expected to influence an investor's evaluation of a company’s value. Material information may cover environmental, social and governance matters, and compliance with the respective legal obligations or specific policies with regard to human rights, health, safety, diversity, consumer security, employment, anti-corruption and sustainable business practices. In addition and as appropriate, SOEs should provide information on key issues relevant to employees and other stakeholders that may materially affect the performance of the enterprise, or have significant impacts on stakeholders.
Depending on the reporting standard used, the sustainability reports may cover a range of financial and non-financial material disclosures. Non-financial disclosures may cover environmental, social and governance categories (Table 4.1). For SOEs, additional reporting may be expected on:
performance-related to public policy objectives and public service obligations
attainment of sustainability-related expectations of shareholder(s)
compliance with the legal obligations or specific policies with regard to human rights, health, safety, diversity, consumer security, employment, anti-corruption and sustainable business practices.
To ensure information on sustainability is of quality, consistent and comparable across SOEs and markets, the state owner may decide to harmonise or standardise reporting standards and performance indicators. To this effect, the state may:
provide a minimum set of indicators or metrics aligned with international frameworks which should be reported on
require or recommend the use of (specific) internationally accepted reporting standards such as IFRS and/or GRI.
Sustainability reports typically address a broad range of issues, ranging from cross-cutting global issues to sector- or enterprise-specific concerns
Source: OECD own compilation, 2025.
A certain number of jurisdictions have issued expectations in this regard, often through the ownership policy. For example, the Dutch state ownership policy provides an overview of all relevant standards and frameworks that SOEs are expected to use for their reporting and disclosures, indicating the nature of their application (i.e. required or expected) and their implementation (in full or on a comply-or-explain basis).
4.2.2. Applicability and proportionality
Many countries have established reporting requirements that may include sustainability-related information. Such requirements generally tend to target listed and large enterprises and those that issue debt in financial markets, which includes some SOEs (OECD, 2024[2]). However, state owners should consider extending reporting requirements to the entire SOE portfolio, if not already the case. This would also be consistent with the SOE Guidelines, which recommend that SOEs be subject to the same high-quality accounting and disclosure standards as listed companies.
Indeed, good practice would call for all SOEs to engage in sustainability reporting and disclosure, as they should demonstrate how they deliver value for citizens. However, flexibility and proportionality related to an enterprise’s size, stage of development or sector of activity may be warranted when setting reporting and disclosure requirements. This may translate into reduced or phased-in reporting requirements for certain categories of SOEs.
In addition, care should be taken not to exclude SOEs that are subject to PPOs from the scope of reporting requirements. Generally speaking, the non-financial performance of such SOEs matters, and therefore transparency to non-state shareholders (where present) and the wider public should be accommodated (see Section 2.2.2 Step 2 for more information on PPOs/PSOS).
4.2.3. Format and accessibility
Where the state has set sustainability reporting requirements or expectations, it may provide SOEs with guidance on where sustainability-related financial disclosures should be presented, such as in the primary annual report (i.e. integrated report) or separately. Reference should be made to the reporting practices in the country, including clear requirements regarding publication and accessibility of reports. Enterprises should avoid disaggregating sustainability-related information into multiple reports and should aim at providing consistent information between any statutory filings and reports to the regulators and information provided to other investors or stakeholders (World Bank, 2022[9]). A comparison of common business reporting formats is provided in Table 4.2.
Note: Narrative reports can take on the form of the directors’ report, management commentary, management’s discussion and analysis, or operating and financial review.
Source: IFAC, (2015[10]), Materiality in Integrated Reporting. Guidance for the Preparation of Integrated Reports, https://www.integratedreporting.org/wp-content/uploads/2015/11/1315_MaterialityinIR_Doc_4a_Interactive.pdf
While integrated reporting can effectively link strategy, governance, and sustainability performance, as it aims at explaining how an entity creates value over the short, medium and long term (forward-looking), a separate sustainability report may better serve broader stakeholder audiences. If conciseness is prioritised (as in integrated reports), supplementary disclosures should detail methodologies and materiality assessments, as this adds to the credibility and auditability of the information (World Bank, 2022[9]).
4.2.4. Assurance and verification
The SOE Guidelines recommend that the accuracy of sustainability reports be verified. Related requirements can be phased in. Annual assurance attestations should be provided by an independent, competent and qualified assurance service provider, in accordance with high-quality internationally recognised assurance standards. The disclosures in the financial statements and those in sustainability reports should be consistent and connected, as per the G20/OECD Principles of Corporate Governance (VI.A.3). The Principles also recommend that whenever high-quality assurance for all disclosed sustainability information might not be possible or too costly, mandatory assessment for the most relevant sustainability-related metrics or disclosures, such as GHG emissions, may be considered. However, greater assurance of sustainability-related disclosures should be the long-term goal.
OECD data shows that in practice, while sustainability reporting has grown, assurance remains limited. In 2022, 66% of all listed companies – including 48% of all SOEs in the sample – by market capitalisation that disclosed sustainability reports had them verified by an independent assurance provider. By number of companies, this represents 31% and 25% of companies, respectively (Figure 4.2) (OECD, 2024[2]).
Source: OECD Corporate Sustainability dataset, LSEG, Bloomberg.
Third-party audits of sustainability-related information are expected to increase in the near future, especially for companies operating within the EU market. The CSRD introduced a requirement for limited assurance of sustainability information for EU companies as well as non-EU companies with substantial activity in the EU market (“third country companies”).4 In addition, external assurance is also already mandatory for some companies in India and Chinese Taipei (OECD, 2024[2]).
However, with the exception of countries where sustainability reporting is well-advanced (e.g. France, Spain and Sweden), it is not yet common practice for governments to require independent assurance of SOEs’ sustainability disclosures. In Colombia and Lithuania, sustainability-related audits of SOEs are carried out by supreme audit institutions depending on a few criteria most frequently related to environmental risks of certain operations. However, such controls do not substitute for external audits or assurances provided by independent third parties.
Similarly to sustainability reporting, several methodologies and frameworks exist for sustainability assurance (e.g. International Standard on Assurance Engagements 3000 (ISAE 3000), AA1000 Assurance Standard). New global baselines for sustainability assurance engagements are currently being developed by the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA). They are expected to further strengthen global assurance practices.
To ensure alignment with rapidly-evolving sustainability reporting and disclosure standards and requirements, state owners and SOEs may consider the following practices:
Align with global reporting standards. Reports should provide a clear, accurate and complete information on sustainability-related policies, activities, risks, objectives and performance metrics. Many state owners reference internationally recognised accounting and disclosure standards in their expectations to ensure alignment with high-quality disclosure norms. This includes adapting to evolving and emerging reporting requirements and standards – including convergent and interoperable frameworks (e.g. IFRS, GRI).
Tailor reporting requirements and/or expectations. Sustainability reporting is increasingly applied to all SOEs, although expectations are often tailored to enterprise size, sector or stage of development.
Ensure accessible and timely reporting. Timely and user-friendly disclosure of material sustainability-related information is a growing focus, including online access and aggregated formats.
Promote assurance and verification. Some countries encourage annual assurance through independent third-party verification to provide an external and objective assessment of a company’s sustainability-related disclosure.
References
[11] EU Commission (2024), Commission provides further clarifications on EU corporate sustainability reporting rules, https://finance.ec.europa.eu/news/commission-provides-further-clarifications-eu-corporate-sustainability-reporting-rules-2024-08-07_en.
[4] GRI (2024), GRI and IFRS Foundation collaboration to deliver full interoperability that enables seamless sustainability reporting, https://www.globalreporting.org/news/news-center/gri-and-ifrs-foundation-collaboration-to-deliver-full-interoperability-that-enables-seamless-sustainability-reporting/.
[8] GRI (2024), The GRI Standards, https://www.globalreporting.org/how-to-use-the-gri-standards/gri-standards-english-language/.
[12] IAASB (2013), ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information International Framework for Assurance Engagements and Related Conforming Amendments, International Auditing and Assurance Standards Board.
[10] IFAC (2015), Materiality in Integrated Reporting. Guidance for the Preparation of Integrated Reports., https://www.integratedreporting.org/wp-content/uploads/2015/11/1315_MaterialityinIR_Doc_4a_Interactive.pdf (accessed on 1 October 2023).
[6] IFRS (2024), Jurisdictional sustainability consultations, https://www.ifrs.org/ifrs-sustainability-disclosure-standards-around-the-world/jurisdiction-consultations-on-sustainability-related-disclosures/.
[5] IFRS Foundation (2024), IFRS Foundation and EFRAG publish interoperability guidance, https://www.ifrs.org/news-and-events/news/2024/05/ifrs-foundation-and-efrag-publish-interoperability-guidance/.
[2] OECD (2024), Global Corporate Sustainability Report 2024, OECD, Paris.
[7] OECD (2022), Climate Change and Corporate Governance, Corporate Governance, OECD Publishing, Paris, https://doi.org/10.1787/272d85c3-en.
[3] Sustainable Economy Law (2011), Spain’s Sustainable Economy Law Requires Disclosure of Annual Sustainability Reports, https://www.boe.es/boe/dias/2011/03/05/pdfs/BOE-A-2011-4117.pdf.
[1] Van der Lugt, C., P. Van de Wijs and D. Petrovics (2020), Carrots & Sticks 2020 - Sustainability Reporting Policy: Global trends in disclosure as the ESG agenda goes mainstream, Global Reporting Initiative (GRI) and the University of Stellenbosch Business School (USB).
[9] World Bank (2022), Management and Disclosure of Climate-Related Financial Impacts for State-Owned Enterprises : Toolkit for Shareholders and Regulators, World Bank Group, Washington, https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099005009022229052/p17256906b9e5b0dd093c30a1ba830d7bc8 (accessed on 2 February 2023).
← 1. This includes the disclosure of a sustainability report, an integrated annual report with sustainability data, a CSR report with substantial data and a full or partial report of GHG emissions scope 1 and 2 or scope 3.
← 2. The CERSE involves representatives from the government, trade unions, employer associations and representatives of civil organisations and experts, with the objective of strengthening and promoting CSR policies in Spain.
← 3. In February 2025, the European Commission proposed revisions to the CSRD that would narrow its scope, postpone reporting for large companies until 2028, and exclude listed SMEs unless they meet new size thresholds (EU Commission, 2024[11]). This so-called “Omnibus Simplification Package” is still under consultation.
← 4. “Limited” assurance engagement refers to the process by which a service provider reduces the risk of material misstatement to an acceptably low level in the circumstances of the engagement. It entails less extensive procedures than a “reasonable” assurance engagement for which the assurance provider affirms that the information reported is materially correct – with a high, but not absolute, level of confidence (IAASB, 2013[12])