With SOEs representing 26% of Asia’s total market capitalisation as of end 2024 — far above levels observed in other regions — their influence over the region’s economic and sustainability trajectory is substantial. Given their scale, strategic importance, sectoral prevalence, and public mandates, SOEs in Asia are uniquely positioned to advance national and international sustainability commitments and drive change. The incorporation of sustainability considerations into SOE ownership and governance frameworks can both mitigate risks and create opportunities for state-owners and their portfolios.
Drawing on the OECD Guidelines on the Corporate Governance of State-Owned Enterprises, this report takes stock of national approaches to integrating sustainability considerations into SOE governance and operations in ten Asian jurisdictions. It covers: the role of the state owner; the roles and responsibilities of SOE boards; sustainability reporting and disclosure; and responsible business conduct and stakeholder engagement. Key findings and ongoing challenges include:
Role of the state-owner. While all reviewed countries have made national sustainability commitments which are progressively cascading to SOEs, implementation remains uneven and concentrated among large or listed enterprises. Strengthening enforcement, incentives and SOE engagement will be critical to turn commitments into measurable outcomes. National sustainability commitments (e.g. emissions reduction targets or energy capabilities) are mainly focused on climate, with reference to international agreements. However, the explicit translation of national commitments into SOE mandates is limited, and linkages to performance outcomes are still evolving. Sustainability requirements (e.g. operational, strategic, disclosure) for SOEs are typically established through laws and regulations, governance codes or sectoral guidance but the level of coverage, formalisation and coherence varies, with a focus on large or listed SOEs. Without credible incentives and consistent application across portfolios, sustainability commitments risk remaining aspirational rather than operational.
Roles and responsibilities of SOE boards. The formalisation of sustainability-related board responsibilities in national governance frameworks is mixed – spanning explicit requirements for listed SOEs, expectations in corporate governance codes and implicit reliance on existing risk management or due diligence practices. Particularly in large or listed SOEs, the sharpened focus on the role of boards has resulted in changes to leadership composition (either by way of designated sustainability committees at board or executive level) and performance evaluation, but embedding sustainability expertise in board appointments remains at an early stage. There is only limited evidence linking sustainability to executive remuneration in most reviewed countries and targeted capacity building initiatives are uncommon.
Sustainability reporting and disclosure. Sustainability reporting frameworks are shifting to align with international standards but only certain SOEs are expected to comply. Nearly all countries have SOEs that report under the Global Reporting Initiative (GRI) Standards and/or the Sustainability Accounting Standards Board (SASB) standards and a majority are developing national equivalents to International Financial Reporting Standards (IFRS) S1 and S2. Despite recent initiatives to align sustainability reporting with evolving internationally recognised disclosure frameworks, there are clear differences in reporting obligations between reviewed countries. Moreover, national frameworks are phased or distinguished by enterprise type (listed vs. non-listed), size or sector. Notably, sustainability disclosure requirements are not expected to apply to non-listed and/or small SOEs in the short- to medium-term. Independent third-party verification processes to provide assurances on sustainability reporting are less advanced than disclosure mandates. While tailored disclosure requirements recognise differences in reporting capacities, they may also lead to fragmented and uneven transparency and disclosure practices of SOEs.
Responsible business conduct and stakeholder engagement. In addition to disclosure and reporting, other responsible business conduct (RBC) principles and standards are increasingly being translated into national frameworks, but limited resourcing and weak enforcement limit the uptake and impact on SOE strategy and operations. All reviewed countries have reflected commitments to international RBC standards in their national legal frameworks, policies and action plans. Human rights and environmental due diligence expectations are also increasingly reflected in enterprise risk management systems. However, the absence of co‑ordination mechanisms, resources and enforcement in most reviewed countries means that practical implementation remains uneven.