Corporate Governance in State-Owned Enterprises

IFC supports state-owned enterprises (SOEs) to improve operational efficiency and introduce commercial strategies and sustainability practices.

A group of men working near river

Governments own and operate enterprises (state-owned enterprises or SOEs) across industries in developed and developing markets. Many SOEs rank among the world’s largest companies and are looking to optimize their operational performance to make them investment-ready for a broader range of investors. The stakes are high as operational deficiencies can disrupt services, negatively impacting citizens, clients, and—potentially—entire economies. Similarly to other companies, SOEs are increasingly looking to operate in a sustainable way for the benefit of all their stakeholders and society as a whole.


State-owned enterprises (SOEs) account for 20 percent of investment, 5 percent of employment, and up to 40 percent of domestic output in countries around the world. They deliver critical services in many economic sectors, such as utilities, finance, and natural resources.

Research from the World Bank reveals many positive benefits of undertaking governance reforms, such as:

  • Improved operational performance
  • Increased access to alternative sources of financing through domestic and international capital markets
  • Reduced fiscal burden of SOEs and increased net contribution to the budget through higher dividends
  • Reduced corruption and improved transparency

IFC supports SOEs through its advisory and investment operations, often in partnership with market intermediaries such as institutes of directors, business schools, and SOE-specific academies, by:

  • Developing sustainability frameworks to strengthen SOE environmental, social and governance performance and monitoring.
  • Training board directors to develop SOE board practices in line with international standards.
  • Training government officials in properly exercising the government’s governance rights as a shareholder.