State-Owned Enterprises: Toward Sustainable Development

Introduction

“Sustainable Development (SD)” has been the concern of the United Nations (UN) for a long time. It has been defined as follows by the UN report entitled “Our Common Future” (Brundtland Commission, 1987):

This means that SD is concerned with “meeting the needs of the people” over a time scale that covers the present and the future generations; therefore, development in the current generation should keep in mind the development rights of the future ones. In this respect, the US “President’s Council on Sustainable Development (PCSD)” identified three pillars for sustainability: “the environment pillar; the social pillar; and the economic pillar” (Olson, 1996).

Considering “State-Owned Enterprises (SOEs)”, they are defined by the “Organization of Economic Cooperation and Development (OECD)” as follows (OECD, 2015).

Since every state would have significant control over its SOEs, and since it should be concerned with SD that does not only involve economic issues and profit, but also social and environmental issues, these SD issue are expected to be the concern of all SOEs worldwide.

A recent report (PWC, 2015) identified the “strategic positioning of SOEs” as concerned not only with “profit making”, but also with “societal value creation”, which can involve “environmental issues”. Figure 1 illustrates the four possible outcomes that can be derived from the dimensions of the “economy” on the one hand and the “society” on the other. This Figure is from (PWC, 2015), after incorporating the “environmental issues” with the “societal issues”, so that all three SD pillars are covered.

Figure 1.

Strategic positioning of SOEs

This paper is concerned with exploring SOEs as means for the achievement of SD. In this respect, it addresses four main integrated issues. The first is concerned with elaborating on the importance of SD; the second is associated with surveying the increasing importance of SOEs; the third is related to providing a generic framework for understanding, assessment and development of SOEs toward the achievement of SD; while the fourth is concerned with providing an illustrative example of the use of the framework. The paper hopes to deliver some guidance on the development of SOEs; and on their role in contributing to the SD of their countries, and of the whole world.

Sustainable Development (Sd)

SD has been introduced above and shown to emphasize a long development “time scale” that covers current and future generations. The main pillars of SD have also been identified as environmental, social and economic. This section is concerned with providing a broader view of SD, so that the contribution of SOEs, working in different fields, can focus on specific SD targets. For this purpose, two main sources are considered. The first is concerned the elements specified for “SD pillars” (Olson, 1996), while the second is related to the “topics” of the UN “Sustainable Development Goals (SDG)” (SDG, 2015).

According to (Olson, 1996), each of the three SD pillars has six main elements. The elements of the “environmental pillar” are concerned with the protection of the environment for the benefit of the present and the future generations. The elements of the “social pillar” are related to: the protection of human beings; the promotion of their capabilities; in addition to caring about their social engagement. The elements of the “economic pillar” are associated with: employment and productivity; supply and demand; in addition to cost. These three pillars and their “18 main elements” are listed in Table 1.