article · Australian Accounting Review
State-owned enterprises often carry dual mandates to deliver commercial returns and advance social objectives. In South Africa, where sustainability reporting is mandatory, many of these entities actively adopt and report on environmental, social, and governance practices. However, findings indicate that more than half of the surveyed enterprises lack a systematic method to reconcile these sustainability measures with their financial viability, frequently creating internal conflict. Evaluating enterprise disclosures and stakeholder views demonstrates that treating environmental and social obligations alongside commercial goals is crucial for long-term viability. Integrating sustainability considerations forms part of the wider accountability expected of public bodies. Doing so effectively can assist such enterprises to manage public resources responsibly, operate with greater financial independence, and reduce their reliance on state bailouts in emerging market contexts.
Public enterprises in emerging economies often struggle to balance delivering social benefits with remaining financially solvent. When these organisations cannot manage these dual pressures systematically, they frequently require costly government bailouts funded by taxpayers. Clarifying how public entities report and manage sustainability alongside financial health helps protect public funds and strengthens institutional governance.
The research provides governance and policy insights that public sector administrators, enterprise managers, and oversight bodies can use to structure sustainability reporting frameworks. Because the work focuses on evaluation and empirical findings via surveys and interviews rather than a practical tool or proprietary system, it represents applied conceptual research that informs management strategy and policy development rather than a commercial product.
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Abstract Concerns remain about how companies will reconcile environmental, social and governance (ESG) issues with their core mandates. This is one reason why many organisations did not initially subscribe to sustainable investing, reporting and accounting, especially where it is not mandatory, despite growing stakeholder pressure to do so. This paper examines how state‐owned enterprises (SOEs) with social and commercial mandates in South Africa, where sustainability reporting is mandatory, balance ESG practices and financial sustainability to fulfil their mandates. This article proposes and evaluates propositions about SOEs adopting and reporting ESG components using a survey questionnaire and semi‐structured interviews with important SOE stakeholders to show that its sustainability accounting approach benefits policy and non‐policy observers. More than half of the studied SOEs have embraced and disclosed their ESG practices, yet there appears to be no systematic way in which they balance ESG practices and financial sustainability, resulting in conflict. This paper appears to be the first SOE study on this topic. In this regard, this study offers novel insights into how sustainability practices may be incorporated into the social and commercial objectives of SOEs, which in most cases are conflicting, while still allowing SOEs to be financially sustainable and depend less on state bailouts, which is often the case, especially in Africa and in countries that face a high level of corruption. Considering the characteristics and mandates of SOEs, part of being socially responsible is utilising public resources in the form of taxpayers’ money in an efficient, effective and accountable manner. The discussion in this paper indicates that paying attention to ESG issues is part of a broader accountability mechanism expected from SOEs. Also, the choice of South Africa and of SOEs in South Africa has implications for theory and practice since SOEs in South Africa have social and commercial objectives such that they are expected to be agents of social responsibility.
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DOI: 10.1111/auar.12415
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