The latest SOE good governance index has been published: the assessment is positive for the first time
The latest SOE Good Governance Index compiled by the Governance Coordination Center shows that almost 8 out of 10 companies meet good governance standards. For the first time, the overall SOE governance indicator is positive. In corporate governance, the progress achieved in depoliticizing SOE boards and other collegial bodies is best appreciated, but SOE sustainability reports have remained the weakest area of governance for several years in a row.
AB “Ignitis grupė” continues to maintain the leading position in the category of large companies with the best governance. In the category of medium-sized companies, AB “Smiltynės perkėla” is named the management leader this year, and in the category of small companies – JV “Indėlių ir investijcija draudimas”. In assessing the achievements of companies in specific areas of good governance, UAB “Toksika” was awarded this year for the best strategic planning and implementation. The management progress nomination is for AB “Lietuvos uostas”, and the most professional board is recognized for AB “Kelių priežiūra”.
During the 2022-2023 SOE governance analysis, even 76 percent of companies were evaluated positively (in 2021-2022, 58 percent of companies were such). All constituent parts of the Index – Transparency, Collegial bodies, Strategic planning and implementation – were ranked with higher scores this year, therefore the general assessment of SOE governance – for the first time in the history of the Index’s compilation – is positive (letter A).
“This is the highest assessment achieved in the 11 years since the SOE Good Governance Index was compiled. This achievement once again only confirmed that the transformation of SOEs started today is being successfully carried out and is yielding tangible results. I have no doubt that this positive change is determined by the joint work and concentration between the Government, the Governance Coordination Center and the entire SOE community to work together to achieve better and more advanced SOE management”, says Vice Minister of Economy and Innovation Ieva Valeškaitė.
Vidas Danielius, director of the Governance Coordination Center, notes that the governance of SOEs is improving every year, as shown by the Index results, but at the same time, the gap between very well and poorly rated SOEs is increasing. “We still see a clear divide between SOEs that have implemented extremely high governance standards and those that are having a much harder time improving. We hope that the SOE transformation plan approved by the Government and started to be implemented will allow companies to concentrate on the most important functions. Deeper centralization of SOE management and portfolio optimization would bring great benefits and solve the problem of small companies, which today, due to limited administrative resources, practically do not have the opportunity to strengthen their management competences”, he is convinced.
According to V. Danieliaus, the most significant changes in the governance of SOEs and the greatest progress have been achieved in the area of collegial bodies. This year, 94 percent companies are positively evaluated for the formation processes of independent and depoliticized boards and other collegial bodies.
“This is a generally accepted practice, which is considered one of the most important for the efficient and transparent management of SOEs. A fundamental breakthrough in the field of collegial bodies has already taken place and we see positive changes in the activities of SOE boards”, he notes.
This year, for the first time, the chairmen of all SOE boards and supervisory boards are independent. Meanwhile, the share of independent members in the elected collegial bodies of SOEs has currently increased to almost 64 percent. This is consistent with OECD good governance practices and principles of balanced representation.
Compliance with the principles of transparency was positively evaluated by 70 percent. companies. “Accountability practices are steadily improving. We see a positive change not only in the quality of annual reports, which are one of the most important forms of accountability, but also in the disclosure of data on SOE websites. Also, great progress has been made in the part of special obligations, which was evaluated positively for the first time. This was due to the regular supervision carried out by the Management Coordination Center, which made it possible to more clearly identify the special obligations carried out by companies, to optimize them and to reduce the number of places for interpretation”, emphasizes V.Danielius.
65 percent have received positive evaluations in the field of strategic planning and implementation. companies. According to the assessment of the management coordination center, the quality of strategic plans is improving, but the integration of strategies into the activities of SOEs is insufficient, and there is a lack of named impact measures to achieve strategic goals.
Of all governance criteria, sustainability reports prepared by SOEs have the weakest rating, although compared to the year 2021-2022, progress has been made and has risen from a negative rating to an average rating. “There is an increasing number of companies that apply sustainable business development practices, systematically implement relevant measures, prepare a Sustainability Policy and other functional obligations related to sustainability, but the part of Sustainability reports has been evaluated as the worst of all management criteria, as in previous years. The environment and goals of sustainability are particularly weakly disclosed, the main impacts, essential risks are not indicated, the sustainability goals with the indicators to be achieved are not disclosed,” says V. Danielius, head of the Governance Coordination Center.
The SOE Good Governance Index compiled annually is one of the main tools used to assess the qualitative aspects of SOE governance. Each SOE is evaluated according to 260 criteria, responding to OECD recommendations, Transparency, Selection and Ownership guidelines and other documents regulating SOE activities and global best practices
Learn more about the 2022-2023 The results of the SOE good governance index are available on the Governance Coordination Center’s website https://governance.lt/valdysenos-indekasas/#indekoso-rezultatai.
