A/HRC/32/45 influence of State-owned enterprises has also been on the rise in the global economy. The proportion of State-owned enterprises among the Fortune Global 500 companies is estimated to have grown from 9.8 per cent in 2005 to 22.8 per cent in 2014, with US$ 389.3 billion in profits and US$ 28.4 trillion in assets. This rise is driven primarily by developing economies, in particular China.4 These figures only comprise publicly listed companies, thus, the overall share of State-owned enterprises in the global economy is likely to be greater. 13. Traditionally, State-owned enterprises have had a solely national focus on sectors considered of national importance, such as energy, infrastructure and public utilities. Nowadays, State-owned enterprises, while still present in these sectors, are also active in a large range of sectors, such as finance.5 They also increasingly operate globally. In 2014, for instance, there were at least 550 State-owned transnational corporations, both listed and unlisted, from developed and developing countries. While the number is relatively small, the number of their foreign affiliates and the scale of their foreign assets are significant, with over 15,000 foreign affiliates and estimated foreign assets of over US$ 2 trillion.6 In addition, State-owned enterprises are increasingly active in mergers and acquisitions of companies worldwide.7 14. The rationale for State ownership has varied over time and is multifaceted, with reasons including providing public goods, fostering industries that would not be developed through private investment, generating government revenue and functioning as a crisis response tool.8 In addition to their commercial activities, some State-owned enterprises are also tasked with fulfilling specific public policy outcomes. State-owned enterprises are owned not only by central or federal Governments, but also by local and sub-regional governments. 15. Concerns have been raised that the advantages enjoyed by such enterprises owing to their relationship with State agencies, such as direct subsidies, preferential regulatory treatment and State-backed guarantees, lead to their being less transparent, accountable or efficient, enjoying a position of market domination and operating with higher levels of impunity.9 Against this backdrop, there has been a trend to reform the sector and encourage 4 5 6 7 8 9 Only entities in which the Government held 50 per cent or more shares were considered. See G. Kwiatkowski and P. Augustynowicz, “State-owned enterprises in the global economy – analysis based on Fortune Global 500 list”, Managing Intellectual Capital and Innovation for Sustainable and Inclusive Society: Proceedings of the MakeLearn and TIIM International Conference, (Bari, Italy, 2729 May 2015), pp. 1739-1747); and Przemyslaw.Kowalski and others, “State-owned enterprises: trade effects and policy implications”, OECD Trade Policy Paper No. 147 (22 March 2013), pp. 5 and 188. Kwiatkowski and Augustynowicz, “State-owned enterprises in the global economy”, p. 1744 (see footnote 4). United Nations Conference on Trade and Development (UNCTAD), World Investment Report: Investing in the SDGs: An Action Plan (New York and Geneva, 2014), pp. 20-21. State-owned transnational corporations are defined here as corporations that are at least 10 per cent owned by the State or public entities, or in which the State or public entity is the largest shareholder or has a “golden share” (p. 34). For instance, in the European Union, State-owned enterprises accounted for 70 per cent of the total Chinese investment in 2015. Thilo Hanemann and Mikko Huotari, “A new record year for Chinese outbound investment in Europe” (Mercator Institute for China Studies, February 2016), p. 5. Kowalski and others, “State-owned enterprises”, pp. 11-13 (see footnote 4). See for example, Kowalski and others, “State-owned enterprises”, p. 4; Arief Budiman, Diaan-Yi Lin and Seelan Singham, “Improving performance at state-owned enterprises”, (McKinsey & Company, May 2009), available at www.mckinsey.com/industries/public-sector/our-insights/improvingperformance-at-state-owned-enterprises; and Institute for Human Rights and Business, “Human rights 5