Background and request for advice
The Dutch government is a shareholder in almost 550 companies, also known as state-owned enterprises. The central government, provinces, municipalities and water authorities all hold shares in companies. Around 70% of state-owned enterprises operate in the physical living environment and infrastructure domain. These more than 350 companies contribute to society in a number of ways, including by realising transition tasks and increasing economic security.
These are areas facing substantial and growing challenges that require close collaboration between government, business, society and social initiatives. State-owned enterprises play a special role in this collaboration. These are private-law organisations that act in a commercial capacity while having a public responsibility.
The central question of the advisory report focuses on harnessing that potential, namely:
How can state-owned enterprises within the physical living environment domain help to safeguard public interests?
Explanation
The Council notes that state-owned enterprises are essential to the robust and future-proof development of the living environment. State-owned enterprises are currently not yet realising their full potential as the relevant public interests have not been clearly defined. In practice, the government’s contribution towards state-owned enterprises is largely limited to the financial performance of these enterprises. There is only limited attention for the companies’ long-term goals in the context of the public interest.
In addition, the government’s interpretation of market failure is 'narrow' when considering whether or not to form a state-owned enterprise. As a result, the option of a state-owned enterprise mainly arises in a monopoly situation. The state-owned enterprise is not always considered as an instrument in the case of policy issues relating to sustainability transitions, strengthening sectors of strategic importance and/or protecting economic security.
Recommendations
State-owned enterprises are an often overlooked government instrument. However, the Council notes that state-owned enterprises are essential to the robust and future-proof development of the living environment. To achieve an open and fresh approach to state-owned enterprises as an instrument, the Council makes the following six recommendations. The first three recommendations aim to strengthen cooperation between shareholder, policymaker and state-owned enterprises.
Work with state-owned enterprises to define the public interests to be promoted
It is important for the government (in its role as both shareholder and policymaker) to establish two things together with its state-owned enterprises: (1) the public interests to be served by the state-owned enterprise and (2) the intended outcome to be pursued by the state-owned enterprise in terms of these interests. It is important that public interests are defined on the basis of a wellbeing perspective and long-term focus.
Formalise three-way consultations to improve cooperation
To make the management of state-owned enterprises more straightforward, the government holds three-way consultations for some enterprises, in which the enterprise, the shareholder and the government policy department concerned engage in joint discussions to streamline the efforts of all parties. The council recommends introducing three-way consultations for all state-owned enterprises.
Increase knowledge within government about public share ownership
Individual public authorities do not always have sufficient knowledge and expertise on public share ownership to effectively collaborate with state-owned enterprises. The Council recommends closing this knowledge gap at state level by introducing a compulsory training curriculum for civil servants on state-owned enterprises. Local and regional authorities can address their knowledge shortage by engaging in regional cooperation in shareholders’ committees, as is already successfully taking place in some areas.
The remaining three recommendations are aimed at making better use of the scope within the assessment framework for entering and exiting state-owned enterprises in response to current physical challenges.
Make full use of the concept of 'market failure'
The government has long based its state participation policy on the concept of market failure. In practice, it largely focuses on one form of market failure: market power due to a monopoly. However, the concept of market failure encompasses many more forms. The Council believes it is important for the government to make full use of the concept to ensure that state participation policy is better able to respond to the major challenges surrounding sustainability transitions, economic security and strategic autonomy.
Recognise equivalence of state-owned enterprises, subsidies, loans and guarantees
The government should view state-owned enterprises as an instrument that has advantages and disadvantages, but that does not automatically need to be approached with greater caution than other financial and economic instruments. The government will need to analyse the risks on a case-by-case basis for each policy objective. The focus must be on which combination of instruments adds the most public value.
Clarify state participation policy at the next review
The government can follow the above recommendations now when using the current assessment framework. The Council recommends that the central government also clarify the recommended approach in the assessment framework during the next review of the central government state participation policy. Furthermore, the Council recommends that the Association of Provincial Authorities, the Association of Netherlands Municipalities and the Association of Regional Water Authorities draw up a ‘model assessment framework’ for entering into state-owned enterprises. This would avoid the need for all local and regional authorities to initiate their own processes to incorporate the recommendations into their policies. Authorities can better spend this time optimising cooperative ties with their state-owned enterprises.
Publication
The advisory report ‘Participation without prejudice’ was presented to the Ministers of Infrastructure and Water Management, Finance, Economic Affairs, and Climate Policy and Green Growth on 9 October 2025.
Information or comments
To comment or for more information, please contact the project leader, Joris Stok, at joris.stok@rli.nl