Singapore Governance and Transparency Index inches to new high; SATS, Ascott Residence Trust lead the pack

    By RAPHAEL LIM 

    The Business Times, 4 August 2021

    THE Singapore Governance and Transparency Index (SGTI) 2021 inched up for the year to a new high, as locally listed companies and trusts upheld their standards despite the ongoing Covid-19 pandemic.

    The mean score in the general category was 68.7 points, up 0.8 point from 67.9 points in 2020. For the real estate investment trust (Reit) and business trust category, the mean score rose to 85.0 points from 84.8 last year.

    For the second year running, SATS emerged as the top performer in the general category with 128 points out of a maximum total of 143.

    Under the Reit and business trust category, Ascott Residence Trust, which ranked third last year, claimed the top spot, scoring 115.3 out of the maximum 143 points.

    "This year's SGTI results reflect the corporate governance performance of listed companies since the onset of the pandemic. It is heartening that the momentum of progress has been maintained," said associate professor Lawrence Loh, who is also director of the Centre for Governance and Sustainability (CGS) at the NUS Business School.

    "The key test now will be how these companies can persevere in their governance and sustainability efforts when the impending local and global operating conditions are expected to be even more challenging."

    The annual SGTI assesses companies on their corporate governance disclosures and practices, as well as the timeliness, accessibility and transparency of their financial results announcements.

    It is jointly conducted by CPA Australia, NUS Business School's CGS and the Singapore Institute of Directors (SID). The Business Times is the strategic media partner.

    This year's study ranked 519 Singapore-listed companies in the general category, and 43 trusts in the Reit and business trust category.

    Under the general category, companies are scored under a "B.R.E.A.D" framework: board responsibilities, rights of shareholders, engagement of stakeholders, accountability and audit, as well as disclosure and transparency.

    Companies are given a base score, with bonus points awarded for good practices and penalty points deducted for issues that point to poor governance.

    Reits and business trusts are also scored against other trust-specific items in addition to the B.R.E.A.D framework.

    The study noted that mean scores in the general category have consistently been improving since 2011, "signalling a general improvement and compliance of companies towards corporate governance disclosures".

    Board diversity policy disclosures were made by 56.1 per cent of companies, up from 48.9 per cent in 2020. "This showed that companies valued the importance of diversity and inclusion in the workplace and had put in place policies to widen the range of skill sets and knowledge of their directors."

    A larger proportion of companies also disclosed the attendance of key personnel at annual general meetings, which the study said promotes greater transparency of leadership for shareholders.

    But while there were improvements in some areas, other aspects saw worse performance amid the pandemic.

    Only 29.5 per cent of companies conducted media briefings or news conferences in 2021, down from 41.9 per cent in 2020. The study also noted a need for better opportunities for shareholders to ask questions at annual general meetings and to receive timely meeting notices.

    Across the sections of the B.R.E.A.D framework, company scores generally increased. The exception was in the domain of board responsibilities, which saw a slight decline. Prof Loh noted that this could be due to various factors, including fewer disclosures of directorships and fewer board and audit committee meetings.

    The Reit and business trust category, meanwhile, saw an increase in bonus points being given for good disclosure practices. An example noted was disclosure of information on the succession planning for board and senior management, with 30.2 per cent of trusts making such disclosures this year versus 6.7 per cent in 2020.

    But there were also higher penalties for poor disclosure practices, such as discrepancies in corporate announcements.

    Max Loh, Singapore divisional president at CPA Australia, said: "With Singapore transitioning to an endemic Covid-19 era, there will clearly be tough business challenges ahead even as companies continue to embrace innovation, transformation and sustainability."

    He added that strong corporate governance, long-term value and sustainability initiatives should continue to be top priorities on the agenda of boards and senior management to help their organisations stay competitive and thrive in the new normal.

    The study found that core aspects of sustainability have seen "good progress momentum". Even so, it noted that it is "essential to integrate sustainability with corporate governance" at the company level. Boards, too, have to take on stronger roles.

    Wong Su-Yen, chairman of the SID, said: "The global pandemic has renewed focus on stakeholder management, sustainability reporting and taking a long-term view. As companies reassess their business models and strategic outlook, this is an opportune time to recalibrate and emerge stronger from the crisis."