Consistent efforts to perfect corporate governance disclosures have paid off, resulting in the highest scores recorded in the latest Singapore Governance and Transparency Index (SGTI).
Singtel topped the annual SGTI ranking in the General Category for the fourth consecutive year, while CapitaLand Mall Trust lead the REIT and Business Trust Category for the second year.
This year’s index ranked a total of 589 Singapore-listed companies and 43 REITs and Business Trusts that released their annual reports by 31 May.
The SGTI assesses companies on their corporate governance disclosure and practices, as well as the timeliness, accessibility and transparency of their financial results announcements. It is published annually by CPA Australia, NUS Business School’s Centre for Governance, Institutions and Organisations (CGIO) and Singapore Institute of Directors (SID).
Singtel retained its pole position with 129 points for SGTI 2018, while DBS Group ranked a close second at 124 points. CapitaLand and Singapore Exchange tied at third position. Demonstrating strong improvements in the areas of Board Responsibility and Disclosure and Transparency, United Overseas Bank made it to the top 10 at eighth place for the first time, while Singapore Press Holdings placed ninth place after an eight-year hiatus in the top 10. (Please refer to Annex 1 for the top 20 results of the General Category.)
In the REIT and Business Trust Category, CapitaLand Mall Trust and CapitaLand Commercial Trust took the top two positions, while Ascott Residence Trust ranked third. (Please refer to Annex 2 for the top 10 results of the REIT and Business Trust Category.)
Steady improvements in corporate governance disclosures
The SGTI 2018 scores constitute base scores, bonuses and penalties awarded in accordance with corporate governance disclosure performances. Overall, the average score for companies in the General Category is 56.3, an increase of 4.0 from 2017 where the mean scores have improved consistently from 31.5 in 2011. (Please refer to Annex 3 for the overall SGTI General Category scores trend.)
In addition, a 13.2% increment of mean bonuses awarded is observed at 7.7 from 6.8 in 2017. Bonuses are awarded when companies demonstrate emerging good practices such as producing an annual sustainability report, and providing comprehensive disclosures of how the company assesses the independence of its directors.
However, there was also an increase in SGTI penalties awarded this year. The penalty scores went up by 1.2 points to 10.2 this year, from an average of 9.0 in 2017. Penalty items reflect issues that are indicative of poor corporate governance. They are assigned on a company-specific basis and are usually event-triggered.
For the REIT and Business Trust Category, the average score of 74.5 from 60.4 in 2017 reflected more individuals who have experience in REIT managing these companies. This is demonstrated by at least 70% of listed companies that provided detailed profiles of CEOs and directors of a REIT manager with a minimum of 10 years of relevant experience and five years at a management level. Furthermore, 77% of the companies also had a REIT manager with at least three full-time representatives each having at least five years of experience relevant to REIT management. (Please refer to Annex 4 for the overall SGTI REIT and Business Trust Category scores trend.)
“Listed companies now operate in a disruptive and complex business environment and are increasingly under pressure to be more transparent and accountable to their stakeholders. Therefore, current corporate governance structures and processes need to evolve to remain relevant and effective in the future economy,” said Mr Yeoh Oon Jin, Singapore Divisional President at CPA Australia. “With the SGTI, we hope that Singapore companies will continue their journey in strengthening governance locally, while aligning with global standards.”
The overall scoring system of SGTI is based on a 5-pronged “BREAD evaluation” metrics namely:
REITs and Business Trusts are subjected to additional guidelines such as the Code on Collective Investment Schemes to complement the existing SGTI framework. Their “SLICE framework” addresses five main areas:
Notable achievements
In general, the top 20 companies ranked in the General Category of the SGTI saw significant improvement especially in areas of stakeholder engagement, better processes in board selection as well as standards of internal auditors.
Stakeholder engagement scores for listed companies improved to 3.8 in 2018 from 3.0 in 2017. 36.0% of companies disclosed the health, safety and welfare policy for its employees in 2018, an improvement from 24.6% in 2017. In addition, 21.2% of companies published relevant data on training and development programmes undergone by its employees, an increase from 10.6% in 2017.
There has also been an improvement in the number of companies providing disclosures for code of conduct or ethics of the company. In fact, 17.7% of companies in 2018 disclosed this information as opposed to 12.9% in 2017. This provides a guide for employees and other stakeholders to refer while carrying out their roles and responsibilities.
The SGTI results also revealed better board processes in director selection and appointments. 64.5% of companies disclosed board diversity policy compared to 33.7% in 2017 and 22.8% had independent chairmanships, an increase from 19.6% in 2017.
89.0% of the listed companies revealed the provision of orientation programmes for new directors/commissioners, a vast improvement from 77.1% of companies in 2017. This is indicative of concerted efforts by companies to provide directors with a seamless transition into the roles and responsibilities of their assigned designation.
To keep the board composition fresh, more companies have also adopted the practice of director re-election once every three years to allow shareholders to vote for director appointments regularly. These participating companies have increased from 78.5% to 84.4% in 2018.
The standards of internal auditors have also improved in 2018, with 48.6% of the companies’ internal auditors meeting the Institute of Internal Auditors (IIA) standard as opposed to 39.1% in 2017. Furthermore, to have better transparency through segregation of duties in internal audit, 66.9% of the companies either disclose the head of internal audit, or the name of their audit firm if it is outsourced. This is a fair improvement from 64.9% in 2017.
“It is heartening to note the steady, positive trajectory of corporate governance disclosures in Singapore, and concerted effort by companies to improve on this front. With the latest changes to Listing Rules and Code of Corporate Governance, the bar is being raised, and we believe companies will embrace the tenets of good governance, including accountability, transparency and sustainability. This includes establishing an appropriate culture, values and ethical standards of conduct at all levels of the company,” said Mr Willie Cheng, Chairman, SID.
Areas requiring more improvements
Despite overall development, some aspects still have room to grow. In 2018, only 9.7% of companies engaged remuneration consultants to decide on directors’ remuneration, a decline from 17.7% in 2017. Moreover, only a slight 25.1% of listed companies disclosed their CEO’s exact remuneration. These modest results suggest companies require time to enforce remuneration disclosures in adherence to the new corporate governance standards.
In the areas of investor relations and board director training disclosures, only 61.3% of listed companies published their investor relations contact details on their website or annual report. This is a drop of 6.7%compared to 68.0% in 2017. Similarly, only 19.4% of listed companies disclosing information on director training in 2018, down from 23.6% in 2017.
Associate Professor Lawrence Loh, Director of CGIO, NUS Business School, said, “The sustained progress of listed companies in the SGTI is timely as Singapore transforms its regulatory landscape for effective corporate governance practices. With good corporate governance, companies demonstrate their commitment to transparency, thus ensuring the long-term success of the company. Continuous public assessments will help companies with the new changes in the Code of Corporate Governance and Singapore Exchange’s Listing Rules.”
Please refer to Annex 5 for the scoring methodology for SGTI2018.
For media enquiries, please contact:
Joanna CHEK Marketing and Communications Manager CPA Australia DID: +65 6671 6546 Email: joanna.chek@cpaaustralia.com.au
Fiona HENG Manager, Corporate Communications NUS Business School National University of Singapore DID: +65 6516 1238 Email: fiona.heng@nus.edu.sg
Sue Anne KUEK Communications and Publications Singapore Institute of Directors DID: +65 6422 1188 Email: sueanne@sid.org.sg
About CPA Australia
Founded in 1886, CPA Australia is one of the world’s largest professional accounting bodies representing more than 160,000 members working in 125 countries around the world. CPA Australia advances its members’ interests through education and knowledge exchange, the development of professional networks, advocacy in relation to policy, standards and regulation and the promotion of value of CPA Australia members to employers, government, regulators and the public. The world-renowned CPA designation is synonymous with professional credibility and international portability. CPA Australia has been operating in Singapore for 64 years, having arrived in this market in 1954 under the auspices of the Colombo Plan.
For more information, please visit cpaaustralia.com.au.
About the Centre for Governance, Institutions and Organisations
The Centre for Governance, Institutions and Organisations (CGIO) was established by the National University of Singapore (NUS) Business School in 2010. It aims to spearhead relevant and high-impact research on governance issues that are pertinent to Asia, including corporate governance, governance of family firms, state-linked companies, business groups, and institutions. CGIO also organises events such as public lectures, industry roundtables, and academic conferences on topics related to governance.
NUS Business School is known for providing management thought leadership from an Asian perspective, enabling its students and corporate partners to leverage global knowledge and Asian insights.
The School is one of the 17 Faculties and Schools at NUS. A leading global university centred in Asia, NUS is Singapore’s flagship university, which offers a global approach to education and research, with a focus on Asian perspectives and expertise. Its transformative education includes a broad-based curriculum underscored by multi-disciplinary courses and cross-faculty enrichment. Over 38,000 students from 100 countries enrich the community with their diverse social and cultural perspectives.
For more information, please visit bschool.nus.edu.sg, or go to the Think Business portal, which showcases the School’s research.
About Singapore Institute of Directors The Singapore Institute of Directors (SID) is the national association of company directors. Formed in 1998, it promotes the professional development of directors and corporate leaders. Its membership comprises mainly directors and other professionals who work in the field of corporate governance.
The SID has a comprehensive training curriculum that covers the spectrum of professional developmental needs of directors including thought leadership on corporate governance and directorship issues. It also provides its members with value-added services such as regular networking events and socials, a board appointment service, and a one-stop information service on governance-related matters.
For more information, please visit sid.org.sg.
Annex 1
Singapore Governance and Transparency Index 2018 General Category
SGTI2018
SGTI2017
Rank 2018
Rank 2017
Company Name
Base
Adjustments for Bonuses/ Penalties
Total Score
1
SINGAPORE TELECOMMUNICATIONS
94
35
129
92
32
124
2
3
DBS GROUP HLDGS
89
28
117
CAPITALAND
93
25
118
91
27
SINGAPORE EXCHANGE
95
23
5
11
SATS
21
114
84
16
100
6
SEMBCORP INDUSTRIES
113
86
24
110
7
8
CITY DEVELOPMENTS
88
22
80
105
UNITED OVERSEAS BANK
90
19
109
12
9
OVERSEA-CHINESE BANKING CORP
108
20
104
13
SINGAPORE PRESS HLDGS
15
99
GLOBAL LOGISTIC PROPERTIES
87
107
17
TUAN SING HLDGS
85
106
DEL MONTE PACIFIC
14
102
79
OLAM INTERNATIONAL
18
82
98
PERENNIAL REAL ESTATE HLDGS
101
43
SINGAPORE TECHNOLOGIES ENGINEERING
81
71
COMFORTDELGRO CORP
75
38
GLOBAL INVESTMENTS
77
63
STARHUB
VICOM
72
Table 1: SGTI 2018 General Category Top 20 Results Source: Centre for Governance, Institutions and Organisations, NUS Business School
Annex 2
Singapore Governance and Transparency Index 2018 REIT and Business Trust Category
Table 1: SGTI 2018 REIT and Business Trust Category Top 10 Results Source: Centre for Governance, Institutions and Organisations, NUS Business School
Trust Name
CAPITALAND MALL TRUST
84.1
102.1
80.8
96.8
CAPITALAND COMMERCIAL TRUST
77.7
95.7
79.3
95.3
ASCOTT RESIDENCE TRUST
74.9
88.9
64.3
76.3
4
KEPPEL REIT
76.5
88.5
77.3
93.3
ASCENDAS REIT
86.7
61.2
73.2
10
CDL HOSPITALITY TRUSTS
70.7
55.9
69.9
KEPPEL DC REIT
74.7
69.6
82.6
STARHILL GLOBAL REIT
85.7
64.6
70.6
CAPITALAND RETAIL CHINA TRUST
73.9
84.9
72.7
88.7
NA
BHG RETAIL REIT
74.5
84.5
–
Key Highlights
Annex 3
Graph 1: SGTI General Category scores trend line (2009 – 2018)
Table 1: Comparison of SGTI General Category 2017 and 2018 overall scores
2017
2018
SGTI 2017 Score
Bonus
Penalty
Overall SGTI 2017 Score
SGTI 2018 Score
Overall SGTI 2018 Score
54.5
6.8
9.0
52.3
58.9
7.7
10.2
56.3
Annex 4
Graph 1: SGTI REIT and Business Trust Category scores trend line (2017 – 2018)
Table 1: Comparison of SGTI REIT and Business Trust Category 2017 and 2018 overall scores
How scoring is done
The Singapore Governance and Transparency Index (SGTI) is a joint initiative of CPA Australia, NUS Business School’s Centre for Governance, Institutions and Organisations (CGIO), and Singapore Institute of Directors (SID). The strategic media partner is The Business Times.
Starting from 2017, the SGTI is a unified framework comprising two separate categories, namely the General Category and the REIT and Business Trust Category. These categories are distinct and are not to be compared directly with each other.
The objective of the SGTI is to evaluate listed companies, including REITs and Business Trusts, on their corporate governance practices and disclosures, as well as the timeliness, accessibility and transparency of their financial results.
For the General Category, the SGTI score has two components: the base score and the adjustment for bonuses and penalties. The base score for companies contains five pillars: board responsibilities (35 points), rights of shareholders (20 points), engagement of stakeholders (10 points), accountability and audit (10 points), and disclosure and transparency (25 points). The aggregate of bonuses and penalties is incorporated to the base score to arrive at the company’s SGTI total score.
For the REIT and Business Trust Category, the companies are evaluated on a similar set of criteria, but with added coverage on the unique nature of their operations. The base score for REITs and Business Trusts includes: items in the base score for the SGTI (75 points) and trust-specific items in the base score for the SGTI for REITs and Business Trusts (25 points) that focus on structure, leverage, interested person transactions, competency of REIT manager / trustee-manager, and emoluments.
SGTI2018 covers 589 Singapore-listed companies in the General Category as well as 43 REITs and Business Trusts which released their annual reports by 31 May 2018. The sources of information for SGTI assessment include annual reports, websites, announcements on SGXNet, and investor relations’ email responsiveness. Announcements made on SGXNet as well as in media coverage, which occurred between 1 January 2016 and 31 May 2018, have been used to update the scores.
Further information on the scoring methodology, including the full instrument, and past results may be obtained from CGIO’s website at bschool.nus.edu.sg/CGIO. Queries about the SGTI may be sent to cgio@nus.edu.sg. In order to maintain independence and fairness of the SGTI, reports or advice cannot be provided to individual companies.
