Singapore-listed companies and trusts uphold high standards of governance and transparency despite pandemic

SATS Ltd and Ascott Residence Trust take top spots in their respective categories in the Singapore Governance and Transparency Index 2021 

Singapore, 4 August 2021 – Singapore-listed companies and trusts have continued to uphold high standards of governance and transparency, faring better in how they disclose their practices and sustainability measures to investors and stakeholders.

This year’s Singapore Governance and Transparency Index (SGTI) found that the entities’ performance continued its upward trend with a marginal increase in the overall score. The mean score in the General Category was 68.7 points, up 0.8 points 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.

Max Loh, Singapore Divisional President, CPA Australia said, “It is pleasing that governance and sustainability standards are trending positively in the latest findings. 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. More than ever, strong corporate governance and 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 annual SGTI assesses companies on their corporate governance disclosures and practices, as well as the timeliness, accessibility and transparency of their financial results announcements.

This year’s index ranked a total of 519 Singapore-listed companies in the General category, and 43 trusts in the REIT and Business Trust category. These companies and trusts released their annual reports by 15 June 2021.

The SGTI is an annual study jointly conducted by CPA Australia, the National University of Singapore (NUS) Business School’s Centre for Governance and Sustainability (CGS) and the Singapore Institute of Directors (SID).

Findings for the General Category

In the General Category, SATS emerged top for the second year running with 128 points, out of a maximum possible score of 143 points. In joint second position were Singapore Exchange and Singtel with 118 points – with Singapore Exchange jumping from seventh position last year to second this year.

A common factor, amongst others, for their strong performance is that these companies have continued to disclose their process and criteria for how their board members were appraised by the committee that nominated them. In addition, they also performed well in disclosing the fee structures of non-executive directors and having a fully independent board-level risk committee.

OCBC and UOB both improved their positions to 4^th and 6^th respectively, from 9^th and 10^th last year.

Sing Investments & Finance jumped 17 places to finish 10^th in this year’s index.

Findings for the REIT and Business Trust Category

In the REIT and Business Trust Category, Ascott Residence Trust, which ranked third last year, claimed the top spot with 115.3 points this year. This was out of a maximum possible score of 143 points. Far East Hospitality Trust, which scored 113.8 points, moved up two positions to second place. Ascendas REIT leaped from eighth position to enter the top three with 111.1 points.

These trusts had done well in sustainability management and also in disclosing policies on the amount of funds they could borrow to invest for higher returns. In addition, they have a minimum of three full-time key representatives who each has at least five years of experience relevant to REIT management.

Associate Professor Lawrence Loh, Director of CGS, NUS Business School, said:
“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. 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.”

Slight improvement in corporate governance disclosures

Overall, companies fared marginally better in corporate governance disclosures in 2021 compared to last year. This was measured in terms of base scores, bonuses and penalties.

For the General Category, companies recorded an average score of 68.7, an increase of 0.8 points year-on-year. The mean scores have been improving consistently since 2011, signalling a general improvement and compliance of companies towards corporate governance disclosures.

Firstly, 56.1 per cent of companies disclosed their board of directors’ diversity policy, compared to 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 skillsets and knowledge of their directors.

Next, the proportion of companies disclosing the attendance of key personnel who attended annual general meetings increased greatly. 85.0 per cent disclosed the meeting attendance of the chairman of the board of directors, an improvement compared to 56.3 per cent last year. 77.6 per cent disclosed for their CEO/Managing Director/President, up from 52.5 per cent last year. 75.9 per cent disclosed for the chairman of the Audit Committee, up from 54.9 per cent last year. Disclosing the attendance promotes greater transparency of leadership to the shareholders.

However, companies were less inclined to conduct media briefings or news conferences, an indicator of disclosure. Only 29.5 per cent of the companies did so in 2021, down from 41.9 per cent in 2020. Against the backdrop of the COVID-19 pandemic and the rising uncertainties in the business environment, the importance of communication from the companies to the different stakeholders is even more critical.

In the REIT and Business Trust Category, the mean overall score increased by 0.2 points year-on-year to 85.0. Bonus points for good disclosure practices increased by 1.3 points to 18.5 points. One example of good disclosure is disclosing information on the succession planning for the board and senior management. The proportion of companies that disclosed this increased from 6.7 per cent last year to 30.2 per cent this year.

Penalties for poor disclosure practices, such as discrepancies in corporate announcements, increased by 0.1 points to 5.1. The proportion of REITs and Business Trusts that received penalty points stood at 9.3 per cent, compared to 4.4 per cent a year ago.

“It is encouraging to note the improving trend of overall scores and accompanying greater accountability and transparency in disclosures. 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,” said Ms Wong Su-Yen, Chairman of the Singapore Institute of Directors.

Annex 1: SGTI 2021 General Category Top 20 Results
Annex 2: SGTI 2021 REIT and Business Trust Category Top 10 Results
Annex 3: SGTI General Category Mean Score Trend (2009 – 2021)
Annex 4: SGTI REIT and Business Trust Category Mean Score Trend (2017 – 2021)

For media enquiries, please contact:

Joanna CHEK
Senior Marketing and Communications Manager
CPA Australia
Tel: +65 6671 6546
Email: Joanna.chek@cpaaustralia.com.au

ANG Hui Min
Acting Head, Corporate Communications
NUS Business School
National University of Singapore
Tel: +65 6601 5857
Email: huimin19@nus.edu.sg

YANG Wai Wai
Head, Communications and Research
Singapore Institute of Directors
Tel: +65 6422 1173
Email: waiwai.yang@sid.org.sg

About CPA Australia

CPA Australia is one of the largest professional accounting bodies in the world, with more than 168,000 members in over 100 countries and regions, including more than 8,500 members in Singapore. CPA Australia has been operating in Singapore since 1954 and opened our Singapore office in 1989. Our core services include education, training, technical support and advocacy. CPA Australia provides thought leadership on local, national and international issues affecting the accounting profession and public interest. We engage with governments, regulators and industries to advocate policies that stimulate sustainable economic growth and have positive business and public outcomes. Find out more at cpaaustralia.com.au

About the Centre for Governance and Sustainability

The Centre for Governance and Sustainability (CGS), formerly known as Centre for Governance, Organisations and Institutions (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 and sustainability issues that are pertinent to Asia, including corporate governance, corporate sustainability, governance of family firms, state-linked companies, business groups, and institutions. CGS 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 centered in Asia, NUS is Singapore’s flagship university which offers a global approach to education, research and entrepreneurship, 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 40,000 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 BIZBeat 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. SID promotes the professional development of directors and corporate leaders, and provides thought leadership and benchmarking on corporate governance and directorship. It works closely with the authorities and its network of members and professionals, to uphold and enhance the highest standards of corporate governance and ethical conduct.

Formed in 1998, the membership of SID comprises mainly directors and senior leaders from business, government agencies and nonprofits. SID has a comprehensive training curriculum that covers the spectrum of a director’s developmental journey. Members have access to a range of resources, including research publications, forums, seminars, benchmarking awards and indices, board appointment services and regular networking and social events.

For more information, please visit www.sid.org.sg.

Annex 1

Singapore Governance and Transparency Index 2021 General Category

Table 1: SGTI 2021 General Category Top 20 Results
Source: Centre for Governance and Sustainability, NUS Business School

Annex 2 

Singapore Governance and Transparency Index 2021 REIT and Business Trust Category  

Table 2: SGTI 2021 REIT and Business Trust Category Top 10 Results
Source: Centre for Governance and Sustainability, NUS Business School

Annex 3

Graph 1: SGTI General Category Mean Score Trend (2009 – 2021)

Table 3: Comparison of SGTI General Category 2020 and 2021 overall scores

Annex 4

Graph 2: SGTI REIT and Business Trust Category Mean Score Trend (2017 – 2021)

Table 4: Comparison of SGTI REIT and Business Trust Category 2020 and 2021 overall scores