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Aug 11, 2023

Singapore companies boost governance and transparency, finds study

Singtel tops Singapore Governance and Transparency Index 2023

Listed companies in Singapore have enhanced their disclosures and governance practices over the last year, according to a new study.

The Singapore Governance and Transparency Index (SGTI), which reviews annual reports against dozens of criteria, finds the mean score for companies stands at 74.8 in 2023, up from 70.6 last year.

The results show ‘further improvement across the board’ and are ‘heartening news,’ commented Tan Boon Gin, CEO of Singapore Exchange Regulation (SGX RegCo), the city’s financial regulator, in a speech earlier this month.

The research is a collaboration between CPA Australia, the National University of Singapore’s business school and the Singapore Institute of Directors.

It measures companies in five areas: board responsibilities, shareholder rights, stakeholder engagement, accountability & audit and disclosure & transparency.

Rights up

The highest marks come in the shareholder rights category, with companies receiving 87 percent on average, a rise of 4 percentage points since last year. For this section, researchers look at areas like dividend payments, institutional investment and AGM processes.

By contrast, the lowest average score is for board responsibilities, with the survey sample receiving just 64 percent, although this is up from 60 percent in 2022. Disclosure & transparency, meanwhile, climbs from 63 percent to 67 percent.

There has been a ‘significant increase in disclosure rates for various indicators related to board practices,’ notes a presentation on the SGTI, highlighting areas such as independence, competence and selection of directors.

Disclosure of ESG practices is also much higher, adds the presentation, with most indicators showing between 8 percentage points and 10 percentage points of improvement year on year.

New rules

The SGTI is set to rise further over coming years as Singapore implements new rules around board independence and executive remuneration.

In January, SGX RegCo confirmed it would limit the tenure of independent directors to nine years and force companies to disclose the exact breakdown of pay packets handed to the CEO and certain directors.

The index also ranks companies individually, with Singtel coming top in 2023, followed by DBS Group, SATS, United Overseas Bank and City Developments.

‘A strong ESG culture and practices are fundamental to our long-term growth and value creation for our shareholders in a rapidly changing business environment,’ says Yuen Kuan Moon, Singtel’s CEO, in a statement.

‘Since our strategic reset in 2021, we have strengthened our ESG commitments and taken steps to integrate sustainability more widely and deeply across our organization as we reposition for growth.’