Date: October 11, 2021
Minister Grace Fu, Minister for Sustainability and the Environment of Singapore; thank you Minister for taking time off your busy schedule to be with us today. We appreciate it very much.
Mr. Carmine Di Noia, Commissioner, CONSOB, Italy; responsible for regulating the Italian securities market and a friend of SIAS.
Ms. Mathilde Mesnard, Deputy Director for Financial and Enterprise Affairs, Organisation for Economic Co-operation and Development (OECD); Ms. Mesnard oversees the Directorate’s work on business conduct standards across responsible business conduct, anti-corruption, corporate governance and corporate finance. We thank OECD for your support for this Conference;
Mr. Ugo Bassi, Director of Financial Markets at FISMA, the European Commission’s Directorate General for Financial Stability, Financial Services and Capital Markets Union. He launched the Capital Markets Union (CMU) project, including the Sustainable Finance component.
Dr. Roger Barker, Director of Policy and Corporate Governance, Institute of Directors (UK), Friend and advisor to SIAS;
Ms. Ho Hern Shin, Deputy Managing Director (Financial Supervision) & Mr. Lim Tuang Lee, Assistant Managing Director (Capital Markets), Monetary Authority of Singapore
Mr. Loh Boon Chye, CEO, Singapore Exchange
Mr. Ong Khiaw Hong, CEO, Accounting and Corporate Regulatory Authority
We welcome you warmly and thank you all for joining us today
Ladies and gentlemen,
A warm welcome to the launch of Singapore Corporate Governance Week and to SIAS Corporate Governance Conference, held online once again. We certainly hope to see you all in person next year.
SIAS has long recognised that a developed capital market is one which allocates resources to their best uses and therefore benefits its economy, and one which observes high standards of corporate governance. Over the past 22 years we have, therefore, spearheaded many efforts to raise the level of corporate governance for the local market, to promote awareness of the need for all companies and organisations that deal with the public to behave honestly and responsibly, and to treat all stakeholders with respect. However, Covid-19 has accelerated the urgent need to take into account actions affecting the climate and a push towards sustainable growth.
Hence, it does not come as a surprise that the policymakers are taking a more proactive stance towards sustainability efforts and reporting. Notably, Singapore Exchange, SGX, has proposed to enhance its sustainability reporting regime by mandating listed companies in Singapore to make climate-related disclosures following the current global shift towards mandatory sustainability and climate reporting and provide details on their board diversity policy. For example, New Zealand became the first country to mandate climiate reporting under TCFD for Financial Institutions in April this year. In addition, the Monetary Authority of Singapore, MAS, had recently formed a new Sustainability Group to steer and deepen its sustainability capabilities; and is looking to deploy S$2.4 billion into climate-related investments under its Green Investments Programme. These meaningful efforts not only convey the importance of sustainability to market participants, but more importantly also encourage firms to do what is right/good for the environment and society at large. We see these as steps in the right direction to ensure sustainable growth and look forward to the new regulations.
This brings me to this year’s theme: “Sustainability Governance: The Next Step of Corporate Governance Framework”. This is especially timely and appropriate, as both sustainability and corporate governance have come to the forefront of discussions – as a result of COVID-19 pandemic, and the climate changes that we are seeing or even experiencing these days.
There is thus an urgent call for companies to act. Given their outsized contributions to the economy, more are demanding that they do the same on the sustainability front. Instead of focusing on short-term financial performance, companies should embed sustainability in their corporate governance framework, and focus on long-term development and sustainability aspects.
Doing so not only results in positive impact to the environment and society, but also builds resilience within the company. To some extent, the health and long-term success of companies now hinges on how well are the themes of sustainability, resilience, and stakeholders’ management addressed and/or integrated in its organisational purposes.
It is ideal, but not realistic, to expect companies to meet the interests of all stakeholders, given the limited resources they operate with. Hence, this necessitates the importance of managing and balancing the interests of different stakeholder groups – especially in light of the challenges and opportunities arising from the pandemic.
To spur companies to adopt good corporate governance and sustainability practices SIAS has revised our criteria for evaluation for the Singapore Corporate Governance Award. For the first time, the criteria will include sustainability disclosures and not just corporate governance disclosures.
The inclusion of sustainability ratings into the Singapore Corporate Governance Award is timely, as more and more investors today are using non-financial information to invest in sustainable companies. Research has shown that sustainability initiatives also increase financial performance, which works also in the other way around, i.e. companies that do not implement sustainability measures have negative performance.
Fundamentally, companies should be aware of the pressure posed by both shareholders and stakeholders regarding sustainability practices, as well as the increased gender diversity may have an intermediate role between corporate governance, sustainability, and financial performance.
Looking ahead, the pivot towards sustainability is certainly welcomed, but not without its challenges. Two challenges come to mind. First, how should businesses and investors reconcile their views towards sustainability, i.e. the bifurcation of investment horizon between short-termism of the markets and the long gestation period of meaningful sustainability efforts? Second, how should investors measure or make sense of companies’ efforts towards sustainability, given the prevalence of “green-washing”?
Other problems are starting to surface and manifest as well. The issue of inequality, though long-standing, has been exacerbated on many fronts and is now brought to the attentions of governments and leaders globally. Income inequality between citizens and/or countries – while an issue by itself – is further complicated by other forms of inequalities, such as the unequal distribution of vaccines worldwide, and the asymmetrical social pressures placed on working-from-home mothers.
We acknowledge that these are challenging questions without any easy solutions. Yet, I am confident that the panel of experts present today would help to shed some interesting thoughts on some of these concerns. As a personal challenge to each and every distinguished guest, I urge you to take this opportunity to engage and challenge these views, in a spirit of collaboration and improve standards.
Once again, our sincere thanks to our Minister for gracing this event, to all our speakers and panellists for taking part in this Conference, our sponsors and delegates for your support.
Enjoy the Conference. Please stay safe & well!