COMPANIES listed on the Singapore Exchange have improved their corporate governance practices and transparency in financial disclosures, going by an annual scorecard developed by industry and accounting bodies as well as academics.

The Singapore Governance and Transparency Index (SGTI) scores for 2023, released on Wednesday (Aug 2), improved significantly in the general category as well as the real estate investment trust (Reit) and business trust category.

In the general category, the index rose to 74.8 points out of a theoretical maximum of 143 points. This marks the first time the mean score has crossed 50 per cent of the maximum score since the index was developed 15 years ago. The 74.8 score also surpassed the 70.6 score from the year before, making it the biggest jump since 2020.

Singtel : Z74 0% reclaimed its top ranking from Sats : S58 0% with a score of 120. The telecommunications company had held first place between 2015 and 2019, before the ground handler and caterer claimed the spot from 2020 to 2022.

Sats fell to second place this year, tying with DBS : D05 0%, which held on to its ranking from last year.

Among Reits and business trusts, the index also rose, to 89.3 points from 85.3 points last year.

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CapitaLand Ascott Trust : HMN 0% maintained its top ranking. Far East Hospitality Trust : Q5T 0% climbed one spot to second place, while CapitaLand Ascendas Reit : A17U 0% fell back one to emerge third this year.

For the 2023 rankings, researchers assessed the annual reports of 474 listed companies as well as 43 Reits and business trusts. These annual reports were released by May 31 this year.

The assessment was jointly conducted by CPA Australia, the National University of Singapore Business School’s Centre for Governance and Sustainability (CGS), and the Singapore Institute of Directors. The Business Times was the strategic media partner for the study.

Companies in the general category were assessed based on five criteria: board responsibility, rights of shareholders, engagement of stakeholders, accountability and audit, and disclosure and transparency.

The proportion of companies disclosing stakeholder engagement practices experienced the most significant rise, with mean scores increasing by nine percentage points to reach 70 per cent.

Professor Lawrence Loh, director of CGS, said that this increase reflected the growing emphasis on sustainability by companies, as they would have to engage not just their shareholders, but also the community, customers, employees and regulators.

However, while mean scores in all five criteria went up, board responsibility and disclosure and transparency remained the lowest-scoring categories, with mean scores below 70 per cent.

When assessing board practices in detail, the study found that linking remuneration to directors’ performance (49 per cent to 76 per cent), having a board diversity policy (60 per cent to 83 per cent), and appointing new directors with skills and experience (40 per cent to 62 per cent) were among those which had the largest percentage point increases from the year before.

However, while there was an improvement in boards conducting annual performance assessments of their chief executive officers (18 per cent to 32 per cent), still only one-third of companies did so, Loh highlighted. He added that it is important for companies to disclose how their CEOs are being assessed.

With DBS in second place, the other two local banks stayed in the top 10. UOB : U11 0% maintained its fourth placing, and OCBC : O39 0% dropped one position from seventh to eighth.

Tying with OCBC was food and beverage company Del Monte Pacific : D03 0%, rising from 12th last year to break into the top 10 in 2023.

Reits and business trusts were evaluated on similar criteria as companies in the general category, but with additional assessments on structure, leverage, interested-person transactions, competency of the Reit manager or trustee-manager as well as emoluments.

In this category, CapitaLand India Trust : CY6U 0% entered the top five rankings for the first time, claiming the fourth spot and displacing CapitaLand Integrated Commercial Trust : C38U 0%, which ranked fifth.

When assessing board practices among Reits and business trusts, the study found that linking remuneration to directors’ performance (77 per cent to 93 per cent), appointing new directors with skills and experience (61 per cent to 77 per cent), and having the board oversee implementation of corporate strategy (59 per cent to 81 per cent) were the board practices that made the most significant improvements.