RECOGNISING the increasing importance of sustainability among various stakeholders, boards of listed companies in Singapore have not only started to oversee environmental, social and governance (ESG) matters that would affect them.
Some have gone a step further by setting up a dedicated team to work on sustainability issues within the company.
Both DBS Bank and SBS Transit have set up a Board Sustainability Committee that provides added guidance and oversight on ESG matters, while Qian Hu has a sustainability reporting team that is directly managed by the company’s chief executive officer and chief financial officer, and whose initiatives are regularly made known to and reviewed by its board.
All 3 companies are the gold winners for best managed boards at this year’s Singapore Corporate Awards.
For DBS, its board sustainability committee looks at ESG issues such as sustainability disclosures, stakeholder engagement and climate-related matters, said its chairman Peter Seah.
Being in a carbon-intensive sector as a transport company, Bob Tan, chairman of SBS Transit, said that it is reducing its carbon emissions by using solar energy wherever possible and training its bus captains on how to conserve fuel.
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As for Qian Hu, Kenny Yap, the executive chairman of the ornamental fish importer and exporter, said that the company’s board discusses how it can set sustainability performance benchmarks and other key performance indicators and to check on the progress of its sustainability roadmap.
While sustainability issues have emerged as a major area of concern that could pose material risks for companies, the Covid-19 pandemic has also brought about an urgency for boards to get up to speed with new ways of working.
The transformation in work habits as more people work from home, instituting a more rigorous health and safety protocol at the workplace, and the adaptation of technology to digitalise operations have dominated board discussions at these 3 companies over the last 2 years.
“During the pandemic, board discussions intensified around these themes, focused on what more DBS can do to support our customers, employees and the community, while delivering a resilient set of earnings, in these challenging times,” said Seah.
Beyond tackling the present problems, the companies’ boards were also forward-looking, and looked at how they can reposition themselves or develop new strategies.
“To stay competitive in this new business and economic environment requires new strategies and practices. Recent board discussions include redefining strategies, continuous assessment of the current business model, setting direction for workforce upskilling, and managing the increased digital, data and cybersecurity risks,” said Yap.
Besides managing internal company matters, active engagement with their shareholders and investors are also important components of board transparency.
And this cannot be achieved solely from yearly updates provided during annual general meetings (AGMs), and only during the earnings reporting season.
Whether it’s himself or Qian Hu’s chief executive officer, Yap said that either one of them or both would meet fund managers and analysts who want to have a better understanding of its operations.
They would also engage with local and foreign investors to get feedback from the investment community on a range of strategic and topical issues, believing that this would provide valuable insights to the board on investors’ views.
As for DBS, Seah noted that its chief executive officer and chief financial officer maintain a close and active dialogue with investors through a dedicated investor relations team
“In 2021, DBS held over 450 meetings with equity investors, more than 200 meetings with debt investors, and we participated in close to 40 investor conferences and road shows. These meetings provide a forum for management to explain DBS’ strategy and financial performance, and solicit analysts’ and investors’ perceptions of DBS,” said Seah.
Listed companies in Singapore are generally known for being slow in reacting to calls for more board diversity. In the case of gender, corporate boards continue to be dominated by men, with women directors occupying just 12.7 per cent of all board seats on listed companies in 2021 - albeit up from 10.8 per cent in 2018, according to the Singapore Institute of Directors.
While the Singapore Exchange (SGX) have mandated that all listed companies adopt a board diversity policy addressing gender, skill, experience and other relevant aspects of diversity, DBS, SBS Transit and Qian Hu have all put in place such a policy years before it became a requirement.
According to Tan, SBS Transit’s board diversity policy, which has been in place since 2019, focuses on ensuring an appropriate balance and mix of skills, knowledge, experience and gender.
The company’s constitution also states that one-third of directors are subject to retirement and re-election by rotation at every AGM. This means that all directors are subject to re-election once every 3 years. The nominating and remuneration committee annually reviews the mix of the board members as well.
As for DBS, Seah said that its board diversity policy ensures an appropriate balance of perspectives, skills and experience is maintained on the board.
“The policy ensures that female candidates are included for consideration when identifying candidates to be appointed as new directors, with the aim of having not less than 2 female directors on the board,” said Seah.
At Qian Hu, Yap said that the nominating committee reviews its board composition annually and makes recommendations on new directors based on whether there are any gaps in the board’s skill sets.
All directors are asked to submit a form that lists their areas of specialisation and expertise during the review.
“The nominating committee seeks to refresh the board membership progressively and in an orderly manner, to avoid losing institutional memory,” said Yap.
While these companies’ boards have got many aspects of corporate governance right, they are still looking at avenues for progress.
Tan said that SBS Transit’s board needs to increase its effectiveness in the areas of sustainability and technological developments that can have a material impact on the business, and also in cybersecurity, given the heightened level of threats globally.
With SGX mandating climate reporting, Yap said that Qian Hu needs to strengthen its sustainability reporting framework to better understand and assess the potential impact climate-related risks has on the organisation, as well as to align various stakeholders’ expectations with its sustainability goals and climate-related disclosures.
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