LESS than half of the issuers listed on the Singapore Exchange (SGX) have disclosed their targets, plans and progress to achieve board diversity, in the first year since disclosures on board diversity were made mandatory for listed companies.

Of the issuers that disclosed a board diversity policy, 41 per cent published targets, 21 per cent provided plans and timelines and 11 per cent reported on the progress towards their targets.

While a large majority (98 per cent) of companies provided a description of their board diversity policy, many were insufficient in their description, a joint study by Singapore Exchange Regulation (SGX RegCo) and Council for Board Diversity (CBD) found.

Overall, the vast majority, or 89 per cent, of listed issuers have provided a board diversity policy in their annual financial reports.

Of the remaining, 7 per cent had not done so as the deadline for the disclosures were not due for them yet.

The findings on listed companies’ board diversity disclosures were published in a report titled State of Board Diversity Disclosures of SGX-listed Issuers on Friday (Nov 17).

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The 39-page report aims to understand the state and quality of board diversity disclosures of listed issuers in Singapore. It is based on a review of the board diversity disclosures by 538 SGX-listed issuers published as at Jul 31 this year.

This is the first study since listing rules on board diversity disclosures kicked in for annual reports for financial years commencing on or after Jan 1, 2022.

Under the rules, an issuer must maintain a board diversity policy that addresses gender, skills and experience, as well as any other relevant aspects of diversity.

An issuer must also describe in its annual report its board diversity policy, including its targets, plans, timeline and progress to achieve diversity on its boards. It should also include a description of how the combination of skills, talents, experience and diversity of its directors serves the needs and plans of the issuer.

Other findings

Of those that had disclosed a board diversity policy, almost all had included aspects such as gender (97 per cent) and skills and experience (99 per cent) in their annual reports.

A large majority (91 per cent) had also included other relevant aspects of diversity such as age and length of service in their reports.

However, factors such as qualifications, educational background and culture were less commonly discussed by issuers, noted the study.

Disclosures by top issuers

The study also analysed diversity disclosures among the top 100 listed issuers by market capitalisation on SGX.

This group fared slightly better in the quality of their disclosure, with 98 per cent maintaining a board diversity policy.

Of those that had disclosed a diversity policy, more than half (57 per cent) had set targets to achieve board diversity, with gender diversity cited as the most common target.

However, only 38 per cent of top issuers had set plans and timelines to achieve their targets, while 23 per cent provided an update on their progress.

All of the top issuers that disclosed a board diversity policy included gender as well as skills and experience in their policies. A majority (97 per cent) also included other relevant aspects of diversity in their policies.

Among those that provided disclosure on other aspects of diversity, a majority (87 per cent) mentioned age in their diversity policy.

Other diversity aspects such as ethnicity, length of service and nationality were mentioned by less than half of the top issuers.

The study noted that the top 100 listed issuers have “more robust and comprehensive” disclosures compared with the full population of listed issuers.

“This may be attributed to various factors including being more mature reporters, and greater expectations and pressures from stakeholders and investors to report more extensively and to provide greater transparency through their disclosures,” said the study.

Disclosures by sector

The study also analysed the quality of disclosures across 11 different sectors, such as utilities, technology and real estate.

It identified the percentage of listed issuers in each sector that disclosed diversity aspects related to gender, skills and experience, as well as other relevant aspects of diversity.

The top three sectors with the highest rates of disclosures across the three diversity aspects were the academic and educational services (100 per cent), real estate (94 per cent) and healthcare (93 per cent).

When it came to disclosures on descriptions of diversity, targets, progress and timelines, the real estate industry topped the score, with 16 per cent of listed issuers in the sector disclosing all four elements in their annual reports.

This was followed by the consumer non-cyclicals (15 per cent), utilities (14 per cent), financials (12 per cent) and industrials (11 per cent) sectors.

The study attributed the higher rate of disclosure by the real estate sector to the disclosures made under the Global Real Estate Sustainability Benchmark, an international standard for the industry that has a section on diversity.

Recommendations

Tan Boon Gin, the chief executive officer of SGX RegCo said that the high adoption rate of board diversity policy among listed issuers suggests that they have incorporated diversity into the board governance framework.

Nevertheless, he noted that the level of detail in disclosures varied significantly, adding that this is consistent with it being the first year for such disclosures.

“We want more measurable progress in future, especially in quantitative aspects such as targets, plans and timelines. SGX RegCo will be closely monitoring how companies perform on this front,” said Tan.

To improve the quality of board diversity disclosures, the study recommended contextualising disclosures according to business strategy and needs, as well as stating proactive steps to address gaps in the board’s mix.