Progress in corporate governance, but challenges lie ahead

AS THE Singapore Governance and Transparency Index (SGTI) enters its 10th year of assessment, it is heartening to note the remarkable progress made by companies over the years. For this year, the average overall score for the general category of companies hits an all-time high of 56.3 from 33.9 in 2009. In the category of real estate investment trusts (Reits) and business trusts, there is a marked rise to 74.5 from 60.4 last year when this category was started.

The SGTI is based on a core assessment framework of five sections: (1) board responsibilities; (2) rights of shareholders; (3) engagement of stakeholders; (4) accountability and audit; and (5) disclosure and transparency. We examined the governance performance along these specific sections and found that companies generally performed well in the various sections, except the one on stakeholder engagement (see Figure 1). Notably, for companies in the general category, this section scored only 38 per cent even if it improved from 30 per cent last year.

Within the stakeholder engagement section, there were three more glaring omissions. These were: (1) disclosing policies and activities relating to customer health and safety; (2) publishing data on employee training and development; and (3) describing the company's anti-corruption programmes and procedures. In each of these separate aspects, only one-fifth of all companies in the general category fulfil the assessment criteria.