Sats tops governance and transparency index; Singapore listcos’ scores dip after methodology change

GROUND handler and caterer Sats clinched the top spot in an annual governance and transparency index assessing Singapore-listed companies on Thursday (Aug 1). It moved up one spot to claim the position from telco Singtel , which placed first on the index last year. Among Reits and business trusts, CapitaLand Ascott Trust clinched the lead on the index this year.

Overall, the performance of Singapore-listed companies and trusts dipped slightly on the annual Singapore Governance and Transparency Index (SGTI) compared with the year before, after the index’s framework was revised this year to emphasise sustainability disclosures.

The index ranks Singapore Exchange-listed companies on their corporate government practices as well as the timeliness, accessibility and transparency of their financial disclosures. They are awarded points out of a theoretical maximum of 143 points.

It has two categories: a general category ranking Singapore-listed companies, and another ranking real estate investment trusts (Reits) and business trusts.

In the General Category, Singapore-listed companies received an overall score of 69.3 points for their performance in the areas of shareholder rights as well as environmental, social and governance practices. This was lower than their score of 74.8 points the previous year.

In the Reits and Business Trusts Category, the mean score stood at 86.6 points, slightly lower than 89.3 points last year. Three CapitaLand-related entities placed among the top five in the category.

General Category 

In the General Category, City Developments Ltd came in second place, while UOB placed third.

Singtel , which was the top scorer on the index last year, fell to fourth position, tying with Keppel .

Big-cap companies with market capitalisations over S$1 billion also outperformed mid and small-cap companies, the study found.

This was especially so in the areas of disclosure and transparency, where large-cap companies scored 17 percentage points higher, followed by sustainability and board responsibilities, which were 15 percentage points higher.

Across the board, 78 per cent of companies on the index demonstrated robust performance in disclosures relating to shareholder rights, followed by sustainability-related matters (67 per cent), and accountability and audit (65 per cent). 

Reits and Business Trust Category

In the Reit and Business Trust category, CapitaLand Ascott Trust clinched the lead, while CDL Hospitality Trusts placed second.

CapitaLand Ascendas Reit and CapitaLand Integrated Commercial Trust ranked third and fourth, respectively, while fibre network operator Netlink NBN Trust rounded out the top five entities.

In this category, 86 per cent of Reits and business trusts exhibited strong performance in disclosures relating to shareholder rights.

The scores for accountability and audit, disclosure and transparency, and sustainability-related matters ranged between 77 and 79 per cent.

Holistic assessment

Professor Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore Business School, said that this year’s revised SGTI starts “a new dynamic approach” to assess companies.

He added: “We are pleased that our listed companies have continued to perform commendably overall, even if sustainability poses additional challenges for governance.”

Index revised to emphasise sustainability

Given the changes made to this years’ framework, score comparisons with previous years’ index can be “misleading”, said the study’s assessors on Thursday (Aug 1).

This is because the latest framework was revised to place greater emphasis on sustainability disclosures and practices in the index.

These changes included the launch of the Director Accreditation framework by the Singapore Institute of Directors and the incorporation of sustainability concerns into corporate governance.

Several existing questions with disclosure rates reaching 100 per cent due to mandatory compliance were removed. Stricter assessment criteria was also applied to the remaining questions.

“Going forward, we want (the index) to be adaptive to market changes, such as changes in regulation and best practices, so that (the index) can continue... to be relevant to (its) users,” explained Prof Loh.

Therefore, rather than comparing the performance of companies across different years, Prof Loh added that it will be better to gauge the performance of companies based on their relative standing on the index going forward.