Singapore corporate governance improving; SATS maintains lead in governance index

THE Singapore Governance and Transparency Index (SGTI) climbed to a new high this year, as companies committed themselves to better corporate governance and sustainability disclosure practices.

According to results released on Wednesday (Aug 3), the index’s mean score in the general category breached the 70-point mark for the first time, hitting 70.6, up from 68.7 a year earlier.

For the third year running, ground handler and caterer SATS came in first on the index’s general category, with a score of 122 points out of a possible 143 points.

Singapore divisional president of CPA Australia Max Loh said the positive trend in this year’s findings demonstrates the “commendable efforts” of companies as they improve their governance and transparency.

Companies in the general category fared better in disclosing stakeholder engagement practices, with their mean score rising by 3 points to 61, while average scores for performance in disclosure and transparency also rose 3 points to 63. Both sections are among the sections of the index with the lowest average scores.

“As businesses begin their recovery from the turbulence caused by the global pandemic, many new and emerging challenges are adding significant complexities to managing businesses. In this context, good leadership and governance – with a focus on accountability, transparency and sustainability – will remain the bedrock of long-term sustainable business performance,” Loh added.

The trio of local banks also stayed within the top 10 companies on the index.

DBS gained 8 places to rank second on the index, while UOB rose 2 places to rank fourth alongside City Developments and Singapore Exchange . OCBC lost 3 places to rank seventh, tied with Singapore Post .

Among the Straits Times Index’s constituents, Thai Beverage was most improved – climbing 233 places to be ranked 185 this year. It scored 73 points, up from 56 points a year earlier.

In the wider market, maintenance, repair, and operations solutions provider Mencast Holdings improved by the greatest margin, jumping 304 places to be ranked 92 this year. The company scored 82 points, up from 58 points the year before.

Meanwhile, Micro-Mechanics and Sing Investments & Finance each received a special commendation under the mid-cap and small-cap categories, respectively.

The SGTI evaluated 489 Singapore Exchange-listed companies based on their corporate governance practices, as well as the timeliness, accessibility and transparency of their financial disclosures.

It was jointly conducted by CPA Australia, NUS Business School’s Centre for Governance and Sustainability and the Singapore Institute of Directors. The Business Times is the strategic media partner for the study.

For the general category, the SGTI score is made up of a base score as well as an adjustment for bonuses and penalties.

Companies in this category are given a base score under the “BREAD” framework, which evaluates board responsibilities, rights of shareholders, engagement of stakeholders, accountability and audit, as well as disclosure and transparency.

Bonus points are then awarded for good practices, while penalty points are deducted for issues that point to poor governance.