THREE years ago in May 2021, Sembcorp Industries unveiled an ambitious, forward-looking transformation plan.
The mainboard-listed conglomerate would bet big – to the tune of more than S$5.5 billion – on the acceleration of its sustainability journey, particularly through growing its renewable energy and integrated urban solutions business units.
Or, as Sembcorp’s group president and chief executive officer Wong Kim Yin described it, shifting the company’s portfolio “from brown to green”.
In doing so, Wong has bagged a string of accolades along the way. The latest? Being named as Best CEO in the large-cap category of the 2024 Singapore Corporate Awards.
This year, Sembcorp also took home the Special Recognition Award at the annual awards, which is in its 19th run.
Edmund Lin, chairman of South-east Asia and partner at Bain & Company, explains what the Special Recognition Award looks for
The objective of the SCA Special Recognition Award is to recognise organisations and/or individuals that have demonstrated outstanding and exemplary corporate governance in the conduct of the affairs of their boards and organisation.
To select a deserving winner, Bain & Company conducted a detailed evaluation of Singapore Exchange-listed companies over five years, from 2019 through 2023, seeking companies with proven success in innovating and transforming their businesses, and demonstrating traction in disrupting their industry.
The highly deserving winner of the 2024 SCA Special Recognition Award is Sembcorp Industries. The scale and scope of Sembcorp’s transformation is massive, covering their entire business.
What has historically been a traditional fossil fuel company is now a leading renewables play with a revised portfolio and business model.
Sembcorp is the tip of the spear of the energy transition, pushing the boundaries with innovative and commercially scalable solutions that have seen traction in Singapore and well beyond in foreign markets.
Importantly, this has translated into very strong financial results which have been recognized and rewarded by the capital markets – Sembcorp achieved annualised TSR (total shareholder return) growth of 36 per cent from 2019 through 2023.
Going green
While the shift towards green practices is increasingly seen as essential for long-term viability, investors may initially view these changes with scepticism.
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The transition often involves significant upfront costs and uncertainty, which can lead to short-term financial volatility and a drop in earnings; all of which make those focused on immediate returns hesitate.
That has decidedly not been the case for Sembcorp.
Under Wong’s leadership, Sembcorp posted total returns of 61 per cent in 2023, tying with Keppel as the best performer within the benchmark Straits Times Index (STI).
For comparison, the STI generated a total return of 4.7 per cent in the same period.
Clearly, Sembcorp’s strategic road map has been paying dividends – both figuratively and literally.
Last November, the firm rolled out a renewed, S$10.5 billion strategic plan as it embarked on its steady march towards green transformation.
This was perhaps due in no small part to the fact that Sembcorp is on track to meet – or has already exceeded, for some – key renewables targets set in the May 2021 road map.
Now, Sembcorp, which is on track to achieve the previous target of 10 gigawatts (GW) of gross installed renewables capacity by 2025, aims to more than double this to an ambitious 25 GW by 2028.
It has also met a 2025 greenhouse gas emissions intensity target ahead of time, and plans to halve this figure by 2028.
For the six months ended Jun 30, 2024, Sembcorp posted a net profit of S$540 million, up 2 per cent from S$530 million in the year-ago period.
This was due partly to the absence of losses from a discontinued operation, which was divested in January 2023.
On a segmented basis, net profit before exceptional items for Sembcorp’s renewables segment fell 13 per cent to S$104 million. However, this was more than offset by a 43 per cent rise in net profit to S$70 million before exceptional items for the group’s integrated urban solutions segment.
Despite Sembcorp’s strong performance under his tenure, Wong is quick to deflect credit. He said: “Sembcorp’s performance must be credited to the entire Sembcorp team, as well as the strong support from the board and various stakeholders.”
He did acknowledge that the success of the transformation journey required making tough decisions.
He said: “While we have achieved several transformation milestones, we have had to make tough decisions to replace some leaders in key roles for varying reasons, including changing market circumstances and individual attributes.
“Where possible, we offer opportunities in alternative roles, where employees could better deploy their individual skill sets and continue contributing to the company’s goals.”
Talent-wise, another challenge lies in the shortage of skilled labour – especially as the growth trajectory of renewable energy deployment continues to accelerate.
“In a tightening labour market like Singapore that faces a greying population and heavy reliance on imported labour, the challenge would be to upskill or reskill existing labour to meet our talent demand, both within the company and the renewables industry in Singapore,” said Wong.
Ideal background
Prior to taking the top job at Sembcorp in July 2020, Wong was already a veteran in the energy and investment management sectors.
He started his career in New York-listed energy firm AES Corporation in 1995, where he focused on the development, financing and management of infrastructure assets across varied geographies.
Such markets included the US, Australia, New Zealand, China, India, Sri Lanka and Pakistan, alongside others in South-east Asia.
He noted: “This experience was especially useful when I joined Sembcorp, owing to the similar geographies and business nature of both companies.”
He moved to Temasek – Sembcorp’s largest shareholder – in an investment management role in 2004, working on deals in banking, airlines, shipping, industrials and manufacturing.
“My time at Temasek also ingrained in me best practices in corporate governance, which was instrumental in my subsequent career path,” Wong said.
In 2011, he took on the mantle of group CEO at Singapore’s national grid operator, SP Group.
This was his “first experience leading a big organisation of over 5,000 staff, with a mission-critical mandate to ‘keep the lights on’ for every Singaporean household and business”, he recalled.
There, he planted the seeds of SP’s low-carbon, smart energy campaign, and also oversaw the company’s push on energy-saving cooling and heating systems.
Even as the Sembcorp transformation journey has had its challenges, it is one that he has relished. Said Wong: “I am fortunate to have gained varied experience in each phase of my career.”
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