Singapore’s companies have shown notable progress in corporate governance, with a remarkable increase in their average score.
In 2021, corporate governance practices within Singapore’s top companies saw a significant improvement, marking the first time the average score of the top 100 public companies exceeded 100 points. This achievement, out of a maximum of 130 points, was revealed in the latest corporate governance scorecard for Asean companies.
The 2021 Asean corporate governance scorecard highlighted that Singapore companies scored an average of 101.1 points, reflecting a 14.5% increase from 88.3 points in 2019. This data was shared by the National University of Singapore Business School’s Centre for Governance and Sustainability (CGS) and the Singapore Institute of Directors on December 14. Since 2013, these entities have been responsible for overseeing Singapore’s biennial ranking.
As of March 2021, these top companies collectively held a market capitalisation of approximately S$586 billion, accounting for over half of the Singapore stock exchange’s total market value, which was about S$1 trillion. Among these, 62 companies scored 75% or higher in corporate governance, placing them in the prestigious “Asean asset class” category—a mark of quality for investors.
In 2021, Singapore’s representation in this category grew significantly, with 62 companies achieving the required score, up from just 26 in 2019. For the first time, 29 real estate investment trusts (Reits) and business trusts were included in the assessment, with 72.4% scoring 75% or higher, compared to 57.7% of publicly listed companies.
Despite the positive trend, CGS Director Lawrence Loh pointed out that the improvements were not solely due to the inclusion of Reits and business trusts. Instead, there was a broad uplift in performance across all companies. The average score of companies in the Asean asset class decreased slightly from 108.1 points in 2019 to 106.2 points in 2021, while companies outside this category saw a significant improvement.
Loh emphasised that significant progress came from companies with scores below 75%, which saw an increase of 11.7 points, reaching an average of 93 points. This shift was crucial in driving the overall improvement in corporate governance standards.
The Asean corporate governance scorecard evaluates companies on five components: shareholders’ rights, equitable treatment of shareholders, the role of stakeholders, disclosure and transparency, and board responsibilities. The maximum score possible is 130 points, with bonus points awarded for exemplary market practices. The main contributors to the improvements were board responsibilities and the role of stakeholders, while areas like shareholders’ rights showed less progress.
As Singapore continues to focus on sustainability and environmental, social, and governance (ESG) disclosures, there are calls to place greater emphasis on ESG factors in future assessments. With the Singapore Exchange mandating ESG disclosures from 2022, the scorecard could align more closely with these domestic initiatives. Additionally, the SGX is considering requiring companies to disclose executive remuneration, further aligning governance standards with global practices.
John Lim, lead member of Singapore’s ranking body, noted that the Asean region comprises countries at different stages of development, which requires flexibility in crafting a unified regional scorecard. Nonetheless, the Asean corporate governance index is increasingly being aligned with global standards set by the OECD and G20, boosting its credibility with international investors.
Among the top-performing companies were Netlink NBN Trust, UOB, ComfortDelGro, and Singapore Press Holdings (prior to its privatisation). These companies were also ranked among the top 20 publicly listed Asean entities. Other leading Singapore companies include CapitaLand, Keppel Corp, Singtel, Far East Hospitality Trust, Singapore Post, and Sembcorp Industries.
