Most listed companies in Singapore have board diversity policies: SGX

SINGAPORE - Most issuers listed on the Singapore Exchange (SGX) have disclosed board diversity policies, but these disclosures need to be more detailed, according to a study released on Friday.

The study to review the board diversity disclosures of 538 issuers listed on SGX was done by PwC Singapore after it was appointed by the Singapore Exchange Regulation (SGX RegCo) and the Council for Board Diversity. It covered the disclosures published as at July 31.

The study found that 89 per cent of the issuers had disclosed a board diversity policy. For most of the others, their deadline to make such disclosures was not yet passed.

Most of the issuers that disclosed their board diversity policy described how a combination of skills, experience and diversity among directors could serve the company’s needs and plans.

The SGX listing rules on board diversity disclosures apply to annual reports for financial years starting from Jan 1, 2022.

Companies can disclose diversity aspects such as gender, skills and experience, age and educational background.

The Council for Board Diversity co-chair Mildred Tan said: “This first year of diversity disclosures is commendable. We’re glad to see SGX-listed issuers expressing how cognitive diversity, from a combination of skills, talents and experience, is serving the strategic ambitions of their organisation.”

Issuers, however, did not give detailed plans on achieving board diversity. Of those that disclosed a board diversity policy, 41 per cent published targets and 21 per cent provided plans and timelines. Just 11 per cent reported on their progress towards their targets, the study showed.

SGX RegCo chief executive Tan Boon Gin said: “We want more measurable progress in future, especially in quantitative aspects such as targets, plans and timelines. SGX RegCo will be closely monitoring how companies perform on this front.”

He added that board diversity is important because it promotes good decision making.

“A diverse board is likely to be more successful in crafting strategy and ensuring the company thrives for the long term. The high adoption rate found in this study suggests most listed issuers have incorporated diversity into the board governance framework.”

The issuers that did well in their overall disclosures include those in real estate, finance and consumer non-cyclicals, such as food and beverage firms.

The study said that board diversity is a factor that shareholders are now paying attention to.

“For Singapore’s listed issuers to continue to attract global investments and ensure regional and global competitiveness, it is imperative that they improve upon their board diversity practices and consequently, their disclosures,” it said.

It highlighted that other jurisdictions also have set board diversity quotas. For instance, Hong Kong and Malaysia both require firms to have at least one woman on the board. In Britain, the quota for women on boards is 40 per cent, with at least one woman in a senior board position and one from a minority ethnic background.

In Singapore, the Council for Board Diversity recommends that women should comprise 25 per cent of boards by 2025 and 30 per cent by 2030, although this is not mandatory.

Nikko Asset Management president and head of Asia (excluding Japan) Eleanor Seet said: “Issuers in Singapore should expect to face market pressure and not risk being inward-looking, satisfied with our current state of disclosures. We need to remain relevant and competitive with moving international standards, and market and societal expectations.”

Moving forward, companies need to move beyond boilerplate statements, said Ms Clare Payn, senior global ESG and diversity manager at Legal and General Investment Management.

“An important step change would be to have clear, ambitious targets and to understand how a diversity policy and the actions to deliver it are in-built into a company’s strategy.”

She added that companies can end up hiring someone in the image of the person who has vacated the position, which results in favouring men of a certain skillset or background.

“By hiring from a wider candidate pool, companies are more likely to appoint on merit.”