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2022 Singapore Spencer Stuart Board Index

December 2022

Singapore board index

The period between 2020 and 2022 saw unprecedented shifts in the global business landscape. More difficult to ascertain is how much of these shifts were driven by the rush to safety amidst pandemic turbulence or, conversely, inflection points heralding the dawn of a renewed paradigm in corporate management. The role of boards in steering the ship has never been more critical. While COVID-19 had necessitated crisis management for a while, emerging from the pandemic even more competitively will remain top-of-mind for much longer. Many hypotheses were made these past two years — the next two will surely test them.

The 2022 Singapore Spencer Stuart Board Index is a comprehensive review of the governance practices of the 30 constituent companies of the Straits Times Index (STI), the benchmark index for the Singapore Exchange. It provides a valuable review of the governance practices of these companies during 2021-2022. Information was compiled from publicly available sources as of August 2022. Here are a few highlights:

Mandatory board functions

As of 2022, all STI boards have established either a combined or standalone committee performing the functions of remuneration and nominating committees. Prior to 2022, approximately 85% had done so. This development is likely a response to the amendment of SGX Listing Rules (Mainboard) where, effective 3 September 2021, listed entities are required to have combined or separate committees performing the functions of audit, nominating and remuneration committees.

Commitment towards sustainability

Sustainability remains a key focus area for boards, and many have aligned their ambitions with the UN sustainability development goals (SDGs). As of 2022, 83% of STI companies have incorporated at least a portion of the SDGs into their sustainability framework. Trends suggest that if SGX continues to encourage robust sustainability reporting, most companies will adopt the SDGs at least as a benchmark for tracking their goals.

Continued emphasis on gender diversity

Female representation has been an increasingly pertinent consideration for board appointments globally, and there has been progress in Singapore. Since 2020, more than 80% of STI boards have appointed at least one female board member, and, as of 2022, 20% of STI board members are women. While there is no diversity requirement as yet, effective 1 January 2022, listed companies are required to set and disclose their diversity policy in their annual reports.

Independence of directors

Long-serving independent directors on SGX boards were a common phenomenon prior to the announcement of the nine-year cap on independence in 2018. The cap reflects the belief that long-serving independent directors are susceptible to independence risk as they gain familiarity with the management. Effective 1 January 2022, directors with an aggregate period of service beyond nine years will no longer fulfill the criteria of independence, with the exception of directors with approval from a two-tier voting process.