Corporate Governance

Singapore’s Corporate Governance Week: Our top 5 takeaways

Corporate Governance Week (CGW) is a key event in the Asia-Pacific business calendar. Inaugurated by the Securities Investors Association (SIAS), 2019 saw the tenth instalment of the annual get-together. Events included a conference, forums, workshops, a charity governance workshop and a gala dinner.

This year’s edition focused on technology, engagement and trust. Diligent was present at the event and enjoyed the opportunity to meet clients and attend expert briefings. Here are our five key ‘takeaways’:

Governance is a long-term investment

The event’s opening address, delivered by Singapore’s Minister for Education Mr Ong Ye Kung, emphasised that good governance isn’t a short-term fix for immediate problems but rather a long-term play to address risk management and manage technological disruption.

The goal, he said, is “not just to tackle problems in the here and now, but to nurture a stronger and better culture … rule-makers and enforcers, like companies, also need to take a long-term view”.

Well-governed organisations are better able to withstand market shocks, natural disasters and product or service problems. Both prescriptive rules (to address specific risks or activities) and principle-based rules (to manage broadly stated goals and outcomes) are needed to provide flexible approaches to governance, risk management and organisational culture.

Technology is impacting governance

Several speakers addressed the influence of new and emerging technologies, especially financial technologies such as blockchain.

Blockchain is already impacting on financial markets, equity financing, debt market financing, shareholder engagement and more. In the long term, it may well prove to be the case that its impact on governance outweighs its impact on finances.

Legal firms are exploring how best to use blockchain to make contracts fast and simple to execute. Its use of distributed ledgers – where a network of computers all must verify any new transaction (or block) before it can be added to the ledger (or chain) – provides unparalleled security.

Blockchain’s impact on governance remains to be seen, but its characteristics make it ripe for adoption into any Modern Governance platform. Combining blockchain technology with existing unified governance software packages offers tantalising possibilities for secure communications, information sharing and collaboration.

Corporate governance is under scrutiny

The corporate world’s reputation has taken some hits in recent years, with scandals rocking banks, insurers, churches and government departments alike. In many cases, governance failed to identify risks, failed to mitigate them and failed to prevent additional harm being done once problems were discovered.

In response, governments are revising existing laws and creating new ones to improve governance and restore public trust in these important institutions. The European Union’s General Data Protection Regulation (GDPR) is frequently mentioned in such contexts, but there have been significant changes to laws across the Asia-Pacific.

These include amendments to Hong Kong’s Corporate Governance Code and Environmental, Social and Governance (ESG) guidance materials; Singapore’s 2018 Cybersecurity Act and establishment of its ‘SGX Fast Track’ program; the ongoing impacts of the Thai Institute of Directors’ Corporate Governance Report of Thai Listed Companies 2016; the establishment of Malaysia’s Institute of Corporate Directors and review of its data protection laws; and India’s actions implementing recommendations from the Kotak Report into corporate governance standards.

Shareholders are getting involved

Shareholder engagement is also receiving attention, as activist shareholders seek to hold their boards to account for governance failures and ensure their investments are protected.

Two sessions at CGW explored this development, one on public equity and shareholder engagement, the other on the impact of technology on shareholder engagement.

The key messages from both sessions were that shareholder engagement is increasing the need for companies to have Modern Governance practices in place. Such practices protect the company – and hence, its profits and price – from undue risk. By helping to prevent governance failures, they also help protect board members and senior managers from potential financial, professional and social penalties.

Company culture is king

Ultimately, speakers and attendees at the event shared the message that above all else – and barring calamity – company culture determines an organisation’s fate.

This requires the right technology to implement Modern Governance. Critically, such tools include analytics so fresh insights can be produced from familiar data. But even the most impressive technologies can be rendered useless by a company culture that is blind to risk, unconcerned with compliance and indifferent to poor behaviour.

Boards must lead by example, exemplifying the values they espouse. Creating a customer-focused, security-savvy, service-oriented culture is another long-term task. Yet it’s vital to every company’s survival.

See you next year!

Looking back, we can report that our week in Singapore was time very well spent. We endorse the SIAS’s goals (see below), and the event reaffirmed our commitment to helping any and every organisation achieve effective, transparent Modern Governance. As the conference told us, it’s a long journey and a long-term commitment towards long-term prosperity. We’d love to be with you every step of the way.

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