Ms Wong Su-Yen
Chairman, Singapore Institute of Directors
Ladies and Gentlemen
1. Thank you for inviting me to speak at the SID Annual Directors Conference today.
2. For the past 2 years, the COVID-19 pandemic has been the defining lens through which we have viewed the world. However, even as we move cautiously out of the shadow of the pandemic, it has become increasingly clear that the pre-pandemic normal may well be a thing of the past.
3. The reasons are multifold.
a. We can no longer take for granted the international system that has been the basis for global order, peace and growth. Russia’s invasion of the Ukraine, and flaring tensions between the US and China, highlight the fragility, complexity and volatility of today’s geopolitical environment. This has also rendered the global economy more susceptible to sudden and intense shocks, supply chain disruptions and inflationary pressure, with profound implications for businesses.
b. The pandemic has revealed and exacerbated fractures in many societies around the world. Certain segments of society harbour a deep resentment towards a political and economic system that they feel has failed them. Longstanding societal cohesion is beginning to fray with the rise of extremist politics, with the strain accentuated by demographic shifts such as an ageing population.
c. And finally, the need for climate action has never been more urgent yet the road ahead is fraught. Climate change is a crisis of the global commons that calls for collective action. Maximising one’s self-interest will inevitably result in a suboptimal outcome for all. There is no quick fix – governments, businesses, and people must work together to ensure a sustainable world for present and future generations.
4. Against this backdrop, there has never been a greater need for strong leadership and governance founded on trust. From the nation to the enterprise and the community, we need to forge a consensus, a social compact premised on a shared understanding of not just our rights and aspirations, but also our duties and responsibilities.
5. You, as directors of companies, play a defining role in this endeavour. The businesses you govern are key agents of change and value creation in the economy. How they fulfil their economic mission and relate to other stakeholders depends critically on the values and priorities set by the Board of Directors. In particular, to build a successful and socially conscious business the focus cannot just be on Profit but also on People and the Planet.
6. First, profit. The profit motive and maximising shareholder value is in the DNA of every business. But directors and shareholders must work together to embrace a broader notion of stakeholder value.
7. There are increasing demands for businesses and their leaders to hold themselves to a higher standard, and take accountability for the broader consequences of their actions. Shareholders and investors also increasingly prioritise environmental, social and governance (ESG) issues.
8. The focus on other metrics of success need not be at the expense of profits; indeed that is a false dichotomy. There is a symbiotic relationship between the commercial success of a business, the opportunities it creates for its people, and the value it endows to the community within which it operates.
9. We need vision, commitment and transparency in corporate governance and leadership to recognise and strive for this goal. It is a challenging task which can be well served by having exemplars to emulate and best practices to share. Hence, I am glad that SID has been particularly active in promoting good corporate governance. The Singapore Corporate Awards, jointly organised by SID, ISCA, and the Business Times, is a good example and I would like to congratulate all companies who have been recognised.
10. Next, people who are at the core of every business.
11. Investing in training and capability development means a productive workforce and a competitive enterprise. It is a virtuous cycle and an area to which the Government has allocated significant resources to help our businesses.
12. These include the upskilling support schemes offered through SkillsFuture-supported programmes. Businesses can also tap on the National Centre of Excellence for Workplace Learning (NACE)’s training programmes and consultancy services, to strengthen your workplace learning capabilities. Companies can also work with the labour movement to form Company Training Committees (CTCs) to drive company and workforce transformation.
13. Further, I urge companies to groom our local talent to take on leadership roles. Our agencies have good programmes to support this. Some examples are the SkillsFuture Leadership Development Initiative that supports companies across sectors to develop local leaders, and the Global Ready Talent Programme that exposes young talent to overseas internships and work placements so that they can be groomed to support business expansion plans in overseas markets.
14. It is especially important to deepen leadership at the Board level given the critical role directors play in steering the company and ensuring good corporate governance. It can be a challenge for some companies to identify and recruit good directors. I therefore welcome SID’s move to address this by launching a board listing service, and urge companies to access this useful service as you seek new talent to strengthen your Boards of Directors.
15. Finally, the planet. Climate change and its consequences are at the forefront of the news. For Singapore as a small, low-lying island nation, it is an existential threat.
16. We are resolutely committed to the transition to a sustainable, low-carbon future. Earlier this year, the government announced that we would raise our climate ambition to achieve net zero emissions by or around mid-century. We will also raise carbon tax levels progressively from 2024, with a view to reaching $50 – 80 per ton of carbon dioxide equivalent (tCO2e) by 2030.
17. The public, private and people sectors are essential partners in this transition. As we adapt to an increasingly carbon-constrained world, companies too must reduce their carbon footprints and do so in a sustained and transparent manner. The continuous oversight of the Board is key and, in that regard, SID’s efforts to promote climate governance amongst companies, including training for climate reporting under the ESG Essentials course for directors, is a welcome initiative.
18. The transition to a low-carbon future also offers opportunities in emerging green industries, such as carbon services and renewable energy, and in decarbonising existing industries. By adopting green and sustainable operations, companies would be better positioned to meet the growing global demand for sustainable goods and services, and thus remain competitive in the long run.
19. The Enterprise Sustainability Programme (ESP) has the resources to deepen your capabilities in sustainability, no matter which stage of the journey your company is at.
20. For those just starting out, the ESP provides subsidised training workshops to give companies a leg-up in developing a longer-term plan. For those further in your sustainability journey, the ESP has grants and risk-sharing support for companies to develop or scale innovative products, services, and solutions to capture opportunities in the green economy.
21. Let me conclude. We face an uncertain environment today driven my geopolitics, economic headwinds, demographic trends, and climate change.
22. To navigate this this uncertain environment, we need strong leadership and principled governance at all levels – government, enterprise, community – to forge a social compact founded on trust.
23. Businesses and the boards that govern them play a crucial role in this effort, as catalysts for change and creators of value. In particular, we must set the tone by seeking to enhance not just shareholder but also stakeholder value; by investing in the skills and capabilities of our people; and by actively contributing to the low-carbon transition.
24. With the stewardship and sustained effort of boards and management, I am confident that we can and will succeed in this mission. I would also like to thank SID for your commitment to helping our businesses become more socially responsible while seizing new opportunities for growth.
25. I wish you all a very fruitful conference. Thank you.