Stewardship for Singapore Investors: A Matter of Principles

SINGAPORE, November 3, 2016 - The notion of stewardship has never been more relevant to business than it is today, particularly in the face of pressure to deliver short-term results and maintain regulatory compliance. In the investment landscape, increasingly there is revived conversation and emphasis on the concepts and practices of stewardship.

Today marks the launch of the "Singapore Stewardship Principles (SSP) for Responsible Investors", an industry-led initiative to encourage responsible investment and to promote good stewardship practices among the investor community. The SSP is drafted and launched by a Singapore Stewardship Principles Working Group which comprises industry players and organisations representing various relevant constituencies in the Singapore investment community, and supported by the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX).

Stewardship, or the safeguarding of an organisation for the future, encourages responsible investor behaviour to ensure long-term benefits for all stakeholders as well as the society at large.

Building on this stewardship mindset, the SSP aims to enable investors to be active and responsible shareholders, by articulating the core actions associated with investor stewardship. The SSP provides a view on the activities and functions that stewards should carry out, and how these principles relate to the boards and management of investee companies. The principles are not intended to be rigid rules to be enforced or prescriptive measures to be adhered to, nor are they intended to constitute a code. They are intended as broad principles, with suggested ways that they could be applied. Articulating the stewardship activities, and its level of commitment to these Stewardship Principles, are left to each individual investor to adopt, on a wholly voluntary basis.

The SSP is intended to bring together and to sustain a community of responsible and engaged investors who practise stewardship as a value-based approach to investment.

Mr Ong Boon Hwee, CEO of Stewardship Asia Centre, which chairs the Singapore Stewardship Principles (SSP) Steering Committee, said, "Singapore's investment environment is thriving, and known to be transparent. Companies are doing well where compliance is concerned. Investors as shareholders and owners generally adhere to good governance practices. Notwithstanding that, there is scope to be proactive in reinforcing the positive mindset of stewardship, towards mutual sharing and encouraging good practice amongst investors. The SSP is intended to improve upon this healthy environment by encouraging investors and companies to voluntarily pursue the spirit of stewardship together with good governance, with the objective of sustaining their responsible good performance over the long term."

Support for the SSP reflects an alignment of belief that stewardship is important. Supporting the SSP represents a commitment to uphold the concept and practice of stewardship, and to be part of the on-going effort towards promoting and reinforcing stewardship amongst the investor community in Singapore. Companies that wish to apply the SSP do so in the spirit that their thinking and practices are aligned with stewardship orientation. The SSP's approach emphasizes that the spirit of the practices is as important as the actions themselves.

At the time of the SSP's announcement, more than 30 fund managers and investment organisations have shared their support for the principles. This is an encouraging sign as it shows that the SSP resonates well with their values and practices, and would have a catalytic effect as the SSP reaches out to the investment community in Singapore.

Temasek said: "We welcome the announcement of the 'Singapore Stewardship Principles for Responsible Investors'. It is a timely initiative by the industry to articulate guiding principles for stewardship and corporate governance that are relevant to Singapore, encourage a deeper level of conversation among industry participants and will continue to move the practices of stewardship and corporate governance in a positive direction."

Michael Lim, the Executive Director of Investment Management Association of Singapore, which counts among its membership the majority of leading institutional investors in the country, commented: "As the representative body of investment managers in Singapore, IMAS strongly supports the adoption of the Singapore Stewardship Principles (SSP) by all our members. The application of responsible stewardship is important to all successful long-term investment processes. We believe that when investment managers and investee companies work together to deliver greater value, everyone will eventually benefit from the sustainable profitability."

David Gerald, President and Chief Executive of Securities Investors Association Singapore, said: "The investing community should be pleased with the advent of this Singapore Stewardship Principles. Now there are settled principles for investors to follow. It ensures responsibility in encouraging higher corporate governance standards and a better overall capital market."

David Smith, Head of Corporate Governance, Aberdeen Asset Management Asia Limited, said: "Stewardship is central to Aberdeen's investing process; we strongly believe it is our duty to be stewards of our clients' capital, and to be stewards of the companies in which we invest on their behalf, over the long-term. To that end, we warmly welcome this initiative, and hope that it serves to further enhance the quality of corporate governance and engagement in Singapore."

Kevin Hardy, Managing Director, Country Head of Singapore and Head of Beta Strategies, Asia Pacific, BlackRock said: "BlackRock welcomes and is pleased to support the IMAS Singapore Stewardship Principles which aim to protect and enhance the value of clients' assets. As a firm focusing on long term investments, we believe that such principles encourage business and management practices that support sustainable financial performance in the long run. Effective stewardship also provides specialist insight on environmental, social and governance (ESG) considerations which are becoming increasingly important to all investment strategies."