What, beyond economics, draws investors to your company

Date: 13 November 2018, Tuesday

The Diversity Action Committee (DAC) organised a forum with BlackRock and the Singapore Exchange. Senior management of larger SGX-listed companies, investment managers and asset owners joined us to listen to distinguished speakers

on how good stewardship would help companies strengthen their capacity to deal with the opportunities and risks arising from disruptive changes in the value chain, climate change, social licence to operate, staffing for new business conditions.


KEY TAKEAWAYS AND VIDEOS 

Event Highlights Video

Welcome
Ms YEO Lian Sim, Member of DAC, Special Adviser (Diversity) of SGX, and Vice Chair of the Task Force on Climate-Related Financial Disclosures (TCFD)

Keynote Address
Ms Barbara G. Novick, Vice Chairman, Blackrock

  • ESG factors and performance are not mutually exclusive. Believes that companies with better ESG scores will do better over the long term.
  • BlackRock sets voting guidelines and engagement priorities; companies are engaged 1-on-1 and also in larger settings.
  • More clients are asking for sustainable solutions.
  • BlackRock believes that there is nothing we should be asking companies to do that we’re not willing to do ourselves, whether it is on governance or commitment to gender diversity and diversity in general.
  • Leading by example,
    • Governance – Blackrock is a US based company but its board includes non-US citizens or dual citizens.
    • Environment – Designed new data centres with energy efficient designs and located them in areas using hydro-power.
    • Social – Has a host of programs for employees such as employee career advancement programs, identifying volunteer opportunities for employees and give them time-off to do so.
  • ESG means different things to different asset owners. Some think of it as things to avoid (eg tobacco, carbon, weapons, defense). Others are forward looking and think of how to advance a particular issue (eg invest in companies developing more sources of alternative energy).

Keynote Address
Mr Chaly Mah, Chairman of Netlink NBN Trust, Singapore Tourism Board and Singapore Accountancy Commission

  • Highlighted key changes to the Code of Corporate Governance – board independence and board diversity.
  • Shared his experience interviewing many candidates to make up the board of directors of Netlink NBN Trust. While skillset was the first criteria he looked out for, he said to himself that if he found someone with these skillsets, it would be preferable if the person was female. He formed a board of 8 people, 25% are women.
  • Not in favour of quota as it forces the hand of the chair and NC chair. Prefers boards to look for diversity in terms of skills, mix and experience whilst taking into consideration that there must be women on boards to get the diversity in place.
  • He has heard that the quota in some of the European countries has actually helped women to come forward to serve on boards.
  • He also spoke about the importance of board culture which sets the tone for the organization, and the importance for companies to stay on top of developments in technology and disruption.

Panel
Speakers:

  • Barbara G. Novick Vice Chairman, BlackRock
  • Chaly Mah Chairman of Netlink NBN Trust, Singapore Tourism Board and Singapore Accountancy Commission
  • Neo Gim Huay Managing Director, Enterprise Development Group and Sustainability, Temasek
  • Yiong Yim Ming Group CFO, City Developments Limited

– Hosted by Ms Divya Balji, Team Leader, Equities & Equity Markets Asia, Bloomberg LP

Topic 1: How do companies stand out to investors?

  • Ensure that investors truly understand your business. Explain your growth strategy, growth sources and the new areas that you are keeping your eyes on (eg innovation, disruption).
  • Give investors confidence in the leadership of the company by having adequate director independence and board diversity.
  • Assure investors that the company will continue to excel in its core business but will also embrace new technology and changes in the market that complements the core business. Having a focus on ESG and innovation also attracts investors.

Topic 2: Returns versus ESG / sustainable investing

  • Investors will need to balance the benefits of returns against sustainable investing. If investors exclude companies that are not sustainable enough, they could end up with a very narrow universe of investable companies.
  • In the long term, investors could probably achieve both good returns and still have a focus on sustainable investments.
  • There is investor appetite for companies that does well financially and does good at the same time. Mainstream funds such as KKR and TPG Capital have raised large amounts of capital focused on investing in companies that are positioned to address some of the sustainability issues.

Topic 3: Board Diversity

  • Board quality is crucial.
    • Boards must ensure that it has the people with the right skillsets and also a diverse set of skillsets to provide adequate diversity of thought. Having an adequate number of women on the board adds to the diversity of thought.
    • Adding women to boards changes board dynamics, board culture and the decision-making process, for the better. (Observations based on actual experiences.)
  • Quotas are not ideal as it becomes a check-the-box exercise for companies.
  • What companies should do
    • Have adequate women in the candidate pool to have a better shot at adding women to your boards. Ideally 50:50 male and female candidates, or at least enough numbers for the board to make a selection.
  • To all-male boards:
    • Institutional investors will include the topic of women on boards in its engagement with such investee companies. It makes investors question whether the board even searched for and considered any diverse candidates.
    • Boards should reflect and ask themselves “are we even making an effort?”
    • Not being able to find qualified women is an excuse that is no longer acceptable to investors. After a number of large investors said they would vote against the nominating committee of boards without women, boards started conducting board searches for open seats and conceded that they were able to find qualified women for their boards.

Supported by

See more photos from the event here.

Speakers

Barbara G. Novick, Vice Chairman, is a member of BlackRock’s Global Executive Committee, Corporate Risk Committee and Global Operating Committee. From the inception of the firm in 1988 to 2008, Ms. Novick headed the Global Client Group and oversaw global business development, marketing and client service across equity, fixed income, liquidity, alternative investment and real estate products for institutional and individual investors and their intermediaries worldwide. In her current role, Ms. Novick oversees the firm’s efforts globally for public policy and for investment stewardship. In addition, she is a member of the Executive Committee of the Investment Company Institute.

Prior to founding BlackRock in 1988, Ms. Novick was a Vice President in the Mortgage Products Group at The First Boston Corporation. Ms. Novick joined First Boston in 1985 where she became head of the Portfolio Products Team. From 1982 to 1985, Ms. Novick was with Morgan Stanley. Ms. Novick has authored numerous articles on asset management and public policy issues.

Ms. Novick is a member of CFA Institute’s Future of Finance Advisory Council and MSCI’s Editorial Advisory Board. She currently serves as a Trustee of Cornell University and the HCM Foundation. Ms. Novick previously served on the boards of Robert Toigo Foundation (2007 – 2010), UJAFederation (2009 – 2015) and Westchester Day School (2000 – 2005), served as both Treasurer and Trustee of Westchester Jewish Center (1994 – 2012) and coached in the Westchester Youth Soccer League (1999 – 2015). Ms. Novick earned a BA degree, cum laude, in economics from Cornell University.

Chaly Mah is Chairman of Netlink NBN Trust, Singapore Tourism Board and the Singapore Accountancy Commission. He is a member of the Board of Trustees of the National University of Singapore and serves on the boards of the Monetary Authority of Singapore, the Singapore Economic Development Board and CapitaLand Limited.

Prior to this Mr Mah was with Deloitte for over 38 years. He retired in 2016 as the CEO of Deloitte Southeast Asia and Chairman of Deloitte Singapore. He was the CEO of Deloitte Asia Pacific and member of the Deloitte Global Executive from 2007 to 2015 and the Vice Chairman of Deloitte Global Board from 2015 to 2016.

Mr Mah graduated with a Bachelor of Commerce degree from the University of Melbourne in 1977 and qualified as a chartered accountant with the Institute of Chartered Accountants in Australia in 1981. He is also a fellow member of the Institute of Singapore Chartered Accountants, CPA Australia and The Association of Chartered Certified Accountants in the United Kingdom.

Neo Gim Huay is Managing Director, Enterprise Development Group and Sustainability, Temasek.

Prior to joining Temasek, Ms Neo was a Management Consultant at McKinsey in the Lagos, New York and San Francisco offices. Before McKinsey & Co, Ms Neo served in the Administrative Service of the Singapore Government, holding various appointments in the Ministry of Finance, Trade and Industry as well as the Prime Minister’s Office and the Singapore Embassy in United States.

Ms Neo has a Master in Business Administration from the Stanford University and was an Arjay Miller Scholar. She also holds a Master of Engineering (Distinction) and Bachelor of Arts (First Class Honors) from Cambridge University. Ms Neo is a Singapore government scholar and a US Eisenhower Fellow.

Yiong Yim Ming is Group Chief Financial Officer of City Developments Limited. An executive of the Company since 2007, she has extensive knowledge on CDL Group’s financial and operation matters, both domestically and overseas, covering the Group’s operations in property development, investment properties and hotels.

Ms Yiong has strong technical competencies, specialising in the real estate sector, harnessed through 12 years of audit experience. Prior to joining CDL, she served a 10-year stint in KPMG Singapore and a two-year engagement with Ernst & Young Singapore.

Ms Yiong holds a Bachelor of Accountancy degree from Nanyang Technological University and is a member of the Institute of Singapore Chartered Accountants.

Divya Balji is Team Leader of Equities & Equity Markets Asia, Bloomberg LP, managing a team of over 20 equities reporters and editors and oversee coverage for the Asia Pacific region including Australia, Hong Kong, Indonesia, Singapore, Malaysia, the Philippines, Vietnam, Thailand, India, Japan, South Korea.

Organisers

The Diversity Action Committee (DAC) is a 18-member Committee comprising corporate leaders and professionals from the business, people and public sectors, formed to address the under-representation of women on boards of companies in Singapore. Mr Loh Boon Chye, CEO of SGX, is the current Chairman.

The DAC announced a triple-tier target of 20% by 2020, 25% by 2025 and 30% by 2030 for SGX-listed companies in April 2017. Larger companies are called to take the lead and create a momentum of change. For more information about DAC, visit www.diversityaction.sg.

BlackRock helps investors build better financial futures. As a fiduciary to our clients, we provide the investment and technology solutions they need when planning for their most important goals. As of June 30, 2018, the firm managed approximately $6.3 trillion in assets on behalf of investors worldwide. For additional information on BlackRock, please visit www.blackrock.com.

Singapore Exchange (SGX) is Asia’s leading and trusted market infrastructure, operating equity, fixed income and derivatives markets to the highest regulatory standards. As Asia’s most international, multi-asset exchange, SGX provides listing, trading, clearing, settlement, depository and data services, with about 40% of listed companies and 75% of listed bonds originating outside of Singapore.

SGX is the world’s most liquid offshore market for the benchmark equity indices of China, India, Japan and ASEAN and offers commodities and currency derivatives products. Headquartered in AAA-rated Singapore, SGX is globally recognised for its risk management and clearing capabilities. For more information, please visit www.sgx.com.