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Times 9 Oct 07
Singapore firms should also think green
AS stakeholders increasingly demand more than financial returns, the time has come for Singapore companies to give greater importance to sustainable development. While climate change is increasingly a major concern all over the world, it appears still that corporates here have been slow to catch on.
Singapore companies did not rank highly in a recent survey of regional countries by the Asian Corporate Governance Association (ACGA). ACGA's Clean & Green (C&G) Survey, which was conducted together with CLSA Asia-Pacific Markets, covered 582 companies across the region.
Among the companies which scored well on the C&G criteria were those from Japan, Taiwan and Korea. Indonesia came in last out of 11 Asian countries. Singapore ranked seventh, after Hong Kong.
The survey results are not too surprising. While the issue of climate change is a pressing one, the response from companies is often coloured by what stakeholders demand of them. And traditionally, companies here have been judged mainly on the strength of their financial performance.
The situation, however, is shifting quickly, and if Singapore companies do not wish to be left behind by investors, customers and indeed, prospective employees, then they will have to put climate change and sustainable development further up on their list of priorities.
There is evidence of a new breed of investors, for instance - including some major institutional investors - who will invest only in 'ethical stocks' and avoid companies that are not socially responsible. There is also a new generation of employees who will shun working for companies that do not care about the environment.
And increasingly, there are customers who will take their business elsewhere than deal with companies that are not 'green'. Being environmentally responsible is increasingly viewed as a vital component of broader good corporate governance.
Indeed, observations from CEOs in PricewaterhouseCoopers' (PwC) 10th Annual CEO Survey released earlier this year have already showed up this trend. CEOs told PwC that while strong corporate governance and regulatory compliance as well as growing the business and creating shareholder value typically top their agenda, they are increasingly witnessing Asia and Singapore-based stakeholders demanding more than financial returns.
Companies are now expected to be socially responsible, and to care about sustainable development. They are now being held to higher standards of corporate behaviour.
So far, the companies that have paid the most attention to sustainable development have come from sectors such as petrochemicals, automotive, and power and gas, where there is already pressure from customers for environmentally responsible operations.
But pressure should not be the motivation for all Singapore companies to embrace sustainable development. Ultimately, it will also be good for the companies themselves, including for their financial performance.
Related articles on Singapore: general environmental issues
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