Singapore Updates Investor Stewardship Principles

Enhanced practices emphasise the need to integrate ESG considerations into investment decision-making and stewardship strategies.

Singapore’s Stewardship Asia Centre (SAC) has announced the release of a second edition of the Singapore Stewardship Principles (SSP) for Responsible Investors, updating practices to enhance Singapore’s investment environment.

SAC is a non-profit organisation established by Temasek. The revisions were driven by a ten-member steering committee supported by the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX).

Singapore first introduced the SSP in 2016, outlining practices related to the core behaviour and actions associated with stewardship to promote active and responsible investment.

The revisions to the SSP take into account capital market developments and the widely-expressed need for investors to become better stewards by demonstrating a genuine intent to deliver sustainable performance and long-term value to clients and beneficiaries, as well as to factor in ESG considerations.

The SAC’s steering committee drew from a March 2021 industry survey of asset managers’ perspectives on investment stewardship. An open consultation was also launched in November 2021 to obtain stakeholders’ feedback on a draft of the updated SSP.

The enhanced SSP includes changes to emphasise:

  • the identification of internal structures and governance of institutional investors, which promote a healthy culture, ensure adequate resourcing, and guide stewardship activities;
  • the application of stewardship to asset classes beyond listed equities, and explanations for investors of how stewardship responsibilities are discharged across all asset classes where possible;
  • the integration of ESG considerations into investment decision-making and stewardship practices, to account for the “material risks” these factors present to the value of investment assets; and
  • an outcomes-oriented approach to applying the SSP which demonstrates both the actions taken and outcomes achieved so that stakeholders can see the benefits of stewardship activities.

The SSP also emphasises regular monitoring of investments, staying active through constructive and purposeful engagement, and taking a collaborative approach in exercising stewardship responsibilities.

While compliance with the enhanced SSP remains voluntary, signatories are “strongly encouraged” to submit evidence of their stewardship efforts annually to the secretariat of the SAC’s steering committee.

The financial services and investment industry are urged to adopt the updated SSP and to “make a greater commitment towards responsible investment,” said SAC CEO Rajeev Peshawaria.

Welcoming the updated SSP, MAS Executive Director Abigail Ng noted that effective stewardship calls for a multi-stakeholder approach that includes asset owners, asset managers and service providers.

“Responsible investment stewardship can help raise corporate governance standards, drive positive change and create sustainable long-term value for all stakeholders – not just for the individual company or investor, but also for the wider economy, environment and society,” she said.

“This is in line with MAS’ efforts to promote sustainable financing in our financial sector. We strongly encourage market participants to become signatories of the SSP and to co-create sustainable business value in an environment of good governance.”

SGX RegCo CEO Boon Gin Tan likewise welcomed the revised SSP, saying it will help institutional investors to shape the practices of their portfolio companies.

“This is especially pertinent with the market’s increased focus on ESG considerations and outcomes,” he said. “With institutional investors engaging actively with companies, I hope SGX-listed companies will be more motivated towards creating and sustaining long term value.”

Industry participants including BlackRock, JP Morgan Asset Management, Prudential Singapore, and multi-family office Maitri Asset Management have also welcomed the updated SSP.

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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