Organisational Capital
CapitaLand strived, where applicable, to align its policies and practices to regional and international standards, surveys or indices including:
- ISO 14001 – Environmental Management
- OHSAS 18001 – Occupational Health and Safety Management
- ISO 26000 – Guidance on Social Responsibility
- Dow Jones Sustainability Indices (DJSI)
- Global Real Estate Sustainability Benchmark (GRESB)
- Carbon Disclosure Project (CDP)
- FTSE4Good Index Series
Corporate Governance
CapitaLand observes a high standard of corporate conduct, integral to ensuring the sustainability of the Group’s business as well as safeguarding shareholders’ interests and maximising long-term shareholder value. This is in line with the Principles of the Code of Corporate Governance 2012.
To demonstrate its commitment in upholding the highest standards of corporate governance, CapitaLand joined the Securities Investors Association (Singapore) (SIAS) and its partners in making the following public Statement of Support:
“As a Company, we are committed to upholding high standards of corporate governance to enhance shareholder value. We believe, practising good corporate governance is central to the health and stability of our financial markets and economy.”
CapitaLand was the Platinum Sponsor at the seventh Singapore Corporate Governance Week (organised by the SIAS) in September 2016 where business leaders, academics and policy makers shared corporate governance perspectives and experiences.
CapitaLand has received accolades from the investment community for excellence in corporate governance including winning the new Diversity category and runner up in the Big Cap category for Corporate Governance.
CapitaLand was ranked fourth out of 631 companies in the Singapore Governance and Transparency Index 2016.
This annual study was conducted by the NUS Business School’s Centre for Governance, Institutions and Organisations. More details can be
found in the Awards & Accolades section on page 58-62 of the CapitaLand Limited
Annual Report 2016.
For detailed disclosure on the application of its corporate governance practices with reference to the Code, please refer to the Corporate Governance Report page 24-51 in CapitaLand Limited Annual Report 2016. Where there are deviations from the principles and guidelines of the Code, an explanation has been provided within the Report.
Board Independence, Diversity and Performance
All board committees are chaired by independent non-executive Directors. The Audit Committee, Executive Resource and Compensation Committee, Nominating Committee and Risk Committee comprise only independent non Directors. For more information, please refer to the CapitaLand Limited Annual Report 2016, page 26-27.
The current CapitaLand Board comprises individuals who are business leaders and professionals with financial, banking, real estate, legal, investment and accounting backgrounds. The Board also considers gender as an important aspect of diversity alongside factors such as the age, ethnicity and educational background of its members, as it believes that diversity in the Board’s composition contributes to the quality of its decision making. For more information, please refer to CapitaLand Limited Annual Report 2016, page 27-28.
Each year, the Nominating Committee (NC) undertakes a process to evaluate the effectiveness of the Board as a whole and the Board Committees. An external consultant was engaged to facilitate the evaluation process for the Board’s performance in FY 2016. The consultant is independent of and is not related to the Company or any of its Directors. As part of the process, questionnaires were sent by the consultant to the Directors and Management and the findings were evaluated by the consultant and reported, together with the recommendations of the consultant, to the Chairman of the Board (also Chairman of the NC). One-on-one interviews were also conducted. The interviews focused on seeking clarifications to the feedback obtained from the responses in the questionnaires, and broader questions were also raised to help validate certain survey findings. The evaluation categories covered in the questionnaire included Board composition, information management, Board processes, corporate integrity and social responsibility, managing company performance, strategy review, Board Committee effectiveness, President &Group CEO performance and succession planning, Director development and management, and managing risk and adversity. The Board has considered and followed up with the findings and recommendations of the consultant. In respect of individual Directors, formal evaluation is carried out by the NC as and when a Director is due for retirement by rotation and is seeking reelection.
Code of Business Conduct
The Group adheres to an ethics and code of business conduct policy which deals with issues such as confidentiality, conduct and work discipline, corporate gifts and concessionary offers. Clear policies and guidelines on how to handle workplace harassment and grievances are also in place.
The detailed policies and guidelines are published on the Group’s intranet (iHub) and accessible by all staff. The policies CapitaLand has implemented aim to help detect and prevent occupational fraud mainly in three ways.
First, the Group offers fair compensation packages, based on practices of pay-for-performance and promotion based on merit, to its employees. The Group also provides various healthcare subsidies and financial assistance schemes to alleviate the common financial pressures its employees face.
Second, clearly documented policies and work procedures incorporate internal controls which ensure that adequate checks and balances are in place. Periodic audits are also conducted to evaluate the efficacy of these internal controls.
Finally, the Group seeks to build and maintain the right organisational culture through its core values, educating its employees on good business conduct and ethics.
Managing Risk of Bribery and Corruption
CapitaLand Global Principles on Ethical Business Conduct
In pursuance of the Anti-Corruption Policy, CapitaLand has set four Global Principles on Ethical Business Conduct which are implemented globally across all strategic business units.
Bribery and Corruption Prevention Policy
The Group adopts a strong stance against bribery and corruption. In addition to clear guidelines and procedures for the giving and receipt of corporate gifts and concessionary offers, all employees of the Group are required to make a declaration on an annual basis when they pledge to uphold the core values and not to engage in any corrupt or unethical practices. This serves as a reminder to all employees to maintain the highest standards of integrity in their work and business dealings.
The Group’s zero-tolerance policy against bribery and corruption extends to its business dealings with third-party service providers and vendors. Pursuant to such a policy, the Group requires that certain of its agreements with third party service providers and vendors incorporate anti-bribery and anti-corruption provisions.
A whistle-blowing policy and other procedures are put in place to provide the Group’s employees and parties who have dealings with the Group with well-defined, accessible and trusted channels to report suspected fraud, corruption, dishonest practices or other improprieties in the workplace, and for the independent investigation of any reported incidents and appropriate follow-up action. The objective of the whistle-blowing policy is to encourage the reporting of such matters – that employees or external parties making any reports in good faith will be able to do so with confidence that they will be treated fairly, and to the extent possible, be protected from reprisal.
This is reinforced by the Group Policy and Procedure on Business Malpractice Incidents (BMIs) Reporting that facilitates line/functional managers to swiftly report any BMI discovered in their workplace or in the course of their work directly to their CEOs.
Substantiated BMI cases are reported quarterly to the CapitaLand Audit Committee meetings and shared with the Risk Champions regularly. Actions taken could include the termination of staff contract, and /or reporting to the appropriate external authorities. In 2016, there were 4 BMI cases substantiated and the appropriate actions were taken. None of the cases were pertaining to anti-competitive or money laundering behavior.
CapitaLand made no payment/donations to politicians or political parties as it expects its projects to be judged on their merits.
Dealings in Securities
CapitaLand has adopted a securities dealing policy for the Group’s officers and employees which applies the best practices recommendations in the Listing Manual. It has issued guidelines to Directors and employees in the Group, which sets out prohibitions against dealings in the Company’s securities (i) while in possession of material unpublished price-sensitive information, (ii) during the two weeks immediately preceding, and up to the time of the announcement of, the Company’s results for each of the first three quarters of its financial year and, (iii) during the one month preceding, and up to the time of announcement of, the Company’s results for the full financial year. Prior to the commencement of each relevant period, an email would be sent out to all Directors and employees of the Group to inform them of the duration of the period.
Directors and employees of the Group are also prohibited from dealing in securities of the company and other relevant listed entities in the Group if they are in possession of unpublished price-sensitive information of the company and other listed entities by virtue of their status as Directors and/or employees. As and when appropriate, they would be issued an advisory to refrain from dealing in the relevant securities. Under the policy, Directors and employees are also discouraged from trading on short-term or speculative considerations. They are also prohibited from using any information with respect to other companies or entities obtained in the course of their employment in connection with securities transactions of such companies or entities.
Other Ethical Management Issues
CapitaLand is committed to best practices and complies with the relevant legislations and requirements.
CapitaLand supports ethical marketing of its products and services, including the marketing of residential projects, commercial leasing or serviced apartment sales. As such, we adhere to the Singapore Code of Advertising Practice (SCAP) and any other rules and regulations that apply. The SCAP was formulated against the background of national law, international law and practice, including the International Code of Advertising Practice published by the International Chamber of Commerce.
CapitaLand is looking into updating its communications/ marketing Code of Conduct and will communicate to communications and marketing heads of department.
CapitaLand ensures that timely and accurate information is disseminated in the markets that it operates. This is particularly important in our residential developments where marketing collaterals and ‘show flats’ presentation are done as accurately as possible to avoid misleading potential homebuyers. In Singapore, CapitaLand adheres to the Urban Redevelopment Authority’s housing developers rules. Shopping mall and office building marketing activities, such as advertisements and promotions (A&P), are generally guided by external A&P consultants where CapitaLand stipulates they ensure compliance to local marketing requirements.
Training
CapitaLand implemented initiatives to ensure that all staff understand the Group’s core values and principles that shape the way the Group works and functions. This is a compulsory module in the CapitaLand Immersion Programme (CIP) for new staff from various countries. For existing staff, there are dedicated training courses in Singapore on “CapitaDNA: Strengthening Core Values” where specific examples and applications of core values in the workplace are shared. As the majority of CapitaLand staff are based in China, this training module has been offered there. In 2016, more than 120 new staff from Singapore, China and other countries participated in CIP. More than 1,500 staff attended the CapitaDNA courses in Singapore, China, Malaysia and Vietnam. In addition, close to 120 staff clocked in over 880 hours of training pertaining to ethics and code of conduct such as preventing and detecting money laundering, profiling and investigation techniques.
Enterprise Risk Management (ERM)
Risk management is an integral part of CapitaLand’s business at both the strategic and operational levels. A proactive approach towards risk management supports the attainment of CapitaLand’s business objective and corporate strategy of ONE CapitaLand, thereby creating and preserving value.
CapitaLand recognises that risk management is just as much about opportunities as it is about threats. To capitalise on opportunities, the company has to take measured risks. Therefore, risk management is not about pursuing risk minimisation as a goal, but rather optimising the risk-reward relationship within known and agreed risk appetite levels. CapitaLand takes risks in a prudent manner for justifiable business reasons. Its Board of Directors is responsible for the governance of risk across the Group.
CapitaLand’s ERM Framework sets out the required environmental and organisational components which enable the company to manage risks in an integrated, systematic and consistent manner. The ERM Framework and related risk management policies are reviewed annually and was previously validated by external ERM consultants.
An effective internal control system and an independent review and audit process are the twin pillars that underpin the Group’s ERM Framework. While the line management is responsible for the design and implementation of effective internal controls using a risk-based approach, the Internal Audit function reviews such design and implementation to provide reasonable assurance to the Audit Committee on the adequacy and effectiveness of the internal control system.
Annually, the Risk Assessment Group (RAG) facilitates and coordinates the Group-wide Risk and Control Self-Assessment (RCSA) exercise that requires business and corporate executive leaders to proactively identify, assess and document material risks as well as the corresponding key controls and mitigating measures needed to address them. Material risks and their associated controls are consolidated and reviewed at the Group level before they are presented to the Risk Committee, Audit Committee and the CapitaLand Board.
Awareness of and preparedness for potential risks affecting its business continuity help CapitaLand minimise the impact of disruption to its business operations. CapitaLand has a Business Continuity Management Policy to guide the business units in the implementation of business continuity plans. Periodic exercises were conducted and results recorded and continual improvements made. The Information Technology team has a disaster recovery strategy which it tests and reviews annually.
CapitaLand believes that having the right risk culture and people with the right attitude, values and knowledge are fundamental to the Group’s success. Therefore, the RAG continues to proactively enhance risk management knowledge within the Group to promote a culture of risk awareness by conducting a survey.
Sustainability risks identified include fraud and corruption risk, environmental risk, health and safety risk and human capital risk.
Based on the ERM framework established and the reviews conducted by Management, both internal and external auditors, as well as the assurance from the President & Group CEO and the Group CFO, the Board concurs with the recommendation of the CapitaLand Audit Committee and Risk Committee and is of the opinion, that the Group’s system of risk management and internal controls addressing financial, operational, compliance and information technology risks is adequate and effective to meet the needs of the Group in its current business environment as at 31 December 2016.
For more information regarding Risk Assessment and Management in CapitaLand, please refer to the CapitaLand Limited Annual Report 2016, page 52-54.