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 (including its subsidiaries) is committed to upholding the highest standard of corporate governance, 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 and its Singapore listed REITs, joined the Securities Investors Association (Singapore) (SIAS) and its partners in making the following public Statement of Support:
“As an Organisation, 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 eighth Singapore Corporate Governance Week (organised by the SIAS) in September 2017 where business leaders, academics and policy makers shared corporate governance perspectives and experiences.
CapitaLand continued to receive accolades from the investment community for excellence in corporate governance. It was accorded the Golden Circle Award as the overall winner for the Singapore Corporate Governance Award at the SIAS 18th Investors’ Choice Awards. It topped the Singapore Corporate Governance Award for Big Cap and Real Estate categories. It was also a winner of the inaugural Sustainability Award and Shareholder Communication Excellence Award.
CapitaLand was ranked second out of 606 companies in the Singapore Governance and Transparency Index 2017. This annual study was conducted by the National University of Singapore Business School’s Centre for Governance, Institutions and Organisations.
For detailed disclosure on the application of its corporate governance practices with reference to the Code, please refer to the Corporate Governance Report on page 28-59 in CapitaLand Limited Annual Report 2017. Where there are deviations from any of the guidelines of the Code, an explanation has been provided within the Annual Report. In addition, the company has included its answers to the questions in the Disclosure Guide provided by the Singapore Exchange Securities Trading Limited (SGX-ST) on page 51-59 of the Annual 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-executive Directors. For more information, please refer to the CapitaLand Limited Annual Report 2017, page 30-32.
The current Board has diversity of skills and knowledge, experience, educational background, ethnicity and gender. Each Director brings to the Board skills, experience, insights and sound judgement which, together with his or her strategic networking relationships, serve to further the interests of the Group. In 2017, three new independent Directors joined the board bringing with them extensive and diverse experience. For more information, please refer to CapitaLand Limited Annual Report 2017, page 14-20.
Each year, the Nominating Committee undertakes a process to evaluate the effectiveness of the Board as a whole and the Board Committees. An external consultant is engaged to facilitate the evaluation process for the Board’s performance in FY 2017. The consultant is independent of and is not related to the company or any of its Directors. As part of the process, questionnaires are sent by the consultant to the Directors and Management and interviews are conducted where required. The objective of the interviews is to seek clarifications to the feedback obtained from the responses in the questionnaires, during which broader questions might also be 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 (P&GCEO) performance and succession planning, Director development and management, and managing risk and adversity. The findings and the recommendations of the consultant which include benchmarking information and best practices of other boards, are considered by the Board and follow up action is taken where necessary.
In respect of individual Directors, a 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 and accessible by all staff. The policies CapitaLand has implemented aim to help detect and prevent occupational fraud in three main ways:
First, the Group offers fair compensation packages, based on practices of pay-for-performance and promotion based on merit, to its staff. The Group also provides various healthcare subsidies and financial assistance schemes to alleviate the common financial pressures its staff 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 staff on good business conduct and ethical values.
Managing Risk of Bribery and Corruption
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 or concessionary offers, all staff 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 staff 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 this policy, the Group requires that certain agreements with third-party service providers and vendors incorporate anti-bribery and anti-corruption provisions.
A whistle-blowing policy and other procedures are in place to provide the Group’s staff and external 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. It also allows for the independent investigation of any reported incidents and appropriate actions for follow up. The objective of the whistle-blowing policy is to encourage the reporting of such matters – that staff 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 furthest 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 and shared with the Risk Champions regularly. Operationally, risk champions from the different Strategic Business Units (SBUs) and corporate functions, as well as various specialist support functions, are tasked to develop, implement and monitor risk management policies, methodologies and procedures in their respective areas. Actions taken may include the termination of staff contract, and/or reporting to the appropriate external authorities. In 2017, there were 17 BMI cases substantiated and the appropriate actions were taken. None of the cases were pertaining to anti-competitive or money laundering behaviour.
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 staff which applies the recommendations based on best practices in the Listing Manual. It issued guidelines to Directors and staff 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 staff of the Group to inform them of the duration of the period.
Directors and staff 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 staff. As and when appropriate, they would be issued an advisory to refrain from dealing in the relevant securities. Under the policy, Directors and staff 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 the ethical marketing of its products and services, including the marketing of residential projects, commercial leasing or serviced residence 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 has updated its communications/ marketing Code of Conduct and shared it with the 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’ presentations 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 such as “CapitaDNA: Strengthening Core Values”, where specific examples and applications of the company’s core values in the workplace are shared. As the majority of CapitaLand staff are based in China, this training module is also offered there. In 2017, more than 50 new staff from Singapore and other countries participated in CIP. More than 1,400 staff attended the CapitaDNA courses in Singapore, China, Malaysia and Vietnam. In addition, over 580 staff clocked in over 2,100 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 is adapted from the ISO 31000 International Risk Management Standards. It also takes reference from the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control-Integrated Framework and other relevant best practices and guidelines. It sets out the required environmental and organisational components which enable the Group to manage risks in an integrated, systematic and consistent manner. The ERM Framework and related risk management policies are reviewed annually and previously validated by external consultants.
A robust 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 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 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. With increased reliance on Information Technology (IT) as a business enabler, CapitaLand has in place Group-wide policies and procedures which set out the governance and controls of IT risks, including cyber-risks. Appropriate measures are in place to ensure the confidentiality, integrity, and availability of CapitaLand’s information assets. This includes implementing access controls, building up data security, raising staff’s IT security awareness through activities such as phishing campaigns, and conducting IT disaster recovery exercise annually to ensure business recovery objectives are met.
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 by conducting regular workshops targeted at different levels and functions, and to promote a culture of risk awareness which embeds risk management principles in decision making and business processes.
Sustainability risks identified include fraud, corruption and bribery risk, environmental risk, health and safety 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 P&GCEO and the Group CFO, the Board concurs with the recommendation of the Audit Committee and Risk Committee and is of the opinion that the system of risk management and internal controls within the Group is adequate and effectively addresses the financial, operational, compliance and IT risks which the company considers relevant and material to its current business environment as at 31 December 2017.
For more information regarding Risk Assessment and Management in CapitaLand, please refer to the CapitaLand Limited Annual Report 2017, page 60-63.
| 1 | CapitaLand has set four Global Principles on Ethical Business Conduct which are implemented globally across all strategic business units, covering the areas of marketing of products and services, offering of business courtesies, accepting business courtesies and managing business relationships. It reiterates key areas for ethical business conduct. |
| 2 | Progressively being rolled out from end 2017. |