Exclusive | Governance, the G in ESG, is critical to businesses seeking capital to survive coronavirus crisis and US-China conflict

The pandemic and rising US-China tensions have thrown boardrooms into crisis mode – but rather than run and hide, directors should openly engage stakeholders in dialogue, says a panel of experts

Family-owned businesses lag behind on governance, says Credit Suisse report

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In recent years investors have been prodding companies to pay more attention to the environment, their social impact and governance, also known as ESG. Photo: Shutterstock

Published: 12:23pm, 3 Sep 2020Updated: 2:29pm, 19 May 2021

Companies that actively communicate with stakeholders, such as shareholders and employees, are more likely to survive and even emerge stronger from economic turmoil than those who run and hide from the unfolding crisis caused by the coronavirus pandemic and worsening US-China relations, according to a panel of governance experts.

Corporate-governance scandals have proliferated across the region as companies have fallen into financial difficulties and sought a quick way out, including Chinese Starbucks’ challenger Luckin Coffee that faked its financial accounts. Investors and creditors are making hard choices over which companies to back, and sound governance will be a deciding factor, the experts said.

“In such an environment, stakeholder engagement is clearly very important,” said Loh Boon Chye, CEO of Singapore Exchange, during a webinar this week organised by the South China Morning Post and independent think tank, the California-based Milken Institute.

Singapore Exchange’s CEO Loh, Boon Chye is pushing companies to communicate with shareholders during the coronavirus pandemic. Photo: Jonathan Wong

While regulators and stock exchanges are enabling companies to make electronic submissions and hold online shareholder meetings, Loh stressed that companies should not just be paying lip service to disclosure. “It’s about doing everything to allow shareholders [to ask] questions and answer them across multiple channels,” he said.

In recent years investors have been prodding companies to pay more attention to the environment, their social impact and governance, also known as ESG. This trend has created a sea change in how board members see their roles; just last year, 200 US chief executives renounced shareholder primacy in favour of taking a more balanced approach to their stakeholders.

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.css-sioo19{color:#c79a00;}Exclusive | Governance, the G in ESG, is critical to businesses seeking capital to survive coronavirus crisis and US-China conflict

Exclusive | Governance, the G in ESG, is critical to businesses seeking capital to survive coronavirus crisis and US-China conflict