PH’s top firms improving corporate governance
THE Philippines’ top corporations have raised the bar in corporate governance in the last three years, based on the latest annual regional scorecard.
Based on the 2014 Asian Development Bank country reports of the ASEAN (Association of Southeast Asian Nations) Corporate Governance Scorecard (ACGS), the average corporate governance scores of the top 100 publicly listed firms in the Philippines had risen to 67.02 points in 2014 from 48.91 points in 2012.
“The results demonstrate that our local PLCs (public listed companies) are continuously striving to improve the corporate governance culture of their organizations,” Institute of Corporate Directors (ICD) founder and chairman emeritus Dr. Jesus Estanislao said in a press statement on Thursday.
ICD is a non-stock, non-profit organization dedicated to the study and professionalization of Philippine corporate directorship. It is the domestic ranking body for the ACGS under the auspices of the Securities and Exchange Commission.
The SEC, together with other corporate regulators within the region, is part of the ASEAN Capital Markets Forum (ACMF). The ACGS is a project of the ACMF that is meant to contribute to the ASEAN integration effort beginning in 2015.
Among the five corporate governance categories, the most dramatic improvement in average scores on a year-on-year basis were in the following: role of the stakeholders” (from 2.8 points in 2012, 4.85 in 2013, to 5.48 in 2014); disclosure and transparency (from 13.6, 16.03, to 16.57 points); and responsibilities of the board (from 16.4, 19.71, to 24.41 points).
Average scores in all corporate governance categories improved including the slight increase for equitable treatment of shareholders (from 10.7, 11.06, to 11.17 points) and rights of shareholders (from 5.6, 5.5, to 6.79 points).
But despite the remarkable progress of the top PLCs as a sector, ICD sees “considerable” room for improvement in the country’s overall performance.
Including all 252 companies listed in the Philippine Stock Exchange, the country’s score has dipped from 53.8 points in 2012 to 51.1 points in 2013-2014.
“Part of the reason for the relatively low score of our PLCs is the lack of adequate disclosures compared to our counterparts in the South East Asian region,” Estanislao said.
The ADB report mentioned that the Philippines had fallen behind in this aspect due to lack of adequate disclosures, particularly on company websites as most companies fail to provide key information such as contact details, policies and procedures, to name a few.
“There is a perception that potential investors have difficulty navigating or searching for information on our PLCs mainly due to the variety of formats and content employed from company to company. We hope that these issues will be addressed soon,” said Estanislao.
An initiative by the ADB in partnership with the ASEAN Capital Markets Forum, ACGS assesses corporate governance performance of PLCs in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. It provides trend analysis to ascertain improving corporate governance standards in the South East Asian region.
A developmental tool for ASEAN PLCs, the ACGS may be used by companies and investors to gauge their adherence to governance best practices. To help Philippine PLCs adopt these best practices, the SEC has instituted several measures such as the “Annual Corporate Governance Report” and an aggressive ACGS information campaign with support from local and international institutions. ICD has likewise done its part by holding workshops for corporate secretaries and compliance officers on the details of the ACGS methodology.
“Therefore, as more companies gain a greater awareness of the corporate governance scorecard and its process, we hope their scores will improve over time,” Estanislao added.
Established in 1999, ICD seeks to raise the level of the country’s corporate governance policy and practice to world-class standards. The institute currently holds over 260 fellows, graduate members and associates who are leaders in business and civil society.
As part of its initiative, the ACGS intends to raise the corporate governance standards and practices of ASEAN PLCs, and to showcase top performing companies by increasing their visibility and appeal to global investors.
The first ACGS regional awards event, organized with the help of ICD, will be held on November 14 this year at the ADB headquarters.
