Accreditation framework launched for company directors to raise competencies
By CHOR KHIENG YUIT
The Straits Times, 28 July 2023
SINGAPORE – Company directors can apply for accreditation from January 2024, in a move to raise the standards and competencies of those who sit on company boards.
The accreditation framework for board directors was launched by the Singapore Institute of Directors (SID) on Friday at its 25th anniversary event.
SID also launched the Governance for Good Alliance, which brings together more than 100 key stakeholders, such as the Singapore Exchange (SGX Group), to champion good governance within the directorship community.
Speaking at the event, Deputy Prime Minister Lawrence Wong, who was the guest of honour, said the accreditation framework will give directors greater clarity on the competencies they should develop, and provide a common standard for companies to make decisions on board appointments.
The framework identifies eight areas of competence that directors have to exhibit in the boardroom: governance; director duties and practice; financial skill sets; risk management; strategy development; digital skill sets; human capital; and sustainability fundamentals.
SID said directors will have to take a suite of core modules to acquire the knowledge, skills and attributes in the eight competencies. They are also encouraged to take additional courses to acquire knowledge in a particular sector or organisation type. SID will then assess the candidates and award the accreditation.
Qualified directors will be able to add “Accredited Director” to their credentials. If they have more than five years of directorship experience, they can be called “Senior Accredited Director”.
SID developed the framework with inputs from SID members, who are researchers, academics, experienced directors and corporate governance experts.
The framework was endorsed by the SID governing council and reviewed and supported by third parties, including the Singapore Exchange Regulation (SGX RegCo), the Accounting and Corporate Regulatory Authority (Acra) and the Charities Unit.
In her welcome address, SID governing council chairman Wong Su-Yen said the institute wants to professionalise directorship by helping all directors bring a holistic set of skills and behaviour to the organisations that they helm.
She added that the role of the director has “never been more demanding, yet never more critical” in a world of increasing complexity and volatility.
She cited rapid technological advancements, climate change, geopolitical tensions and changes in workforce dynamics as some challenges that directors must navigate, whether they serve on the board of a listed company, a family business, a start-up or a charity.
Mr Wong, who is also Finance Minister, highlighted three areas that boards and directors should think about and have competencies in, so they can provide guidance to their management teams.
First, boards and directors should consider how they can harness the full potential of technology and better manage its risks, such as service outages and cyber attacks, he said.
The second area that boards can pay attention to and steer their management teams towards is the shift to net-zero emissions and carbon neutrality, he added.
Companies need to be aware of their own carbon footprint, have green transition plans and take sustainability reporting seriously.
If companies fail to do these, Mr Wong said they may find it increasingly harder to get financing from the banks.
The third area for companies and their directors to focus on is investment in their workers.
Mr Wong said: “See employees as drivers of profitability and growth. Create more meaning, purpose and dignity in their jobs and find opportunities for employees to get involved in causes beyond the company itself.” He added that “it is not just a mindset of ruthlessly cutting down costs and minimising investments in employees”.
Managing and navigating these changes will not be easy. To deal with them effectively, Mr Wong said all companies should think about their board compositions, and how they can get the right mix of skills, experience and perspectives.
“We need directors who can ask the right questions, with the relevant capabilities to challenge existing business models, and ultimately, hold the company’s management accountable for results,” he said.
To help businesses transform for the future, Mr Wong also pointed out that companies, industry associations and the Government will need to work together and collaborate.
SID’s Governance for Good Alliance aims to foster a vibrant, diverse and robust directorship community through mentoring, networking opportunities and consultations with regulators.
The alliance comprises more than 100 founding partners, including regulators, government agencies, professional services firms, trade associations, institutes of higher learning and other institutions in the directorship or governance space.
SGX Group, one of the partners in the alliance, has been working with SID over the past 25 years to promote corporate governance.
SGX Group chief executive Loh Boon Chye said good corporate governance is the bedrock of his company’s activities in building and maintaining a thriving market ecosystem.
With strong governance processes in place, investors are assured that their interests will be protected, Mr Loh said, adding that they also help to maintain investors’ trust in issuers that are listed on the exchange.
“Good governance is the compass that guides us. It instils a culture of integrity, transparency and accountability. It safeguards the interests of all stakeholders and ensures that organisations deliver value to all stakeholders and society at large,” said SID’s Ms Wong.
“As directors, our responsibility is not just about doing things right but, more importantly, ensuring that we are doing the right things for our organisations and for society.”