Driving a sustainable corporate sector

This year’s winners of The Edge Singapore’s

Billion Dollar Club (BDC) and Centurion Club awards have performed admirably despite the uncertain economic outlook and market volatility.

The Company of the Year, Venture Corp, recorded robust shareholder returns as well as earnings because it had diversified its range of services and customer base.

Meanwhile SATS, which won most of the awards in the services sector, had the highest profit after tax growth, as well as return to shareholders in the three years under evaluation. This is because of its transformation from an airline caterer and baggage handler at Changi Airport into a global logistics and food services provider.

In recognition of the smaller companies that have also made significant contributions to the market, we launched The Edge Singapore Centurion Club awards. The inaugural winners in the eight sector groups include household names such as luxury watch retailer and wholesaler Cortina Holdings and pawnbroker ValueMax Group.

As investors, particularly institutional ones, no

longer look at the financial performance of companies in isolation, The Edge Singapore has also incorporated environmental, social and governance (ESG) factors into the evaluation of this year’s crop of companies for the BDC awards.

The ESG component is in addition to the metrics of three-year annualised return to shareholders; three-year annualised net profit growth; and three-year weighted return on equity.

The ESG component had a 30% weightage on the overall scoring of the companies shortlisted for the award. The scores for the companies mirror the Singapore Exchange’s iEdge SG ESG Transparency Index, which comprises SGX companies that are assessed and scored by Sustainalytics on an annual basis. The companies are weighted based on their free-float market capitalisation and ESG scores relative to their peer groups in the Asia-Pacific region. Companies that want to be included in the index must have a free float of at least 20%, while those already on the index must have a free float of 15%. Companies are also assessed based on liquidity, median daily traded value, median free-float market capitalisation and daily traded velocity.

As part of its screening, Sustainalytics also scores companies based on their involvement in major controversies, and companies that are involved in such controversies will be removed from the index. The consultancy says its assessment is based on the risk exposure that will have financial material impact on the companies and how well the companies manage the risks. It takes into account both industry risks and management issues. Material issues may include factors such as business ethics, human capital and data security.

We have highlighted the three companies that have scored well according to Sustainalytics’ metrics. The top scorer City Developments is part of a dozen global sustainability indices. It is the first real estate developer in Singapore to carry out a thorough climate risk scenario study. The excercise aims to make its business and buildings more resilient, and hence help mitigate potential financial losses resulting from extreme weather events and rising temperatures in the future. CDL conducted the study last year. Phase 1, which has been completed, covers its core business operations in Singapore and selected key markets.

For details on the awards’ methodology, please refer to http://bdc.theedgesingapore.com/ #methodology E