Governance

Sembcorp maintains an effective governance and decision-making structure that embeds responsible business practices within the organisation. We are committed to fostering an ethical culture and conducting our businesses with integrity. We recognise the importance of the effective identification of risks, and work hard to ensure we have an adequate and effective risk management and internal control system.

Why this is material
Well-defined corporate governance structures, practices and processes are essential to enhancing corporate accountability and long-term sustainability to preserve and maximise shareholder value.

Our approach
We comply with the principles and guidelines set out in the Singapore Code of Corporate Governance 2018 issued by the Monetary Authority of Singapore, and our corporate governance practices are set out in the Corporate Governance Statement of the annual report. Sembcorp’s Board of Directors are collectively responsible for the long-term success of the company. To facilitate the effective execution of both our internal processes and business needs, we have in place a clearly defined organisational structure which includes detailed roles and responsibilities for key appointment holders. This is further supported by an established matrix for the delegation of authority and financial authority limits, which has been approved by the board.

Why this is material
Responsible business conduct ensures the long-term viability of our businesses by building trust and confidence with our stakeholders. Our businesses operate in highly regulated environments where non-compliance may subject us to statutory and regulatory fines or sanctions, and could result in the loss of our licence to operate.

Our approach
We are committed to high standards of behaviour and integrity in everything we do and expect the same from those whom we do business with.

We seek to ensure that we comply with all legal and statutory requirements, and have zero tolerance for fraud, bribery and corruption.

Ethical business and compliance falls under the oversight of our general counsel, supported by the Group Ethics and Compliance department. Ethics and compliance matters are reported quarterly to the senior leadership council. The Group Integrated Audit (GIA) department provides independent assurance to the senior leadership council and the board’s Audit Committee on the reliability, adequacy and effectiveness of our system of internal controls, risk management, governance framework and processes. All employees are required to comply with the principles and requirements of our Code of Conduct. Bonus payments for most employees are tied to the completion of mandatory compliance training.

Why this is material
The global energy transition has led to significant risks and business model disruptions. As a diverse company with a presence in multiple markets, we are exposed to risks including financial, operational, compliance and information technology threats.

Our approach
We have an overall risk management strategy, as set in place by our board of directors and supported by the board’s Risk Committee and Audit Committee. Oversight of risk management within the Group’s listed entities lies with their respective boards. The Risk Committee reviews and enhances the effectiveness of the Group’s risk management plans, systems, processes and procedures. It also regularly reviews group-wide risks including significant risk exposure relating to operational risks, foreign exchange rates, commodity prices and major investment projects as well as corresponding risk mitigation plans. HSSE policies, guidelines and limits are also regularly reviewed.

Risk Appetite Framework
The board has determined a risk appetite framework which guides the board and management in the execution of our strategy and objectives. Under this framework, the board has approved risk appetite statements with respect to economic, environmental, social and governance areas in line with our material issues for the management and reporting of our overall sustainability performance.

Enterprise Risk Management
The Group is committed to ensuring that an effective and practical enterprise risk management (ERM) framework is in place. Our framework aims to safeguard our people and assets, protect shareholders’ interests, facilitate informed decision-making for value creation and ultimately enhance our brand and reputation. In designing our ERM framework, the Group has adapted and made reference to various industry risk management standards, such as ISO31000 and the Enterprise Risk Management – Integrated Framework of the Committee of Sponsoring Organizations of the Treadway Commission.

For details of our risk appetite framework and enterprise risk management, please refer to the Risk Management section of our Sustainability Report.

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