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
We define corporate governance as the structures, practices and processes in place by which our organisation is controlled, operated, directed and accountable for. Well-defined corporate governance processes are essential to enhancing corporate accountability and long-term sustainability to preserve and maximise shareholder value.
Our approach
Sembcorp is led by an effective board. The board is collectively responsible for providing overall strategic direction and ensuring the long-term success of the Group. Several board committees have been established with clear terms of reference, both to assist the board in fulfilling its responsibilities and to provide independent oversight of management. Our Board Diversity Policy sets out principles to maintain diversity on the board’s composition. In 2019, 82% were independent non-executive directors.
We comply with the principles and guidelines set out in the new 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 in our annual report.
We are in the midst of transitioning from our GAF to an IAF to provide a more holistic and robust basis of assurance for the adequacy and effectiveness of our risk management and internal control system. The process identifies risk from strategic top-down and bottom-up perspectives from each key market, putting greater emphasis on the three LOD model.
a. First LOD
Key markets and business units are required to regularly review their risk and internal control environment to ensure that they operate within the prescribed risk appetite. This is done through a combination of detailed risk and control registers and review processes, established escalation procedures and well-defined consequence management. In addition, a rigorous management attestation process, the Management Control Assessment (MCA), is submitted quarterly by each market and business unit to provide the assurance that its risk management and internal control system is adequate and effective.
b. Second LOD
The second LOD sets the policies, standards and standard operating procedures that the markets and business units are required to adopt. Additionally, submissions and responses from the MCA are further validated through substantive review by the business lines, subject matter experts and corporate functions as an added layer of assurance.
c. Third LOD
Group Integrated Audit (GIA) provides independent assurance across financial, operational, compliance and IT risks through a series of walkthroughs and substantive testing. Management works closely with GIA in closing out all material issues and gaps in a timely manner to ensure that there is continual improvement to our risk and controls environment as well as an effective feedback loop to the first and second LODs. External audit considers internal controls relevant to the preparation of financial statements to ensure they give a true and fair view.
