Stewardship: Building on Asia’s Strength · 2018-05-31 · By Mr. S Dhanabalan Former Chairman,...

Stewardship Asia Centre

60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891

Stewardship: Building on Asia’s Strength24 June 2015

No part of this publication may be translated, reprinted or reproduced or utilised in any form either in whole or in part or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system, without prior permission in writing from the copyright owner.

The views expressed here are those of some participants involved in the discussion of the Stewardship Asia Roundtable and Forum 2015 and do not necessarily reflect the views of all participants or of Stewardship Asia Centre.

Copyright © 2015 Stewardship Asia Centre, a member of Temasek Management Services Group

02 Roundtable Welcome Address

04 Insights into Stewardship Practices at Temasek Holdings

05 Fundamentals of Stewardship

06 The Origins of Stewardship at State-owned Enterprises

07 Institutionalising Stewardship at Korea Investment Corporation

08 Key Points from an Engaging Discourse on Stewardship

12 Forum Welcome Address

14 Inspiring Stewardship

15 Fundamentals of Steward Leadership

16 Stewardship Where the State is a Shareholder

17 Stewardship from an Investment Perspective

18 The Challenges in Pursuing Stewardship

19 Closing Remarks

20 Inspiring Stewardship – an exclusive preprint edition

CONTENTS

01

The Stewardship Asia Roundtable brings together the region’s influential thinkers and leaders for a dynamic exchange of ideas on advocating sound stewardship and governance in their organisations and businesses. By invitation only, this exclusive platform will allow invited steward-leaders to mutually share best-in-class practices and experience in promoting stewardship and governance applications which will create wealth for stakeholders and benefit the larger community over the long term.

The Stewardship Asia Forum provides a high-level, mutual-learning and networking platform for business leaders across Asia from companies, organisations and institutions which are committed to sound stewardship and corporate governance. By invitation only, the participants would be from a spectrum of the stewardship landscape including owners, asset managers, board directors and senior management of corporations, family-owned businesses, institutional investors and state-owned enterprises.

ROUNDTABLE

FO

RU

M

About Stewardship Asia CentreStewardship Asia aims to foster effective stewardship and governance amongst businesses and leaders. Based in Singapore, it is a thought-leadership centre that collaborates with credible partners globally on capacity-building amongst organisations and business leaders in Asia. The Centre works with state-owned enterprises, corporations, family-owned businesses, institutional investors as well as non-profit organisations. Through its forum and knowledge platforms, the Centre promotes and propagates the sharing and mutual learning of concepts and practices that would make a difference to organisations in creating wealth and also contributing to the well-being of the larger community over the long term. We are committed on this journey with like-minded organisations and leaders to contribute to building businesses that can thrive and grow, and creating the landscape for good stewardship across Asia.

01

The Stewardship Asia Roundtable brings together the region’s influential thinkers and leaders for a dynamic exchange of ideas on advocating sound stewardship and governance in their organisations and businesses. By invitation only, this exclusive platform will allow invited steward-leaders to mutually share best-in-class practices and experience in promoting stewardship and governance applications which will create wealth for stakeholders and benefit the larger community over the long term.

The Stewardship Asia Forum provides a high-level, mutual-learning and networking platform for business leaders across Asia from companies, organisations and institutions which are committed to sound stewardship and corporate governance. By invitation only, the participants would be from a spectrum of the stewardship landscape including owners, asset managers, board directors and senior management of corporations, family-owned businesses, institutional investors and state-owned enterprises.

ROUNDTABLE

FO

RU

MAbout Stewardship Asia CentreStewardship Asia aims to foster effective stewardship and governance amongst businesses and leaders. Based in Singapore, it is a thought-leadership centre that collaborates with credible partners globally on capacity-building amongst organisations and business leaders in Asia. The Centre works with state-owned enterprises, corporations, family-owned businesses, institutional investors as well as non-profit organisations. Through its forum and knowledge platforms, the Centre promotes and propagates the sharing and mutual learning of concepts and practices that would make a difference to organisations in creating wealth and also contributing to the well-being of the larger community over the long term. We are committed on this journey with like-minded organisations and leaders to contribute to building businesses that can thrive and grow, and creating the landscape for good stewardship across Asia.

02 03

STEWARDSHIP ASIA ROUNDTABLE 2015 STEWARDSHIP ASIA ROUNDTABLE 2015

“The problem in stewardship is how to strike the right balance between the short-term and long-term considerations, and the right balance among the interests of the different stakeholders - shareholders, board, management, employees, partners, suppliers, customers, clients and also the community.”

ROUNDTABLEWELCOME ADDRESS

By Mr. S DhanabalanFormer Chairman, Temasek Holdings &

Member, Council of Presidential Advisers

Excerpts

Welcome to the Stewardship Asia Roundtable. This is the first gathering of its kind. We hope to grow over time to be a meaningful platform for mutual sharing and interaction among those who have a deep interest in this important subject of corporate stewardship.

This morning we are delighted to have among us a distinguished group of business leaders with different backgrounds and geographies. These persons around the table come from nine countries, across 10 industries. We have representation from state-owned companies, sovereign wealth funds, listed corporations, private companies, family businesses, asset-owners, asset managers, and governance practitioners. We can look forward to an enriching discussion as we exchange and share frankly our views, observations and experience of corporate governance with particular emphasis on stewardship.

Let me start by sharing a few personal thoughts about corporate stewardship. There are many aspects to stewardship. One aspect, which I think is important, is that of trusteeship. A trustee holds an asset on behalf of someone else, with a strong obligation to take good care of it and hand it over to the owner or to another trustee in a better shape than what he took over.

In the corporate world, the narrow view would see two parties as the only stakeholders - the shareholder and management. The shareholder as the owner and the management as trustee are the primary stakeholders, but they are not the only important stakeholders who determine the performance of a business and who have pecuniary interest in a corporation. In a narrow view of stakeholders, it would be considered proper for the management to focus entirely on maximising the return to shareholders. In this narrow view, the management is judged and rewarded according to the returns to the shareholders. When shareholders are transient, they tend to have an interest only in the daily share price in the stock market and have no real interest in the long-term

sustainability or the fundamental performance of the business. If you combine this with a management that focuses on the returns to shareholders and is incentivised by compensation based on this focus, it is a recipe for disaster. This was shown in the Global Financial Crisis of 2008 and it is a notorious example of this narrow focus. Investment bankers in the money centres did not see their client as a stakeholder whose interests they should look after, but as a cow to be milked to the maximum even if in the process the cow dies.

We all know that over time the share price of an organisation will reflect the real business performance. But most stock investors today do not have the patience to wait to see the share price reflecting the real performance. There have been cases of CEOs who have done an outstanding job of turning a business around but whose company shares prices have not immediately increased and therefore have been turned out. Most investments in the stock market today are very short term and these short-term investors now shape corporate governance. A good example is the decision of those who oversee corporate governance, imposing a Quarterly Financial Reporting requirement on listed companies. This requirement is primarily to meet the demands

of those who have a short-term horizon. This now shapes the behaviour and presentations of the financials of listed companies to the detriment of the long-term interests of the business.

It is good to note the widening definition of stakeholders. There is an increasing recognition of other stakeholders to include many others such as employees, customers, suppliers and the society as a whole. This widening of the definition of stakeholders is sometimes seen as an ethical issue with a strong dose of altruism, and not as fundamental to

a company’s performance. Owners and managers who see it this way think that they are doing the other stakeholders a favour when they do anything that benefits these other stakeholders. This leads to an approach to keep other stakeholders’ interests to the minimum because such wider considerations are seen to subtract from the owner’s and manager’s share of benefits accruing from a business. This mental attitude is at the bottom of many of the economic problems, which many nations now face. Not all managers see the other stakeholders, whether customers, employees, or suppliers as key players in the quality of the performance and fortunes of their enterprise.

The problem in stewardship is how to strike the right balance between the short-term and long-term considerations, and the right balance among the interests of the different stakeholders - shareholders, board, management, employees, partners, suppliers, customers, clients and also the community. To strike the right balance among contending and perhaps inherently conflicting forces is not easy. In some aspects, for example the short term versus the long term, we may have reached the point of no return and have to just live with the dominance of the short-term investors. Some have refused to accept this and have resorted to taking their companies private to escape the damage of the activism of short-term investors.

Part of the challenges in a discussion on stewardship relates to a lack of a common vocabulary of terms and a framework of reference. This is where Stewardship Asia as a thought leadership centre aims to contribute its effort towards building a conceptual framework and promoting a conversation on stewardship.

02 03


“The problem in stewardship is how to strike the right balance between the short-term and long-term considerations, and the right balance among the interests of the different stakeholders - shareholders, board, management, employees, partners, suppliers, customers, clients and also the community.”

ROUNDTABLEWELCOME ADDRESS

By Mr. S DhanabalanFormer Chairman, Temasek Holdings &

Member, Council of Presidential Advisers

Excerpts

Welcome to the Stewardship Asia Roundtable. This is the first gathering of its kind. We hope to grow over time to be a meaningful platform for mutual sharing and interaction among those who have a deep interest in this important subject of corporate stewardship.

This morning we are delighted to have among us a distinguished group of business leaders with different backgrounds and geographies. These persons around the table come from nine countries, across 10 industries. We have representation from state-owned companies, sovereign wealth funds, listed corporations, private companies, family businesses, asset-owners, asset managers, and governance practitioners. We can look forward to an enriching discussion as we exchange and share frankly our views, observations and experience of corporate governance with particular emphasis on stewardship.

Let me start by sharing a few personal thoughts about corporate stewardship. There are many aspects to stewardship. One aspect, which I think is important, is that of trusteeship. A trustee holds an asset on behalf of someone else, with a strong obligation to take good care of it and hand it over to the owner or to another trustee in a better shape than what he took over.

In the corporate world, the narrow view would see two parties as the only stakeholders - the shareholder and management. The shareholder as the owner and the management as trustee are the primary stakeholders, but they are not the only important stakeholders who determine the performance of a business and who have pecuniary interest in a corporation. In a narrow view of stakeholders, it would be considered proper for the management to focus entirely on maximising the return to shareholders. In this narrow view, the management is judged and rewarded according to the returns to the shareholders. When shareholders are transient, they tend to have an interest only in the daily share price in the stock market and have no real interest in the long-term

sustainability or the fundamental performance of the business. If you combine this with a management that focuses on the returns to shareholders and is incentivised by compensation based on this focus, it is a recipe for disaster. This was shown in the Global Financial Crisis of 2008 and it is a notorious example of this narrow focus. Investment bankers in the money centres did not see their client as a stakeholder whose interests they should look after, but as a cow to be milked to the maximum even if in the process the cow dies.

We all know that over time the share price of an organisation will reflect the real business performance. But most stock investors today do not have the patience to wait to see the share price reflecting the real performance. There have been cases of CEOs who have done an outstanding job of turning a business around but whose company shares prices have not immediately increased and therefore have been turned out. Most investments in the stock market today are very short term and these short-term investors now shape corporate governance. A good example is the decision of those who oversee corporate governance, imposing a Quarterly Financial Reporting requirement on listed companies. This requirement is primarily to meet the demands

of those who have a short-term horizon. This now shapes the behaviour and presentations of the financials of listed companies to the detriment of the long-term interests of the business.

It is good to note the widening definition of stakeholders. There is an increasing recognition of other stakeholders to include many others such as employees, customers, suppliers and the society as a whole. This widening of the definition of stakeholders is sometimes seen as an ethical issue with a strong dose of altruism, and not as fundamental to

a company’s performance. Owners and managers who see it this way think that they are doing the other stakeholders a favour when they do anything that benefits these other stakeholders. This leads to an approach to keep other stakeholders’ interests to the minimum because such wider considerations are seen to subtract from the owner’s and manager’s share of benefits accruing from a business. This mental attitude is at the bottom of many of the economic problems, which many nations now face. Not all managers see the other stakeholders, whether customers, employees, or suppliers as key players in the quality of the performance and fortunes of their enterprise.

The problem in stewardship is how to strike the right balance between the short-term and long-term considerations, and the right balance among the interests of the different stakeholders - shareholders, board, management, employees, partners, suppliers, customers, clients and also the community. To strike the right balance among contending and perhaps inherently conflicting forces is not easy. In some aspects, for example the short term versus the long term, we may have reached the point of no return and have to just live with the dominance of the short-term investors. Some have refused to accept this and have resorted to taking their companies private to escape the damage of the activism of short-term investors.

Part of the challenges in a discussion on stewardship relates to a lack of a common vocabulary of terms and a framework of reference. This is where Stewardship Asia as a thought leadership centre aims to contribute its effort towards building a conceptual framework and promoting a conversation on stewardship.

04 05


Excerpts

An ownership perspective

Temasek Holdings was founded with the mind-set that today’s investments and expenditures should be made with the future in mind. Its charter specifically describes it as an active investor and shareholder, a forward-looking institution, and a trusted steward.

In line with this, Temasek’s investment decisions are made with the next two to three decades in mind. This requires being prepared to ride

Excerpts

Stewardship in practice

Many large organisations around the world have practised stewardship for a long time, albeit using different definitions and with different priorities. However, some aspects remain the same across countries, industries, and sectors.

Firstly, there is an emphasis on long-term thinking: forgoing short-term profit to ensure that the company’s operations are in the long-term interest of consumers and society at large.

“As an investor, we see ourselves as a source of thoughtful long-term

growth capital. So we are not here for the short-

term gain. We invest with an owner perspective and we are not bound

by notions of geographic limits.”

INSIGHTS INTO STEWARDSHIP PRACTICES

AT TEMASEK HOLDINGSSharing by Mr. Lim Boon Heng, Chairman of Temasek Holdings

FUNDAMENTALS OF STEWARDSHIPSharing by Mr. Masamoto Yashiro, Former Chairman of Shinsei Bank

over short-term volatility, and being selective about investment targets. For example, Temasek prefers to invest in businesses that operate and compete effectively for the long-term, without taking short cuts at the expense of the community at large. These businesses should also have demonstrably good governance.

Future-based compensation

To encourage a long-term mind-set among its staff, Temasek has implemented future-based compensation features such as performance bonuses with deferred components and with claw-back features. Incentives for senior

management may be deferred for longer periods in recognition of their greater impact on the company’s operations.

Reinvesting in the community

To actively drive social good in the communities where it operates, Temasek is committed to set aside a portion of its returns above its risk-adjusted hurdle for community building efforts. It currently maintains 16 separate non-profit endowments, directed at philanthropic organisations that develop and deliver community programmes across Asia.

“When you receive the company from your predecessors, rather than looking at short-term

returns, you have to make sure the company has a long-term growth potential.”

Secondly, an organisation that practises stewardship needs a strong leader who can guide its strategy and keep its vision on track.

Ensuring long-term growth potential

One of the steward’s primary objectives should be ensuring that the company can achieve long-term stable growth in earnings. When a new steward leader receives the company from his or her predecessors, that leader must prioritise long-term strategies, even if these inflict short-term costs. For example, a business leader in charge of a large multinational group may need to prune subsidiaries that are not profitable, even though the

company has a historical attachment to these subsidiaries.

Developing steward leaders

A company’s future depends heavily on its leader and so companies that practise good stewardship typically devote a great deal of time to selecting and developing future leaders. Often, the choice of succession is not left to the current incumbent alone, but is built into the organisation’s system and based upon qualifications, evaluation, performance, and potential. Furthermore, such organisations tend to prefer internal candidates who have been immersed in the organisational culture for a period of time, and who are familiar with its processes and priorities.

04 05


Excerpts

An ownership perspective

Temasek Holdings was founded with the mind-set that today’s investments and expenditures should be made with the future in mind. Its charter specifically describes it as an active investor and shareholder, a forward-looking institution, and a trusted steward.

In line with this, Temasek’s investment decisions are made with the next two to three decades in mind. This requires being prepared to ride

Excerpts


Many large organisations around the world have practised stewardship for a long time, albeit using different definitions and with different priorities. However, some aspects remain the same across countries, industries, and sectors.

Firstly, there is an emphasis on long-term thinking: forgoing short-term profit to ensure that the company’s operations are in the long-term interest of consumers and society at large.

“As an investor, we see ourselves as a source of thoughtful long-term

growth capital. So we are not here for the short-

term gain. We invest with an owner perspective and we are not bound

by notions of geographic limits.”

INSIGHTS INTO STEWARDSHIP PRACTICES

AT TEMASEK HOLDINGSSharing by Mr. Lim Boon Heng, Chairman of Temasek Holdings

FUNDAMENTALS OF STEWARDSHIPSharing by Mr. Masamoto Yashiro, Former Chairman of Shinsei Bank

over short-term volatility, and being selective about investment targets. For example, Temasek prefers to invest in businesses that operate and compete effectively for the long-term, without taking short cuts at the expense of the community at large. These businesses should also have demonstrably good governance.

Future-based compensation

To encourage a long-term mind-set among its staff, Temasek has implemented future-based compensation features such as performance bonuses with deferred components and with claw-back features. Incentives for senior

management may be deferred for longer periods in recognition of their greater impact on the company’s operations.

Reinvesting in the community

To actively drive social good in the communities where it operates, Temasek is committed to set aside a portion of its returns above its risk-adjusted hurdle for community building efforts. It currently maintains 16 separate non-profit endowments, directed at philanthropic organisations that develop and deliver community programmes across Asia.

“When you receive the company from your predecessors, rather than looking at short-term

returns, you have to make sure the company has a long-term growth potential.”

Secondly, an organisation that practises stewardship needs a strong leader who can guide its strategy and keep its vision on track.

Ensuring long-term growth potential

One of the steward’s primary objectives should be ensuring that the company can achieve long-term stable growth in earnings. When a new steward leader receives the company from his or her predecessors, that leader must prioritise long-term strategies, even if these inflict short-term costs. For example, a business leader in charge of a large multinational group may need to prune subsidiaries that are not profitable, even though the

company has a historical attachment to these subsidiaries.

Developing steward leaders

A company’s future depends heavily on its leader and so companies that practise good stewardship typically devote a great deal of time to selecting and developing future leaders. Often, the choice of succession is not left to the current incumbent alone, but is built into the organisation’s system and based upon qualifications, evaluation, performance, and potential. Furthermore, such organisations tend to prefer internal candidates who have been immersed in the organisational culture for a period of time, and who are familiar with its processes and priorities.

06 07


Excerpts

SOEs in China

State-owned enterprises in China are constitutionally mandated to play a dominant role in the economy, as major employers and contributors to the state coffers. To ensure that these SOEs fulfil their social and economic responsibilities, the Chinese government established the State-owned Assets Supervision and Administration Commission (SASAC) in 2003.

Importance of accountability and responsibility

SASAC introduced stewardship to the SOEs in the form of a system of accountability and responsibility, covering areas from the use of profits to remuneration for management and employees. This system includes monitoring, reward, and penalty mechanisms to ensure that SOEs comply, and it has been central to the SOEs’ ability to grow and contribute to the economy. Only 5 percent of companies in China are SOEs, but they have contributed 60 percent of state revenue since 2003. The average growth rate of SOEs during this period has been around 20 percent.

Building a good board of directors

SASAC conducted research on the large-scale US corporate scandals,

“At SASAC, we have three responsibilities. One is economic, the second is social, and

the third is political. By responsibility, I mean our

obligations under the constitution to manage

the SOEs well.”

THE ORIGINS OF STEWARDSHIP AT STATE-

OWNED ENTERPRISESSharing by Mr. Li Rongrong

Former Chairman of SASAC & Vice Chairman of China Center for International Economic Exchanges (CCIEE)

and found that the majority of failures were attributable to the board of directors and senior management not upholding their responsibilities. SASAC therefore prioritised the development of a

good board of directors at SOEs. It began by clarifying the roles and responsibilities of the board, emphasising that directors serve on the behalf of shareholders and act on the behalf of owners. SASAC’s next step will be to implement a supervisory and monitoring system to ensure that directors are carrying out their roles independently and in full. Excerpts

KIC in history

KIC suffered much from the financial crisis of 2008, and it underwent a period of demoralisation and a lack of stewardship as a result. Although individual leaders would attempt to rejuvenate the company by putting stewardship practices in place, these

“I try to inspire employees by making them realise that they will be with the KIC for a couple of decades while the senior management, may be there only briefly. So employees are the real owners of KIC.”

INSTITUTIONALISING STEWARDSHIP AT KOREA

INVESTMENT CORPORATIONSharing by Mr. Hongchul (Hank) Ahn,

Chairman & CEO of Korea Investment Corporation

would often last only as long as the leader’s tenure.

Hence, such practices had to be institutionalised and be made part of KIC’s organisational culture.

Involving long-term stakeholders

In recognition of the fact that employees would usually remain

with the company for longer than top management or even the board of directors, KIC’s employees were brought into the investment decision-making process. Investment proposals are now initiated by employees rather than by top management, giving them a stake in the company and an incentive to do the best job they can.

Four pillars of the company philosophy

To anchor stewardship in the corporate culture and help overcome the low morale following the financial crisis, KIC management and employees came together to jointly develop four pillars that would uphold the company’s philosophy.

• Patriotism: KIC being a sovereign wealth fund, must act in the best interests of the country.

• Integrity: It is crucial to have integrity and accountability, because KIC handles citizens’ money.

• Professionalism: Employees are encouraged to take pride in their work.

• Speed: Investment decisions must be executed quickly and professionally for the best results.

06 07


Excerpts

SOEs in China

State-owned enterprises in China are constitutionally mandated to play a dominant role in the economy, as major employers and contributors to the state coffers. To ensure that these SOEs fulfil their social and economic responsibilities, the Chinese government established the State-owned Assets Supervision and Administration Commission (SASAC) in 2003.

Importance of accountability and responsibility

SASAC introduced stewardship to the SOEs in the form of a system of accountability and responsibility, covering areas from the use of profits to remuneration for management and employees. This system includes monitoring, reward, and penalty mechanisms to ensure that SOEs comply, and it has been central to the SOEs’ ability to grow and contribute to the economy. Only 5 percent of companies in China are SOEs, but they have contributed 60 percent of state revenue since 2003. The average growth rate of SOEs during this period has been around 20 percent.

Building a good board of directors

SASAC conducted research on the large-scale US corporate scandals,

“At SASAC, we have three responsibilities. One is economic, the second is social, and

the third is political. By responsibility, I mean our

obligations under the constitution to manage

the SOEs well.”

THE ORIGINS OF STEWARDSHIP AT STATE-

OWNED ENTERPRISESSharing by Mr. Li Rongrong

Former Chairman of SASAC & Vice Chairman of China Center for International Economic Exchanges (CCIEE)

and found that the majority of failures were attributable to the board of directors and senior management not upholding their responsibilities. SASAC therefore prioritised the development of a

good board of directors at SOEs. It began by clarifying the roles and responsibilities of the board, emphasising that directors serve on the behalf of shareholders and act on the behalf of owners. SASAC’s next step will be to implement a supervisory and monitoring system to ensure that directors are carrying out their roles independently and in full. Excerpts

KIC in history

KIC suffered much from the financial crisis of 2008, and it underwent a period of demoralisation and a lack of stewardship as a result. Although individual leaders would attempt to rejuvenate the company by putting stewardship practices in place, these

“I try to inspire employees by making them realise that they will be with the KIC for a couple of decades while the senior management, may be there only briefly. So employees are the real owners of KIC.”

INSTITUTIONALISING STEWARDSHIP AT KOREA

INVESTMENT CORPORATIONSharing by Mr. Hongchul (Hank) Ahn,

Chairman & CEO of Korea Investment Corporation

would often last only as long as the leader’s tenure.

Hence, such practices had to be institutionalised and be made part of KIC’s organisational culture.

Involving long-term stakeholders

In recognition of the fact that employees would usually remain

with the company for longer than top management or even the board of directors, KIC’s employees were brought into the investment decision-making process. Investment proposals are now initiated by employees rather than by top management, giving them a stake in the company and an incentive to do the best job they can.

Four pillars of the company philosophy

To anchor stewardship in the corporate culture and help overcome the low morale following the financial crisis, KIC management and employees came together to jointly develop four pillars that would uphold the company’s philosophy.

• Patriotism: KIC being a sovereign wealth fund, must act in the best interests of the country.

• Integrity: It is crucial to have integrity and accountability, because KIC handles citizens’ money.

• Professionalism: Employees are encouraged to take pride in their work.

• Speed: Investment decisions must be executed quickly and professionally for the best results.

08 09


KEY POINTS FROM AN ENGAGING DISCOURSE

ON STEWARDSHIP

The Roundtable was attended by distinguished business leaders from state-owned companies, sovereign wealth funds, listed corporations, private companies, family businesses, asset-owners, asset managers, and governance practitioners. They shared their perspectives and insights in a wide-ranging discussion into many aspects of stewardship, including:

• Issues faced by different organisations

• Managing transitions of ownership

• The limitations of capital markets

• The need for long-term ownership

• Shareholder and stakeholder involvement

• The Board’s role as stewards• Developing the Board’s

stewardship capabilities• The conditions that foster good

stewardship

Issues on stewardship faced by different types of organisations

The challenges of stewardship differ between organisations. Some of these issues are sector-specific: stewardship at state-owned companies, for example, is vulnerable to political change. Since the tenures of such leadership are perceived to last only as long as the office holders who appointed them, they have little incentive to think about the future or to practise stewardship for the longer term.

Issues, such as transitioning from one form of ownership to another, affect

almost all types of organisations. Many family-owned businesses are currently examining their succession with an eye to broadening their ownership, but the market offers them limited options for doing so. The most common solutions – IPO and private equity – open them to the risk of diluted control and hence

less ability to maintain the same levels of stewardship. State-owned companies that are moving towards privatisation also face the same challenge.

Still other issues are systemic in nature. Listed companies may be impeded in their stewardship by the limitations of capital markets, which tend to prioritise financial returns above all other performance indicators. For example, certain regulatory standards, such as quarterly reporting, encourage short-term behaviour.

In addition, some companies are short term by nature and cannot adopt long-term views due to the nature of their industry or the culture in which they operate.

Managing transitions of ownership

Many non-listed companies will eventually face the need to change ownership. However, full public ownership may not be appropriate for many of them, and may even be detrimental to the intention

of maintaining stewardship. This is especially the case in Western markets, where it is considered “healthy” for any individual shareholder not to hold more than 1 percent of the company. Such dispersed shareholding makes shareholders reluctant to engage in stewardship as they receive no immediate rewards.

Hence, these companies will need to find an acceptable alternative model. Some possibilities are employee ownership or hybrid solutions where the state becomes a part owner. Ideally, they should be able to gain an anchor shareholder who can provide stability for the long term and thinking for the future. Without such an anchor shareholder, the company will be far more vulnerable

to the actions of irresponsible senior management or directors, and is more likely to be driven by short- term perspectives.

It is worth noting that in 2014, 75 percent of the companies on the Forbes Asia’s Rich list were family-owned companies. This suggests that the way in which family-owned companies operate is conducive to good and successful stewardship.

The limitations of capital markets

At present, capital markets are built upon regulations and corporate cultures formulated in the West. While there are good points to the Western model, it also comes with features such as quarterly reporting, the dispersed shareholding model, inviting external successors who have no prior relationship to the company, the use of economic value-added measurements, and other characteristics that are potentially detrimental to stewardship.

For example, certain stringent regulations that Western markets

introduced after the financial crisis may lead to an outcome that is more form than substance, as companies attempt to comply in the least burdensome manner.

On a systemic level, the emphasis on broad ownership results in companies not having a long-term shareholder base or long-term management. The company’s performance then eventually becomes driven by the demands of the stock market, which prioritises financial returns at the expense of other outcomes.

Companies based in Asia need to consider whether they can capitalise on the strengths of Asian culture, rather than relying on wholesale importation of Western standards and rules. It is opportune to do so now as there is currently a vacuum in thought leadership on stewardship, with many people and companies placing more emphasis on rigid corporate governance. However, companies should be aware that corporate governance is only one aspect of stewardship, and may be seen as a means to an end and not an end in itself.

The need for long-term ownership

Businesses with long-term shareholders are more likely to thrive, as these shareholders see the company as a long-term core holding and are hence more willing to accept decisions that sacrifice short-term profit to gain long-term benefit. Such companies also have fewer issues of ownership and management.

Certain types of owner and shareholder are also more likely to prioritise stewardship. With family-owned businesses, for example, the family members tend to have an emotional investment in the company and will automatically prioritise its long-term survival. Companies with a philanthropic trust as a major shareholder or owner will also tend to have long-term values and views, and to focus on corporate responsibility.

Besides shareholders, the company’s employees must take ownership of the business for stewardship to succeed. Management and employees alike need to take long-

08 09


KEY POINTS FROM AN ENGAGING DISCOURSE

ON STEWARDSHIP

The Roundtable was attended by distinguished business leaders from state-owned companies, sovereign wealth funds, listed corporations, private companies, family businesses, asset-owners, asset managers, and governance practitioners. They shared their perspectives and insights in a wide-ranging discussion into many aspects of stewardship, including:

• Issues faced by different organisations

• Managing transitions of ownership

• The limitations of capital markets

• The need for long-term ownership

• Shareholder and stakeholder involvement

• The Board’s role as stewards• Developing the Board’s

stewardship capabilities• The conditions that foster good

stewardship

Issues on stewardship faced by different types of organisations

The challenges of stewardship differ between organisations. Some of these issues are sector-specific: stewardship at state-owned companies, for example, is vulnerable to political change. Since the tenures of such leadership are perceived to last only as long as the office holders who appointed them, they have little incentive to think about the future or to practise stewardship for the longer term.

Issues, such as transitioning from one form of ownership to another, affect

almost all types of organisations. Many family-owned businesses are currently examining their succession with an eye to broadening their ownership, but the market offers them limited options for doing so. The most common solutions – IPO and private equity – open them to the risk of diluted control and hence

less ability to maintain the same levels of stewardship. State-owned companies that are moving towards privatisation also face the same challenge.

Still other issues are systemic in nature. Listed companies may be impeded in their stewardship by the limitations of capital markets, which tend to prioritise financial returns above all other performance indicators. For example, certain regulatory standards, such as quarterly reporting, encourage short-term behaviour.

In addition, some companies are short term by nature and cannot adopt long-term views due to the nature of their industry or the culture in which they operate.

Managing transitions of ownership

Many non-listed companies will eventually face the need to change ownership. However, full public ownership may not be appropriate for many of them, and may even be detrimental to the intention

of maintaining stewardship. This is especially the case in Western markets, where it is considered “healthy” for any individual shareholder not to hold more than 1 percent of the company. Such dispersed shareholding makes shareholders reluctant to engage in stewardship as they receive no immediate rewards.

Hence, these companies will need to find an acceptable alternative model. Some possibilities are employee ownership or hybrid solutions where the state becomes a part owner. Ideally, they should be able to gain an anchor shareholder who can provide stability for the long term and thinking for the future. Without such an anchor shareholder, the company will be far more vulnerable

to the actions of irresponsible senior management or directors, and is more likely to be driven by short- term perspectives.

It is worth noting that in 2014, 75 percent of the companies on the Forbes Asia’s Rich list were family-owned companies. This suggests that the way in which family-owned companies operate is conducive to good and successful stewardship.

The limitations of capital markets

At present, capital markets are built upon regulations and corporate cultures formulated in the West. While there are good points to the Western model, it also comes with features such as quarterly reporting, the dispersed shareholding model, inviting external successors who have no prior relationship to the company, the use of economic value-added measurements, and other characteristics that are potentially detrimental to stewardship.

For example, certain stringent regulations that Western markets

introduced after the financial crisis may lead to an outcome that is more form than substance, as companies attempt to comply in the least burdensome manner.

On a systemic level, the emphasis on broad ownership results in companies not having a long-term shareholder base or long-term management. The company’s performance then eventually becomes driven by the demands of the stock market, which prioritises financial returns at the expense of other outcomes.

Companies based in Asia need to consider whether they can capitalise on the strengths of Asian culture, rather than relying on wholesale importation of Western standards and rules. It is opportune to do so now as there is currently a vacuum in thought leadership on stewardship, with many people and companies placing more emphasis on rigid corporate governance. However, companies should be aware that corporate governance is only one aspect of stewardship, and may be seen as a means to an end and not an end in itself.

The need for long-term ownership

Businesses with long-term shareholders are more likely to thrive, as these shareholders see the company as a long-term core holding and are hence more willing to accept decisions that sacrifice short-term profit to gain long-term benefit. Such companies also have fewer issues of ownership and management.

Certain types of owner and shareholder are also more likely to prioritise stewardship. With family-owned businesses, for example, the family members tend to have an emotional investment in the company and will automatically prioritise its long-term survival. Companies with a philanthropic trust as a major shareholder or owner will also tend to have long-term values and views, and to focus on corporate responsibility.

Besides shareholders, the company’s employees must take ownership of the business for stewardship to succeed. Management and employees alike need to take long-

10 11


term views of the organisation’s interests, live its code of ethics and conduct, and place importance on responsible behaviour. This is especially effective if the employees remain with the organisation for a long time, and if management is promoted internally: they have a personal attachment to and stake in the business.

Shareholder and stakeholder involvement

For any company, its anchor shareholder or primary owner will loom large and matter much. This shareholder has a significant stewardship responsibility due to its influence on the company, and it must discharge this responsibility where necessary. To do so, the anchor shareholder must follow events in the company closely and act to ensure the company’s long- term survival if necessary. But at the same time, it needs to strike a careful balance between intervention and interference, refraining from becoming too closely involved with all aspects of the business.

Companies should not forget their minority shareholders either. These shareholders, and the company’s stakeholders, are not disparate groups. They are the same people wearing different hats; retail investors are citizens and vice versa. As market participants, they have the right to have a say in how well

their investments are stewarded, and a system needs to be implemented to help them get that say.

Companies need to spend the time and effort to understand the concerns of all stakeholders, whether they are shareholders, customers, employees, or members of the wider community. The company should be aware of future trends that will affect its stakeholders, and be ready to answer their future needs.

The Board’s role as stewards

One primary responsibility of the Board of Directors is to help management to balance the conflict between short-term and long-term mindsets. It has to frame the nature of the company’s relationship with society as a whole, while remaining aware of and sensitive to the interests of various stakeholders.

One way of asserting Board stewardship is to guide management’s investment decisions. For example, the Board may schedule annual meetings with management specifically to discuss investment and direct management towards a suitable longer term time horizon. This will more clearly define the company’s risk appetite, providing both management and Board alike with a level of comfort.

The Board also has a role to play in framing investor expectations. This

requires the directors to actively communicate with investors and shareholders. AGMs are one platform for doing so; in addition, the Board can meet core shareholders annually to reaffirm the company’s strategy.

In addition, the Board has a responsibility to set the tone from the top. It needs to ensure that the company’s culture, values and behaviours emphasise the long over the short term, and that this is reflected in how leaders are developed, evaluated and rewarded.

Developing the Board’s stewardship capabilities

The Board must be sufficiently diverse to understand and embrace the broader concepts of stewardship and society as a whole, so that it can move beyond a purely commercial agenda. This diversity should extend across age, gender, ethnicity, background, expertise, industry, and so on. Where necessary, the Board must be prepared to welcome individuals who traditionally would not be given a seat at the table, although the professionalism of the selection process should not be compromised upon.

The Board must also have a deep and comprehensive understanding of the business, not only its current state but also its history and its vision for the future. This requires great commitment on the part of directors as they need to spend much time and effort gaining industry context, domain knowledge, and very extensive familiarity with the company.

At the same time, the Board needs sufficient conviction to stay the course in the face of naysayers, particularly in a business environment that focuses on the short term. Other market participants including analysts and investors may be at odds with the company’s chosen time horizon. In order not to be swayed by these opposing views, the Board must be willing to assume ownership of the company despite not being actual owners, and to accept the responsibility of steering it well into the future.

The conditions that foster good stewardship

Amongst these, some key conditions identified in the discussion are:

A) Leadership and tone at the top. When a company’s leaders –

the Board of Directors and the senior management – set high standards and live up to them,

these standards will trickle down to the rest of the company, all the way to the front line staff. However, this takes time, and so consistency and long-term tenure contribute greatly to how well a stewardship culture takes hold in the organisation.

B) Clarity of roles. The Board of Directors, the CEO,

and other senior management have important and distinct roles to play. They need to be aware of their own functional scope and carry out their responsibilities without overlapping.

C) The external environment. The operating environment is

an important influencing factor in the level of stewardship a company attains. For example,

companies operating in an environment where there are higher levels of regulation and governance, and other institutions are also contributing to a level playing field, will find it easier to maintain good stewardship. In contrast, an operating environment that overlooks misbehaviour will pull companies down to that level.

D) Organisational culture. Stewardship must be

institutionally embedded in an organisation for it to be lasting and enduring. Hence, the company needs to cultivate a culture that values the future and does not shun short-term detriment in the interest of long-term perspectives.

10 11


term views of the organisation’s interests, live its code of ethics and conduct, and place importance on responsible behaviour. This is especially effective if the employees remain with the organisation for a long time, and if management is promoted internally: they have a personal attachment to and stake in the business.

Shareholder and stakeholder involvement

For any company, its anchor shareholder or primary owner will loom large and matter much. This shareholder has a significant stewardship responsibility due to its influence on the company, and it must discharge this responsibility where necessary. To do so, the anchor shareholder must follow events in the company closely and act to ensure the company’s long- term survival if necessary. But at the same time, it needs to strike a careful balance between intervention and interference, refraining from becoming too closely involved with all aspects of the business.

Companies should not forget their minority shareholders either. These shareholders, and the company’s stakeholders, are not disparate groups. They are the same people wearing different hats; retail investors are citizens and vice versa. As market participants, they have the right to have a say in how well

their investments are stewarded, and a system needs to be implemented to help them get that say.

Companies need to spend the time and effort to understand the concerns of all stakeholders, whether they are shareholders, customers, employees, or members of the wider community. The company should be aware of future trends that will affect its stakeholders, and be ready to answer their future needs.

The Board’s role as stewards

One primary responsibility of the Board of Directors is to help management to balance the conflict between short-term and long-term mindsets. It has to frame the nature of the company’s relationship with society as a whole, while remaining aware of and sensitive to the interests of various stakeholders.

One way of asserting Board stewardship is to guide management’s investment decisions. For example, the Board may schedule annual meetings with management specifically to discuss investment and direct management towards a suitable longer term time horizon. This will more clearly define the company’s risk appetite, providing both management and Board alike with a level of comfort.

The Board also has a role to play in framing investor expectations. This

requires the directors to actively communicate with investors and shareholders. AGMs are one platform for doing so; in addition, the Board can meet core shareholders annually to reaffirm the company’s strategy.

In addition, the Board has a responsibility to set the tone from the top. It needs to ensure that the company’s culture, values and behaviours emphasise the long over the short term, and that this is reflected in how leaders are developed, evaluated and rewarded.

Developing the Board’s stewardship capabilities

The Board must be sufficiently diverse to understand and embrace the broader concepts of stewardship and society as a whole, so that it can move beyond a purely commercial agenda. This diversity should extend across age, gender, ethnicity, background, expertise, industry, and so on. Where necessary, the Board must be prepared to welcome individuals who traditionally would not be given a seat at the table, although the professionalism of the selection process should not be compromised upon.

The Board must also have a deep and comprehensive understanding of the business, not only its current state but also its history and its vision for the future. This requires great commitment on the part of directors as they need to spend much time and effort gaining industry context, domain knowledge, and very extensive familiarity with the company.

At the same time, the Board needs sufficient conviction to stay the course in the face of naysayers, particularly in a business environment that focuses on the short term. Other market participants including analysts and investors may be at odds with the company’s chosen time horizon. In order not to be swayed by these opposing views, the Board must be willing to assume ownership of the company despite not being actual owners, and to accept the responsibility of steering it well into the future.

The conditions that foster good stewardship

Amongst these, some key conditions identified in the discussion are:

A) Leadership and tone at the top. When a company’s leaders –

the Board of Directors and the senior management – set high standards and live up to them,

these standards will trickle down to the rest of the company, all the way to the front line staff. However, this takes time, and so consistency and long-term tenure contribute greatly to how well a stewardship culture takes hold in the organisation.

B) Clarity of roles. The Board of Directors, the CEO,

and other senior management have important and distinct roles to play. They need to be aware of their own functional scope and carry out their responsibilities without overlapping.

C) The external environment. The operating environment is

an important influencing factor in the level of stewardship a company attains. For example,

companies operating in an environment where there are higher levels of regulation and governance, and other institutions are also contributing to a level playing field, will find it easier to maintain good stewardship. In contrast, an operating environment that overlooks misbehaviour will pull companies down to that level.

D) Organisational culture. Stewardship must be

institutionally embedded in an organisation for it to be lasting and enduring. Hence, the company needs to cultivate a culture that values the future and does not shun short-term detriment in the interest of long-term perspectives.

12 13

STEWARDSHIP ASIA FORUM 2015 STEWARDSHIP ASIA FORUM 2015

part of. So, stewardship, in both an organisational and an individual dimension, is about those who are entrusted with responsibilities and assets being obliged to endeavour to hand over things in a better shape to their successors.

Let me attempt to say a few words on the difference between stewardship and governance. One might say it is two sides of the same coin. Perhaps, governance has taken on a meaning which is largely confined to the boardroom when in fact governance extends far beyond the boardroom. So, the subject of stewardship tries to tease it out of the boardroom, what I call the hard thinking part of what we understand as governance from a compliance point of view. Stewardship, I think, takes you far beyond the thinking of governance as compliance. This is indeed a topic to be explored.

FORUM WELCOME ADDRESS

By Mr. Hsieh Fu HuaChairman of Stewardship Asia Centre & UOB

Excerpts

Firstly, let me welcome all of you to the inaugural Stewardship Asia Forum. This morning, we had a fruitful discussion at the Roundtable participated by a group of influential and experienced leaders from various organisations, including family businesses, sovereign wealth funds and state enterprises across Asia on a private exchange on the topic of stewardship. This afternoon, we will at this Forum, see a larger open exchange, and hear from our line-up of speakers and panellists on their views and perspectives of stewardship.

Stewardship Asia Centre was recently established. It is in a sense preceded by the Stewardship and Corporate Governance Centre that was launched four years ago. The issue of governance had been dealt with at length by many different organisations. But, at the heart of the success of many Temasek Portfolio Companies as Mr Lim Boon Heng shared this morning, is all about stewardship. Hence, we revisited the thinking, and decided to adopt a strategic approach of focusing our effort on thought leadership for this particular subject of stewardship.

Today’s gathering, which is Stewardship Asia’s first, is to be a forum platform. A platform for networking, and bringing people together to share and discuss this important topic. Secondly, it’s also a platform for us to generate content as part of our role in thought-leadership.

This discourse on stewardship is not just from West to East; it’s also from East to West. In our earlier session, there were opinions expressed that the West’s views on the topic of governance seemed to have driven the agenda in Asia (and worldwide) on what governance should be like. On stewardship, it may be different, and we hope that with the energy and thinking that comes out of such discourses, Stewardship Asia is able to, together with partners, encourage a shift in thinking, and to bring some influence to bear globally, in Asia and beyond.

Stewardship, reduced to its crux, is about engaged, responsible and meaningful value creation over the long term, and how successful and sustained organisations could benefit, not only its stakeholders in an inclusive way, but also the larger community that they are a

“Stewardship, reduced to its crux, is about engaged, responsible and meaningful value creation over the long term, and how successful and sustained organisations could benefit, not only its stakeholders in an inclusive way, but also the larger community that they are a part of.”

The journey of stewardship cannot be just left at what I term as fluffy talk and mere philosophising. At this morning’s Roundtable, one participant who was closely involved with the Tata Group, shared that they have codified stewardship for their employees, for the Board and for the company so that they know how to put it in practice. This was also shared by the former Chairman of SASAC – Mr. Li spoke about how he felt it was extremely important to lay out very clearly the specific roles, responsibilities and duties of the Board and of the managers. So, this journey of stewardship is not just going to end as a generalised subject. Going forward, Stewardship Asia will be working on knowledge pieces to try and delve deeper, and more specifically to help leaders, companies and boards to move forward in stewardship practices, ensuring that the organisations they hand over are in a better shape for their successors.

12 13


part of. So, stewardship, in both an organisational and an individual dimension, is about those who are entrusted with responsibilities and assets being obliged to endeavour to hand over things in a better shape to their successors.

Let me attempt to say a few words on the difference between stewardship and governance. One might say it is two sides of the same coin. Perhaps, governance has taken on a meaning which is largely confined to the boardroom when in fact governance extends far beyond the boardroom. So, the subject of stewardship tries to tease it out of the boardroom, what I call the hard thinking part of what we understand as governance from a compliance point of view. Stewardship, I think, takes you far beyond the thinking of governance as compliance. This is indeed a topic to be explored.

FORUM WELCOME ADDRESS

By Mr. Hsieh Fu HuaChairman of Stewardship Asia Centre & UOB

Excerpts

Firstly, let me welcome all of you to the inaugural Stewardship Asia Forum. This morning, we had a fruitful discussion at the Roundtable participated by a group of influential and experienced leaders from various organisations, including family businesses, sovereign wealth funds and state enterprises across Asia on a private exchange on the topic of stewardship. This afternoon, we will at this Forum, see a larger open exchange, and hear from our line-up of speakers and panellists on their views and perspectives of stewardship.

Stewardship Asia Centre was recently established. It is in a sense preceded by the Stewardship and Corporate Governance Centre that was launched four years ago. The issue of governance had been dealt with at length by many different organisations. But, at the heart of the success of many Temasek Portfolio Companies as Mr Lim Boon Heng shared this morning, is all about stewardship. Hence, we revisited the thinking, and decided to adopt a strategic approach of focusing our effort on thought leadership for this particular subject of stewardship.

Today’s gathering, which is Stewardship Asia’s first, is to be a forum platform. A platform for networking, and bringing people together to share and discuss this important topic. Secondly, it’s also a platform for us to generate content as part of our role in thought-leadership.

This discourse on stewardship is not just from West to East; it’s also from East to West. In our earlier session, there were opinions expressed that the West’s views on the topic of governance seemed to have driven the agenda in Asia (and worldwide) on what governance should be like. On stewardship, it may be different, and we hope that with the energy and thinking that comes out of such discourses, Stewardship Asia is able to, together with partners, encourage a shift in thinking, and to bring some influence to bear globally, in Asia and beyond.

Stewardship, reduced to its crux, is about engaged, responsible and meaningful value creation over the long term, and how successful and sustained organisations could benefit, not only its stakeholders in an inclusive way, but also the larger community that they are a

“Stewardship, reduced to its crux, is about engaged, responsible and meaningful value creation over the long term, and how successful and sustained organisations could benefit, not only its stakeholders in an inclusive way, but also the larger community that they are a part of.”

The journey of stewardship cannot be just left at what I term as fluffy talk and mere philosophising. At this morning’s Roundtable, one participant who was closely involved with the Tata Group, shared that they have codified stewardship for their employees, for the Board and for the company so that they know how to put it in practice. This was also shared by the former Chairman of SASAC – Mr. Li spoke about how he felt it was extremely important to lay out very clearly the specific roles, responsibilities and duties of the Board and of the managers. So, this journey of stewardship is not just going to end as a generalised subject. Going forward, Stewardship Asia will be working on knowledge pieces to try and delve deeper, and more specifically to help leaders, companies and boards to move forward in stewardship practices, ensuring that the organisations they hand over are in a better shape for their successors.

14 15


INSPIRING STEWARDSHIP

Speech by Mr. Masamoto Yashiro, Former Chairman of Shinsei Bank

FUNDAMENTALS OF STEWARD LEADERSHIP

Presentation by Professor Didier Cossin, Director of Stewardship Asia Centre & IMD Global Board Center

Key Points


Stewardship has been recognised and practised by certain established large corporations around the globe for many years, and the policies and best practices passed down from these companies are still relevant today.

As early as 1949, the chairman and directors of Standard Oil Jersey – now the Exxon Corporation – acknowledged publicly that the continued existence of a business relies upon its acceptance by society. Hence, the company took pains to act as a good citizen, even when it had to forgo legitimate short-term

Major dimensions of Stewardship

1) Leading with impact. Whether as an individual or an organisation, stewardship requires the ability to energise, motivate, and transform. For example, companies that exercise good stewardship tend to focus on areas that increase non-fiscal stakeholder satisfaction, such as employee careers and social responsibility.

2) Safeguarding the future. This requires the organisation to always choose long-term value, sacrificing short-term benefits to do so if necessary.

profits in the process. For example, during the oil product shortages following the Second World War, the company chose to invest in low-return projects that would help increase supply, even though more profitable but less socially beneficial investment opportunities were available.

Bringing third-party views onto the Board

As corporations grow larger, their ownership will become more spread out, and they will become accountable to an increasingly broad base of stakeholders. In recognition of this, many large companies began to invite non-employee, independent directors onto their boards as early as the 1970s. These individuals might be less conversant with the industry,

3) Driving social good. Companies that prioritise social good must strike a balance between value contribution and value extraction, ensuring that even as they earn profits, they give back to the communities they operate in.

Characteristics of steward leaders

Leaders who embrace stewardship need certain qualities. They must have the resilience to tide over long-term decisions that do not appear attractive in the short term. They need compassion, empathy, and humility to establish genuine connections with the people around

but they provided important insights into how the public views the company’s operations.

Spending time and resources to develop future leaders

In the 1980s, Exxon was searching for a candidate who could be the company’s future CEO in 10 or 15 years’ time. A group of top executives dedicated several days to sifting through every employee within the age group they wanted, examining factors such as performance rating and potential outlook. After shortlisting 20 candidates, they came up a career path to develop each person’s potential, and continued to observe all the candidates over the next decade. In this way, the company always had several replacements ready for contingencies.

Making difficult decisions to pursue long-term strategies

In the mid-2000s, Hitachi Ltd was performing poorly due to a large number of loss-making subsidiaries in the consumer goods sector. Often, corporate heads in Japan are reluctant to close down subsidiaries, even under-performing ones, as these subsidiaries are considered the company’s ‘children’. However, to preserve the company in the long term, the CEO of Hitachi made the difficult decision to close many subsidiaries and consolidate others. Within two years, Hitachi had gone from net losses of several billion dollars a year to an equal amount of profit.

themselves. Most importantly, they need to be willing to continually learn, grow, and develop themselves.

In addition to the above characteristics, steward leaders also need to encourage certain organisational behaviours. These include investment and participation in the community where the organisation operates, cross-cultural learning to achieve harmony between different stakeholders, and stable and fair succession planning.

“We can promote a steward-leadership view

by: safeguarding the future with prudence and care; leading with

impact, influence, contextual intelligence and commitment; and

driving social good with compassion and

accountability.”

14 15


INSPIRING STEWARDSHIP

Speech by Mr. Masamoto Yashiro, Former Chairman of Shinsei Bank

FUNDAMENTALS OF STEWARD LEADERSHIP

Presentation by Professor Didier Cossin, Director of Stewardship Asia Centre & IMD Global Board Center

Key Points


Stewardship has been recognised and practised by certain established large corporations around the globe for many years, and the policies and best practices passed down from these companies are still relevant today.

As early as 1949, the chairman and directors of Standard Oil Jersey – now the Exxon Corporation – acknowledged publicly that the continued existence of a business relies upon its acceptance by society. Hence, the company took pains to act as a good citizen, even when it had to forgo legitimate short-term

Major dimensions of Stewardship

1) Leading with impact. Whether as an individual or an organisation, stewardship requires the ability to energise, motivate, and transform. For example, companies that exercise good stewardship tend to focus on areas that increase non-fiscal stakeholder satisfaction, such as employee careers and social responsibility.

2) Safeguarding the future. This requires the organisation to always choose long-term value, sacrificing short-term benefits to do so if necessary.

profits in the process. For example, during the oil product shortages following the Second World War, the company chose to invest in low-return projects that would help increase supply, even though more profitable but less socially beneficial investment opportunities were available.

Bringing third-party views onto the Board

As corporations grow larger, their ownership will become more spread out, and they will become accountable to an increasingly broad base of stakeholders. In recognition of this, many large companies began to invite non-employee, independent directors onto their boards as early as the 1970s. These individuals might be less conversant with the industry,

3) Driving social good. Companies that prioritise social good must strike a balance between value contribution and value extraction, ensuring that even as they earn profits, they give back to the communities they operate in.

Characteristics of steward leaders

Leaders who embrace stewardship need certain qualities. They must have the resilience to tide over long-term decisions that do not appear attractive in the short term. They need compassion, empathy, and humility to establish genuine connections with the people around

but they provided important insights into how the public views the company’s operations.

Spending time and resources to develop future leaders

In the 1980s, Exxon was searching for a candidate who could be the company’s future CEO in 10 or 15 years’ time. A group of top executives dedicated several days to sifting through every employee within the age group they wanted, examining factors such as performance rating and potential outlook. After shortlisting 20 candidates, they came up a career path to develop each person’s potential, and continued to observe all the candidates over the next decade. In this way, the company always had several replacements ready for contingencies.

Making difficult decisions to pursue long-term strategies

In the mid-2000s, Hitachi Ltd was performing poorly due to a large number of loss-making subsidiaries in the consumer goods sector. Often, corporate heads in Japan are reluctant to close down subsidiaries, even under-performing ones, as these subsidiaries are considered the company’s ‘children’. However, to preserve the company in the long term, the CEO of Hitachi made the difficult decision to close many subsidiaries and consolidate others. Within two years, Hitachi had gone from net losses of several billion dollars a year to an equal amount of profit.

themselves. Most importantly, they need to be willing to continually learn, grow, and develop themselves.

In addition to the above characteristics, steward leaders also need to encourage certain organisational behaviours. These include investment and participation in the community where the organisation operates, cross-cultural learning to achieve harmony between different stakeholders, and stable and fair succession planning.

“We can promote a steward-leadership view

by: safeguarding the future with prudence and care; leading with

impact, influence, contextual intelligence and commitment; and

driving social good with compassion and

accountability.”

16 17


STEWARDSHIP WHERE THE STATE IS A SHAREHOLDER

Panel Discussion with Mr. Li Rongrong, Former Chairman of SASAC & Vice Chairman of

China Center for International Economic Exchanges (CCIEE) and Mrs. Lim Hwee Hua, Director of Stewardship Asia Centre &

Executive Director of Tembusu Partners

Key Points

Characteristics of state ownership

The state or government typically takes ownership of companies in sectors of strategic, national, and historical importance. These sectors tend to be highly regulated, with ownership restrictions, and regulations are often closely pegged to public policy intent.

Due to the involvement of public money, state ownership imposes a very high level of accountability upon a company, often going beyond what is legally required. The company is also prone to situations where the state becomes its default shareholder or capital provider, and during periods of severe economic downturn, the state may even become the business owner because the company is too big to fail.

Why SOEs need exceptional levels of stewardship

SOEs are very often large companies that play a significant role in the economy or in critical public services, such as utilities providers, public infrastructure companies, or major financial institutions. Investments made by these companies tend to be capital intensive and very long term, with social benefits outweighing profitability. Hence, SOEs have to be particularly resistant to the lure of short-term gains.

Due to their nature, the failure of SOEs could have a serious national impact. Besides the losses of critical goods and services to the public, bailouts would consume enormous amounts of public money. These companies therefore shoulder an extraordinary amount of responsibility.

The need for state stewardship

As a shareholder with much more than the usual power, the state, too, must exercise stewardship in the influence it exerts over SOEs. The state must be mindful of the broader picture when it designs policies and regulations related to SOEs. SOEs

should not be used as a tool to deliver policy outcomes.

In addition, the state must clearly define the nature of its role(s) in the SOEs: whether it is a regulator, developer and promoter of industry, provider of capital, or fiscal manager. These roles need to be kept separate and carefully monitored to ensure that conflicts of interest are minimised.

Governance for SOEs should also be stringent and transparent. Key areas such as accountability, management, performance assessment, and remuneration need to be very clear.

STEWARDSHIP FROM AN INVESTMENT PERSPECTIVE

Panel Discussion with Mr. Ng Kok Song, Chairman of Avanda Investment Management &Former Group Chief Investment Officer of GIC

and Dr. Hans-Christoph Hirt, Executive Director of Hermes Equity Ownership Services

Key Points

The consequences of poor stewardship

The events of the 2008 financial crisis illustrated how important it is to have a responsible and sustainable business model, and for the Board of Directors to fully understand the risks of that model. The financial crisis also highlighted the critical need for a corporate culture that has the resilience to prioritise long-term perspectives and ethical behaviour.

Companies lacking the stewardship to implement these values are not

only prone to management issues and subsequent long-term losses, they also have difficulty gaining or regaining the trust of stakeholders. For example, the Troubled Asset Recovery Programme in the US, which is intended to strengthen the US financial sector through buying over assets from distressed financial institutions, ran into considerable political opposition due to a loss of trust in the financial sector’s integrity.

Stewardship for institutional investors

As major shareholders, institutional investors have the power to demand accountability and long-term

sustainable practices from their invested companies. They can even participate in creating solutions to improve stewardship.

Notably, stewardship codes drawn up after the financial crisis encourage institutional investors to monitor investing companies, exercise their voting rights to drive good corporate policy, and even to have mechanisms for intervening in favour of corporate governance if necessary. In the UK, where a Stewardship Code has been in place since 2010, institutional investors now have more and productive engagement with the Board of Directors.

16 17


STEWARDSHIP WHERE THE STATE IS A SHAREHOLDER

Panel Discussion with Mr. Li Rongrong, Former Chairman of SASAC & Vice Chairman of

China Center for International Economic Exchanges (CCIEE) and Mrs. Lim Hwee Hua, Director of Stewardship Asia Centre &

Executive Director of Tembusu Partners

Key Points

Characteristics of state ownership

The state or government typically takes ownership of companies in sectors of strategic, national, and historical importance. These sectors tend to be highly regulated, with ownership restrictions, and regulations are often closely pegged to public policy intent.

Due to the involvement of public money, state ownership imposes a very high level of accountability upon a company, often going beyond what is legally required. The company is also prone to situations where the state becomes its default shareholder or capital provider, and during periods of severe economic downturn, the state may even become the business owner because the company is too big to fail.

Why SOEs need exceptional levels of stewardship

SOEs are very often large companies that play a significant role in the economy or in critical public services, such as utilities providers, public infrastructure companies, or major financial institutions. Investments made by these companies tend to be capital intensive and very long term, with social benefits outweighing profitability. Hence, SOEs have to be particularly resistant to the lure of short-term gains.

Due to their nature, the failure of SOEs could have a serious national impact. Besides the losses of critical goods and services to the public, bailouts would consume enormous amounts of public money. These companies therefore shoulder an extraordinary amount of responsibility.

The need for state stewardship

As a shareholder with much more than the usual power, the state, too, must exercise stewardship in the influence it exerts over SOEs. The state must be mindful of the broader picture when it designs policies and regulations related to SOEs. SOEs

should not be used as a tool to deliver policy outcomes.

In addition, the state must clearly define the nature of its role(s) in the SOEs: whether it is a regulator, developer and promoter of industry, provider of capital, or fiscal manager. These roles need to be kept separate and carefully monitored to ensure that conflicts of interest are minimised.

Governance for SOEs should also be stringent and transparent. Key areas such as accountability, management, performance assessment, and remuneration need to be very clear.

STEWARDSHIP FROM AN INVESTMENT PERSPECTIVE

Panel Discussion with Mr. Ng Kok Song, Chairman of Avanda Investment Management &Former Group Chief Investment Officer of GIC

and Dr. Hans-Christoph Hirt, Executive Director of Hermes Equity Ownership Services

Key Points

The consequences of poor stewardship

The events of the 2008 financial crisis illustrated how important it is to have a responsible and sustainable business model, and for the Board of Directors to fully understand the risks of that model. The financial crisis also highlighted the critical need for a corporate culture that has the resilience to prioritise long-term perspectives and ethical behaviour.

Companies lacking the stewardship to implement these values are not

only prone to management issues and subsequent long-term losses, they also have difficulty gaining or regaining the trust of stakeholders. For example, the Troubled Asset Recovery Programme in the US, which is intended to strengthen the US financial sector through buying over assets from distressed financial institutions, ran into considerable political opposition due to a loss of trust in the financial sector’s integrity.

Stewardship for institutional investors

As major shareholders, institutional investors have the power to demand accountability and long-term

sustainable practices from their invested companies. They can even participate in creating solutions to improve stewardship.

Notably, stewardship codes drawn up after the financial crisis encourage institutional investors to monitor investing companies, exercise their voting rights to drive good corporate policy, and even to have mechanisms for intervening in favour of corporate governance if necessary. In the UK, where a Stewardship Code has been in place since 2010, institutional investors now have more and productive engagement with the Board of Directors.

18 19


THE CHALLENGES IN PURSUING STEWARDSHIP

Panel Discussion moderated by Mr. Mark Goyder, Founder & Chief Executive of Tomorrow’s Company

CLOSING REMARKS By Mr. Ong Boon Hwee

CEO of Stewardship Asia Centre

Key Points

Balancing the demands & benefits of ownership

Shareholders are not always unanimous in their wishes, and they have different views of what stewardship should constitute. Some may pursue profit maximisation, demanding the highest possible returns on their investment. Others may demand that the company emphasises sustainability, or prioritises social returns over financial returns. At times, pursuing certain definitions of stewardship may place the company in conflict with their operating jurisdiction. Steward leaders therefore need to carefully weigh the benefits to different owners even as they develop overall company policies.

Avoiding speculative investment

The temptation to make a quick buck by following market trends can be very great. However, speculative investment is as risky as it is potentially profitable. Good stewardship, which

Excerpts

We have come to the end of a meaningful and interesting Forum. In conclusion, let me make three points.

First, I would like to thank everyone present here today for taking the time to join us at this inaugural event. Stewardship Asia is but in its first year of inception, a new kid on the block, and we recognise that the notion of stewardship is in itself still pretty ambiguous. In the Asian context, many countries may not even have the direct translated term for stewardship in their vocabulary. However, as our discourse in today’s Forum has shown, many participants in this room share the consensus stewardship as a concept resonates strongly across Asia, much aligned with many Asian cultures.

This is also reflected in the response for this Forum. For an inaugural session like this, we are especially appreciative of the fact that we managed to gather 178 participants from more than 120 organisations from 13 countries across Asia. And among these, we have the whole spectrum of the stewardship landscape - sovereign wealth funds, state-owned organisations, family-based businesses, private companies, listed companies, asset owners, asset managers and more.

Secondly, I would like to make a special effort to thank our panel of distinguished speakers and moderators for sharing with us their knowledge and experience on stewardship with such passion. Many of our speakers took time off their

requires preservation of capital, therefore requires companies to be very discerning and rational in their investment decisions. This is doubly the case if certain regulatory changes that may leave existing shareholders vulnerable to market fluctuations, such as easing restrictions on M&A or liberalisation of the capital market, seem likely to take place. Companies, as investors, need to focus on long-term sustainability rather than potential short-term profits. However, this is not easy in the current environment, which still tends to reward short-termism.

Panellists

Mr. Kong Dan Former Chairman, CITIC Group Corporation

Mr. Tae-Shin Kwon President & CEO, Korea Economic Research Institute

Mr. Sunny Verghese Co-founder, Group Managing Director & CEO, Olam International

Mr. Pham Khac Dung Deputy CEO, PVI Holdings

Mr. Morio Nishikawa Chairman, Family Business Advisors Association Japan

“We know that the only way that Stewardship Asia is able to contribute towards fostering stewardship across Asia, is to do it with like-minded partners.”

busy schedules, with some making their trip here or just returning to Singapore, taking great effort to work on their scripts, and I must add that the quality of research was exceptional.

Lastly, this is but a beginning. We know that the only way that Stewardship Asia is able to contribute towards fostering stewardship across Asia, is to do it with like-minded partners. We hope that this will begin a conversation, in both the forum and the knowledge platforms. We are much encouraged by the response received from the participants at this Forum. Many have commented to me on the quality

of sharing by the “heavyweight” speakers and panellists gathered today, contributing towards building this body of knowledge on stewardship. Yes, we will be working on gleaning learning points from the event’s proceeding, and will share them in our upcoming publications. We will also follow up with those who have approached us on exploring collaborations towards promoting stewardship in various ways.

In closing, we would like to announce that the 2016 Stewardship Asia Roundtable and Forum will be held on 17 August, and we look forward to seeing all of you again for yet another inspiring session next year.

Appropriate use of the Board mandate

The concept of the Board mandate may be misperceived as suggesting that having been elected, the Board has the right to lead and need not be swayed by investors’ wishes; but rather, investors who disagree with the Board’s actions are free to take out their capital. Board mandate may be a useful tool for implementing stewardship decisions, but it needs to be exercised with care. Used indiscriminately, it runs the risk of marginalising shareholders to their disadvantage, and excluding potentially useful perspectives.

18 19


THE CHALLENGES IN PURSUING STEWARDSHIP

Panel Discussion moderated by Mr. Mark Goyder, Founder & Chief Executive of Tomorrow’s Company

CLOSING REMARKS By Mr. Ong Boon Hwee

CEO of Stewardship Asia Centre

Key Points

Balancing the demands & benefits of ownership

Shareholders are not always unanimous in their wishes, and they have different views of what stewardship should constitute. Some may pursue profit maximisation, demanding the highest possible returns on their investment. Others may demand that the company emphasises sustainability, or prioritises social returns over financial returns. At times, pursuing certain definitions of stewardship may place the company in conflict with their operating jurisdiction. Steward leaders therefore need to carefully weigh the benefits to different owners even as they develop overall company policies.

Avoiding speculative investment

The temptation to make a quick buck by following market trends can be very great. However, speculative investment is as risky as it is potentially profitable. Good stewardship, which

Excerpts

We have come to the end of a meaningful and interesting Forum. In conclusion, let me make three points.

First, I would like to thank everyone present here today for taking the time to join us at this inaugural event. Stewardship Asia is but in its first year of inception, a new kid on the block, and we recognise that the notion of stewardship is in itself still pretty ambiguous. In the Asian context, many countries may not even have the direct translated term for stewardship in their vocabulary. However, as our discourse in today’s Forum has shown, many participants in this room share the consensus stewardship as a concept resonates strongly across Asia, much aligned with many Asian cultures.

This is also reflected in the response for this Forum. For an inaugural session like this, we are especially appreciative of the fact that we managed to gather 178 participants from more than 120 organisations from 13 countries across Asia. And among these, we have the whole spectrum of the stewardship landscape - sovereign wealth funds, state-owned organisations, family-based businesses, private companies, listed companies, asset owners, asset managers and more.

Secondly, I would like to make a special effort to thank our panel of distinguished speakers and moderators for sharing with us their knowledge and experience on stewardship with such passion. Many of our speakers took time off their

requires preservation of capital, therefore requires companies to be very discerning and rational in their investment decisions. This is doubly the case if certain regulatory changes that may leave existing shareholders vulnerable to market fluctuations, such as easing restrictions on M&A or liberalisation of the capital market, seem likely to take place. Companies, as investors, need to focus on long-term sustainability rather than potential short-term profits. However, this is not easy in the current environment, which still tends to reward short-termism.

Panellists

Mr. Kong Dan Former Chairman, CITIC Group Corporation

Mr. Tae-Shin Kwon President & CEO, Korea Economic Research Institute

Mr. Sunny Verghese Co-founder, Group Managing Director & CEO, Olam International

Mr. Pham Khac Dung Deputy CEO, PVI Holdings

Mr. Morio Nishikawa Chairman, Family Business Advisors Association Japan

“We know that the only way that Stewardship Asia is able to contribute towards fostering stewardship across Asia, is to do it with like-minded partners.”

busy schedules, with some making their trip here or just returning to Singapore, taking great effort to work on their scripts, and I must add that the quality of research was exceptional.

Lastly, this is but a beginning. We know that the only way that Stewardship Asia is able to contribute towards fostering stewardship across Asia, is to do it with like-minded partners. We hope that this will begin a conversation, in both the forum and the knowledge platforms. We are much encouraged by the response received from the participants at this Forum. Many have commented to me on the quality

of sharing by the “heavyweight” speakers and panellists gathered today, contributing towards building this body of knowledge on stewardship. Yes, we will be working on gleaning learning points from the event’s proceeding, and will share them in our upcoming publications. We will also follow up with those who have approached us on exploring collaborations towards promoting stewardship in various ways.

In closing, we would like to announce that the 2016 Stewardship Asia Roundtable and Forum will be held on 17 August, and we look forward to seeing all of you again for yet another inspiring session next year.

Appropriate use of the Board mandate

The concept of the Board mandate may be misperceived as suggesting that having been elected, the Board has the right to lead and need not be swayed by investors’ wishes; but rather, investors who disagree with the Board’s actions are free to take out their capital. Board mandate may be a useful tool for implementing stewardship decisions, but it needs to be exercised with care. Used indiscriminately, it runs the risk of marginalising shareholders to their disadvantage, and excluding potentially useful perspectives.

20 21

Stewardship Asia Centre launched the exclusive preprint edition of “Inspiring Stewardship” at the inaugural Stewardship Asia Roundtable and Forum 2015

The notion of stewardship has never been more relevant to business than it is today. In a world where the ownership of firms is increasingly fragmented, and investment structures are more and more complex, the time horizons of investors, executives and owners do not always coincide. Managing competing interests to find the right balance between short- and long-term considerations is perplexing for many leaders. Stewardship is an inspiring way to revitalise this discussion. It encourages business leaders to shift mind-sets, to creatively engage their organisations and other societal actors, and to enhance wealth creation for all. Stewardship requires the ability to focus on the core, to consider the extent and dimension to which business impacts depend on the relationship among different

groups of people, and the context and time horizon in which the business operates. We define such organisational stewardship as the act of safeguarding and enhancing the capability of the organisation to create economic and societal value over time.

“Inspiring Stewardship”, co-authored by Ong Boon Hwee, CEO of Stewardship Asia Centre, and Didier Cossin, Professor and Director of IMD Global Board Center, examines a range of exceptional individual and organisational examples of stewardship, as well as insights gleaned from two innovative quantitative studies. This book will help to unlock the contribution business leaders can make today to enhance their influence and to secure their legacy over time.

ONG Boon HweeChief Executive OfficerStewardship Asia Centre

Mr. Ong is currently the CEO of Stewardship Asia Centre, a thought-leadership centre that focuses on promoting stewardship and governance of companies and organisations across Asia. In his varied professional career, Mr Ong has extensive working experience in the civil service as well as the commercial sectors. In Temasek Holdings, Mr. Ong was the Managing Director (Strategic Relations). He was concurrently the CEO of Temasek Management Services, managing diverse businesses including IT, training and consulting. Mr. Ong has also been the COO of Singapore Power. Over the last 20 years, he has served on the boards of companies of various sectors, as well as of non-profit organisations and foundations.

About the Authors

Didier COSSINDirectorStewardship Asia Centre & IMD Global Board Center

Prof. Didier Cossin is the Director of the IMD Global Board Center, Switzerland, and professor of Finance and Governance IMD and holds a UBS chair in Banking & Finance. Prof. Cossin has been an Advisor and/or Executive Teacher with the United Nations and other international organisations, the European Central Bank and other central banks, the boards or executive committees of many multinational corporations, financial institutions and funds in Europe, Asia and the Middle East.

He holds a Ph.D from Harvard University (Robert C. Merton Chair) and is a former Fulbright Fellow at the Massachusetts Institute of Technology, Department of Economics (USA). He is a graduate of ENS rue d’Ulm (France) and holds master degrees from Sorbonne University and EHESS (France).

Before joining IMD, he worked for Goldman Sachs (London, UK) and pharmaceutical company Roussel-Uclaf (Tokyo, Japan). He has taught at Harvard University, and was associate then full professor at HEC, University of Lausanne (1993-2002) where he chaired the Institute of Finance and the Department of Management.

Prof. Cossin is the author and co-author of books, book chapters and many articles, several of which have obtained

citations of excellence or other awards.

20 21

Stewardship Asia Centre launched the exclusive preprint edition of “Inspiring Stewardship” at the inaugural Stewardship Asia Roundtable and Forum 2015

The notion of stewardship has never been more relevant to business than it is today. In a world where the ownership of firms is increasingly fragmented, and investment structures are more and more complex, the time horizons of investors, executives and owners do not always coincide. Managing competing interests to find the right balance between short- and long-term considerations is perplexing for many leaders. Stewardship is an inspiring way to revitalise this discussion. It encourages business leaders to shift mind-sets, to creatively engage their organisations and other societal actors, and to enhance wealth creation for all. Stewardship requires the ability to focus on the core, to consider the extent and dimension to which business impacts depend on the relationship among different

groups of people, and the context and time horizon in which the business operates. We define such organisational stewardship as the act of safeguarding and enhancing the capability of the organisation to create economic and societal value over time.

“Inspiring Stewardship”, co-authored by Ong Boon Hwee, CEO of Stewardship Asia Centre, and Didier Cossin, Professor and Director of IMD Global Board Center, examines a range of exceptional individual and organisational examples of stewardship, as well as insights gleaned from two innovative quantitative studies. This book will help to unlock the contribution business leaders can make today to enhance their influence and to secure their legacy over time.

ONG Boon HweeChief Executive OfficerStewardship Asia Centre

Mr. Ong is currently the CEO of Stewardship Asia Centre, a thought-leadership centre that focuses on promoting stewardship and governance of companies and organisations across Asia. In his varied professional career, Mr Ong has extensive working experience in the civil service as well as the commercial sectors. In Temasek Holdings, Mr. Ong was the Managing Director (Strategic Relations). He was concurrently the CEO of Temasek Management Services, managing diverse businesses including IT, training and consulting. Mr. Ong has also been the COO of Singapore Power. Over the last 20 years, he has served on the boards of companies of various sectors, as well as of non-profit organisations and foundations.

About the Authors

Didier COSSINDirectorStewardship Asia Centre & IMD Global Board Center

Prof. Didier Cossin is the Director of the IMD Global Board Center, Switzerland, and professor of Finance and Governance IMD and holds a UBS chair in Banking & Finance. Prof. Cossin has been an Advisor and/or Executive Teacher with the United Nations and other international organisations, the European Central Bank and other central banks, the boards or executive committees of many multinational corporations, financial institutions and funds in Europe, Asia and the Middle East.

He holds a Ph.D from Harvard University (Robert C. Merton Chair) and is a former Fulbright Fellow at the Massachusetts Institute of Technology, Department of Economics (USA). He is a graduate of ENS rue d’Ulm (France) and holds master degrees from Sorbonne University and EHESS (France).

Before joining IMD, he worked for Goldman Sachs (London, UK) and pharmaceutical company Roussel-Uclaf (Tokyo, Japan). He has taught at Harvard University, and was associate then full professor at HEC, University of Lausanne (1993-2002) where he chaired the Institute of Finance and the Department of Management.

Prof. Cossin is the author and co-author of books, book chapters and many articles, several of which have obtained

citations of excellence or other awards.

Stewardship Asia would like to thank the following Partners who helped to make the inaugural Roundtable and Forum a successful event.

Strategic Media Partner Research Partners

No part of this publication may be translated, reprinted or reproduced or utilised in any form either in whole or in part or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system, without prior permission in writing from the copyright owner.

The views expressed here are those of some participants involved in the discussion of the Stewardship Asia Roundtable and Forum 2015 and do not necessarily reflect the views of all participants or of Stewardship Asia Centre.

Copyright © 2015 Stewardship Asia Centre, a member of Temasek Management Services Group

02 Roundtable Welcome Address

04 Insights into Stewardship Practices at Temasek Holdings

05 Fundamentals of Stewardship

06 The Origins of Stewardship at State-owned Enterprises

07 Institutionalising Stewardship at Korea Investment Corporation

08 Key Points from an Engaging Discourse on Stewardship

12 Forum Welcome Address

14 Inspiring Stewardship

15 Fundamentals of Steward Leadership

16 Stewardship Where the State is a Shareholder

17 Stewardship from an Investment Perspective

18 The Challenges in Pursuing Stewardship

19 Closing Remarks

20 Inspiring Stewardship – an exclusive preprint edition

CONTENTS

Stewardship Asia Centre

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Stewardship: Building on Asia’s Strength24 June 2015

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