Letter to the Editor | Responsible companies must deliver sustainable value over the long term

This letter was originally published in the The Business Times (Singapore) on 8 March 2022.

LETTER TO THE EDITOR 

We read with keen interest the article by Dan W. Puchniak (“No need for Asia to be woke: Responsible Capitalism through an Asian lens”), which articulates the importance of a diversity of approaches for companies to be responsible for maximising public good, alongside generating returns. Temasek also believes that the fundamental responsibility of companies is to make a positive contribution to society. This cannot be decoupled from their aim to deliver profits for themselves or their shareholders and to achieve long term sustainable returns in the pursuit of multi-stakeholder capitalism. Indeed, the issues around balancing profit and purpose are as relevant in Asia as anywhere else in the world.

The piece also proffers that the unique institutional architecture in Singapore ensures state-owned companies can focus on profit maximisation, without the encumbrance of politics. While Singapore’s fundamental governance structure allows these companies to operate commercially without interference, direction or promotion from the state, their purpose should transcend the drive for profit maximisation.

Temasek, as a state-owned but independently operated commercial investment company, sees our purpose beyond generating profit and delivering returns to our shareholder. We are guided by our Charter as an active investor, a forward looking institution, and a trusted steward and we take our three separate but inter-dependent roles seriously.

As an investor, we seek to deliver sustainable value over the long term. As an institution, we act with purpose and integrity, and with a commitment to pursue excellence. As a steward, we are a responsible corporate citizen and engage our communities based on the principles of sustainability and good governance. Indeed, these three pillars are very much interconnected, and form the foundation of our decisions and actions as a firm.

In an increasingly complex and interconnected world, it is those who understand and embrace their fundamental role of being responsible, sustainable and purpose-driven organisations who will ultimately thrive in all they do.

We expect our portfolio companies to honour their obligations to their stakeholders, even as they rightly pursue commercial objectives and returns. As a shareholder, we actively engage with the boards of our portfolio companies but do not interfere with their day-to-day management of their businesses. Rather, we look to the boards and management of our companies to lead their business. At the same time, they are stewards of their companies, expected to deliver sustainable value for all their stakeholders over the long term. They understand that corporate responsibility should never be seen as a trade-off for profit maximisation.

Through all these obligations, sustainability sits at the core of everything we do, not just as a company, but as a steward of our portfolio and our communities. In an increasingly complex and interconnected world, it is those who understand and embrace their fundamental role of being responsible, sustainable and purpose-driven organisations who will ultimately thrive in all they do.

Stephen Forshaw,
Head, Public Affairs,
Temasek

This letter is in reaction to, and a furtherance of, Dan Puchniak's blog article 'No need for Asia to be woke: Responsible Capitalism through an Asian lens' , which was first published in The Business Times (Singapore) on 7 March 2022.

This letter reflects solely the views and opinions of the author(s). The ECGI does not, consistent with its constitutional purpose, have a view or opinion. If you wish to respond to this, you can submit a blog article or 'letter to the editor' by clicking here.