PHL ‘average’ in disclosure practice

THE PHILIPPINES got an average score though it placed second-lowest in the latest ASEAN Disclosure Index of business advisory firm FTI Consulting, Inc. which monitors corporate disclosure practices.
In the 2018 report, the Philippines got a score of 7.8 out of 10 for Composite Disclosure, the second-lowest next to Vietnam which garnered 5.4 points.
Southeast Asia had a 7.8 average composite disclosure score.
The results were derived from publicly available data of the top 180 listed companies in Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam, with 30 firms from each market.
The scores were calculated based on three performance indicators, namely: performance disclosure, board quality and risk disclosure.
Malaysia topped the list with a score of 8.7, followed by Thailand with 8.6. Singapore with 8.3, while Indonesia got 7.9.
FTI Consulting said Malaysian and Thai firms’ disclosure practices were commendable, adding that Malaysia is “clearly driving higher standards of board-related disclosures amongst other jurisdictions.”
A total of 24 companies were also named corporate disclosure champions after getting a perfect 10 score, 11 of which came from Malaysia, eight from Thailand as well as three each from Singapore and Indonesia. None of the Philippine companies monitored made the cut.
“The ASEAN Disclosure Index report shows that progress in being made in the region to raise corporate transparency and non-financial disclosure, but there is still room for improvement,” FTI Consulting Chairman of Asia Pacific for the Strategic Communications Segment Paul Downie said in a statement.
The weighted score for performance disclosure came from metrics such as specific and updated non-financial information on company operations, as well as business strategy in the medium or long-term, as stated in companies annual reports or Web sites.
The rating for board quality — in which the Philippines scored 2.9 out of four against a 3.4 regional average — was based on board diversity policy targets for gender diversity/presence of female directors on the board, board evaluation by external third-party advisor or consultant, director remuneration, dividend policy, as well as separation of chairman and chief executive officer roles. FTI Consulting noted that 21 out of 30 companies in the Philippines had at least one female director, which was also true of Vietnam and Singapore. Malaysia scored the highest in this aspect, with 29 out of 30 companies having at least one female director. The study also said only eight of out of the 30 Philippine firms monitored provided board evaluation involving a third-party service or external expert.
The Philippines scored 3.9 out of five in terms of “risk disclosure” against ASEAN’s 3.8/5. This field pertained to whistleblowing mechanisms via phone or e-mail, top 10 shareholding info, recent analyst transcripts/ updates, stakeholder engagement info, sustainability report, etc. The country’s score for risk disclosure is the lowest next to Vietnam, which got 1.9. Among others, 19 of the monitored firms in the Philippines provided convenient whistleblowing mechanisms on their Web sites. FTI Consulting cited six firms that included whistleblowing incidents in their annual reports, namely: VietJet Aviation; the Philippines Ayala Corp. and PLDT, Inc.; as well as Indonesia’s PT Hanjaya Mandala Sampoerna Tbk and PT Telkom Indonesia Tbk.
“Despite seemingly high aggregate Composite Disclosure scores in the region, there are significant differences on individual parameters between companies and jurisdictions,” FTI Consulting Managing Director for the Strategic Communications Segment Amrit Singh Deo said in a statement. “Directors and management teams should discuss higher standards of risk disclosure at board meetings…” — Arra B. Francia