Closer to home, SGX-listed companies have had their fair share of failures in corporate governance. BIS central bankers’ speeches  1  7. The answer does not lie in even more rules. We must now focus on changing behaviour and building capabilities, to make the recent reforms meaningful. Let me highlight three areas: •  one, strengthening market discipline  •  two, building Board competencies  •  three, instilling the right values  Strengthening market discipline 8. Let me begin with market discipline – the process by which stakeholders apply effective scrutiny on a company. The key enabler for market discipline is disclosure. We have put in place, in the SGX listing rules, the necessary requirements for disclosure to be ongoing, timely, and accessible. But for disclosure to enable effective market discipline, it must also be meaningful. 9. Meaningful disclosure is especially important given that our Code is non-mandatory. We have adopted a “comply or explain” approach so that we can pitch the expectations at the level of best practice while allowing companies the flexibility to deviate from these expectations if their particular circumstances warrant it. But companies must explain publicly the reasons for any such deviations so that the market can judge. 10. Unfortunately, disclosures being made by companies deviating from the Code are often uninformative. Let me give an example.
As more plantations embrace sustainability practices, this will enhance the industry’s international reputation and may even elevate Malaysia to be a global leader in sustainable palm oil. At the same time, the income and livelihood of smallholders would also improve as their outputs benefit from better market access upon being certified. DFIs could consider adopting the Value Based Intermediation Assessment Framework or VBIAF sectoral guides on palm oil6, developed by the Islamic financial industry which provides guidance on overlaying credit or investment decisions with ESG considerations. Thirdly, DFIs can onboard or nudge plantations to work towards enhancing the living conditions of estate workers by incorporating this as part of the credit assessment process. This ensures palm oil plantations meet the basic needs of workers i.e access to safe drinking water and proper housing. This is a specific use case where sustainable finance can contribute towards strengthening Malaysia’s sustainable economic growth but in order to execute this well, DFIs need to work with other partners across the public and private sectors, which leads me to my next point. DFIs should be creative in designing innovative funding structures and solutions that leverage on the capacity of the private sector and knowledge from other partners, including peers and the Government. 2/5  BIS central bankers' speeches  DFIs are often constrained by the size of their balance sheet or capital and take on outsized risks in specific sectors in serving their mandates.