Keynote Address by SM Tharman Shanmugaratnam at the Inaugural RaiSE Conference on The PurpoSE Agenda

SM Tharman Shanmugaratnam | 30 March 2022

Transcript of Keynote Address by Senior Minister and Coordinating Minister for Social Policies Tharman Shanmugaratnam at the Inaugural RaiSE Conference on The PurpoSE Agenda on 30 March 2022.


Please scroll down for the transcript of the Fireside Chat.

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Keynote address transcript

Mr Gautam Banerjee (Chair, raiSE) and Friends,

Thank you for inviting me to join you this morning. It’s a very meaningful gathering, for an important purpose.

The PurpoSE Agenda is not just an agenda for each of us – whether in businesses, government, social agencies, community bodies. It is a collective purpose agenda, because the challenges we face will require much deeper collaboration. We are not going to build a more inclusive society, and we are not going to have a more sustainable world, without much deeper collaboration amongst us.

It essentially means that we’ve got to broaden the intersections between our individual missions. We each have important individual missions: businesses must aim to make a profit to be sustainable; social sector agencies must be focused on achieving social outcomes; community bodies look to strengthen bonds - each have their social missions. But there is an intersection between those missions. We’ve got to grow that intersection - the intersection between making a profit on a sustainable basis and doing good for the environment and for society. The missions are intrinsically dependent on each other.

Put another way, economic health and social health depend on each other. We have to increasingly look at business missions and our economic policy objectives as resting on social health, and recognise that we are not going to succeed in our social agenda without a vibrant economy and continued innovation. They depend on each other.

We are past the harshest effects of COVID globally - it is not over yet, but hopefully we are past the worst. Much of the world is also past the economic recession. But many countries are in lasting social recession – a social recession that predated COVID, but was accentuated by COVID - wider social distances between people, and a loosening of the threads that bind society. When you combine that social recession with the looming challenge of the climate crisis; with the fact that we are in a pandemic era where we have to prepare for the recurring outbreaks of infectious diseases; and you combine that with a geopolitical environment that is now much more fragile; we have a confluence of forces that are going to make things much more difficult and unpredictable around the world.

It therefore requires a much deeper collaboration, and that melding of missions - broaden that collective space between the individual missions, an especially the space that enables making a profit while doing good. We are not going to be able to tackle this otherwise.

That is what raiSE is about. You were founded in 2015 and have grown significantly since, helped to spawn new social enterprises, supported them, and catalysed networks among enterprises. We are still very early in the journey, but you are off to a very good start.

But as we think about this journey, and we think about the scale of the problem, it requires thinking not just about social enterprises. It requires thinking much more broadly about businesses. We have to mainstream business responsibility, in every sector - responsibility for the environment, for social inclusion and keeping the threads of society tightly woven.

Every business must be concerned about making a profit while doing good. It has to go beyond CSR. CSR is good, but it has to go beyond nice-to-have CSR efforts. It has to be integral to business operations. That is what it means to mainstream business responsibility - make it integral to the way we operate a business, integral in the investor mindset and integral to the way all stakeholders engage with businesses.

It means dealing with suppliers fairly, particularly SMEs, and helping to develop capabilities jointly, up and down the supply chain. Most importantly, it means treating our own people fairly - treating lowest paid employees fairly and enabling them to earn a decent income that improves over time as they progress in their careers. And hiring differently. Our hiring practices are still too rigid and credential-based, and without intending to be so, discriminatory. We have to hire differently. Hire not just on the basis of past credentials but a person's aptitude and willingness to learn, and invest in them and upskill them continually. That business responsibility is a very important part of an inclusive society, not just what we are doing through the Progressive Wage Model and various government policies to supplement wages through Workfare. How in the everyday business of life we pay employees, how we upskill them, how we ensure that everyone progress in their careers.

I would say here, a particular challenge that we have is for businesses to take mid-career workers more seriously - those who want to come back into the workforce, those who are dislodged from previous employment and need to gain new jobs. Take them seriously. Their skills may not immediately match the needs of the job, but they can be reskilled, and ways found to leverage their experience and maturity.

And take differently abled members of our society seriously. That’s an important challenge for the future as well. I think we’ve done well to build up the special education sector. We are still developing it but it’s now in a far better shape than it was two decades ago or even a decade ago. Our next big challenge is in employment for the differently abled. There are some good examples. UOB started on this almost a decade ago - hiring persons with autism, helping them play a very useful role in UOB’s Scan Hub, where they digitised and archived customer documents - and is now taking this further. Likewise, a Temasek initiative with Autistic Resource Centre (ARC), working with Ensign, a cybersecurity firm, again to train persons with autism. It got off to an impressive start, so they are expanding the scheme.

At the end of the day, we’ve got to change the culture of business to wanting to do well by doing good. It will be an evolutionary process. We cannot get there quickly. But we have to spread that culture. Some firms taking the lead, and investors taking the lead and nudging firms. Still a long way to go, but more businesses are now recognising that they are less likely to do well in the long term if they short-change our collective future. Shareholders too, particularly family offices and foundations who are taking the lead in this, are recognising that a business focus on social and environmental impact will be a value creator, not just a cost centre. So, this change is happening, but it’s still early days, and we still have quite some ways to go.

Consumers are also moving, globally. We have seen that in the wake of the war in Ukraine, but we have been seeing it more broadly – an increased concern for the environment, carbon footprints. It starts with consumers buying less or boycotting the most egregious producers. But it is increasingly moving into a more discerning attitude, consumers trying to reward businesses that are taking the lead. When we buy something, we don’t just look at the branding in the front. Turn to the back and look at the fine print. We need standards for that fine print, standards of disclosure across a whole range of consumer products.

Employees too are a force for change. Around the world, you can see that. Between the baby boomer generation and the youngest generation of employees, the latest alphabet after Z, there’s been a major shift. A new generation wants to be engaged in companies with an authentic purpose, environmental or social or both. They want that engagement, and they want it to be authentic and integral, not just slogans and going beyond CSR. So, this too will be a force for change.

We have to take ‘doing well by doing good’ to the next level in Singapore. We are off to a good start, still some ways to go, and we have to take it to the next level. Catalysing this intersection of business purpose with social and environmental purpose - in Singapore as well as across the region. We should think of Singapore's collective purpose in regional terms, think of opportunities across the region to uplift people. Singapore will do well if we are in a region where everyone is being uplifted. That has always been the case. But that’s not just about the state or government policies. It is about businesses, and it is for Singaporeans as individuals wanting to do good in Singapore and around the region. There is huge opportunity for that.

I think the initiatives that raiSE is taking are very helpful and important steps. We must find ways in which we can share expertise across the different stakeholders and share risk. That’s the way we expand that collective space between the different missions, between profit and doing good. Find ways in which the public, private, philanthropic and community sectors can share risk and share expertise.

Three initiatives that you have now embarked on, all very helpful.

First on catalysing finance itself - the social impact bonds that you have launched, aimed at providing jobs as well as retention in jobs for persons in recovery from mental health issues. I think that’s a very good example. It involves social enterprises: the project manager, which is Social Venture Partnerships and the service provider, Findjobs. NCSS and its partners were deeply involved - IMH, Singapore Association of Mental Health, and Singapore Anglican Community Services – they all worked together to shape the design of this programme, and also to help refer people to the job agency. And the providers of capital - Johnson & Johnson, a key investor, AP ventures which is a philanthropy venture, and C Plus V Foundation, which came through SymAsia, the Credit Suisse philanthropy platform. And raiSE came in as an outcome funder - funding based on outcomes. A good melding of expertise, different risk orientations, bringing both capital and purpose together.

A second initiative is building capabilities for social enterprise. raiSE has partnered with Quest Ventures, which is an established VC player in Singapore. raiSE provides the seed and early-stage grants, and Quest puts the enterprises on its accelerator programme, which means providing the curriculum, the tools and very importantly, giving them access to a network of investors so there is the potential for further funding.

Third initiative, talent, and developing the skills and aptitudes required for social enterprise. raiSE has partnered here with Singapore University of Social Sciences (SUSS), ideally chosen, to develop those instincts and skills when people are in school. Many SUSS students are in fact working adults who already have some experience. So, they come with experience, skills, but the programme is providing them with deeper immersion - traineeships that involve immersion in education, health, and wellness ventures – a range of ventures both here in Singapore, as well as the region.

We have to try different initiatives, different experiments, and find ways of spreading this culture of combining the profit motive with social good. Still early days, but I believe in Singapore we can do this well. We can develop collective purpose and deeper collaborations between businesses, social enterprise, community bodies, social agencies and government agencies. In so doing, we evolve a new culture of business, that allows businesses to be viewed as integral to our social mission and allow them to sustain success over the long term.

I would like to thank everyone who has been involved with raiSE, and thank all of you - from the different places you sit, including the family offices, and foundations – all of you are catalysts on this journey. We’ve got to be willing to take some risks, put in additional effort, and find ways of leveraging on each other.

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Fireside chat transcript

Mr Gautam Banerjee: Once again, thank you for being with us this morning, SM. You’ve been a great supporter of raiSE right from the very start. As you said, we started this journey not that long back, in 2015. Two years later, when we had our first event, you were there as our keynote speaker, and you encouraged us and have given us a lot of support over the years. As you said, raiSE has come some way but it is still very early on in this journey.

When we first started, raiSE, we just had a few individuals. For many of you might not know, social enterprise is not a new thing, a new concept. We were doing this within the Ministry of Family and Social Development. This was being done. But then it was felt that maybe we split it out into a company limited with guarantee outside of the government department and see if we get some private sector board members and that is how I got involved. Fu Hua, who was then NCSS’s Chairman convinced me that it is a good thing to do and I really appreciated that he thought of me because this is one of the really fulfilling parts of my journey. When you work for a private equity firm, you need to have some good karma, and this is certainly helping me in that sort of quest. I think John is laughing and nodding his head as a GIC man. I think it has really been, as you said, SM, you gave a very good summary of where we are and the need for stakeholders and not just shareholder returns and the need to really work at those intersections of social and corporate objectives.

One of the first things I did was to rope in quite a few members from the private sector to join the board. Alfie, my CEO, kept saying that the board will be bigger than the employees, but it was alright because we didn't need to pay the board members and we would get great ideas, great networks, which is important. When you bring these people on to your board, they all have very strong ideas and strong views. When we were starting off with an open canvas, in a completely empty canvas, and we had to come up with the vision and mission. There was a big argument as to what our vision should be as a sector developer. Many of my board members were a little, I would say they felt that we were not bold enough in our vision because our vision is basically to build a caring and inclusive society by developing social enterprise. That was our vision and our mission was to raise awareness of social enterprises, build capacity in social enterprises, see new social enterprises be networked with SEs both in the region and outside. Some of my board members who were running big companies were, ‘well, that's not good enough’. And I think Teresa, in her opening speech said, every enterprise is social enterprise, because, as you have said SM, we have had reasonable success in our journey so far. But if you look at it very critically, I think the main challenge has been that we have worked with social enterprises and social enterprises are mainly start-ups, SMEs, they are very small, employing maybe 20 to 30 people, sometimes a bit more, and some from the disadvantaged sectors. So the impact they make on society is limited. It is good, and it is a good start. We learn a lot of things, but I think it is limited. You said in your speech, the only way we will make an impact is if the big companies take on this and realize that they need to do more. They need to be more socially minded. They need to really get into this whole area of how do they work to wider stakeholders, and I think you said it very well.

So I just wanted to ask your advice and views on this change of what we are trying to do, trying to change our thinking and our mind-set to ‘every return to social enterprise’. I think, for myself, that is not that radical change. It is actually incremental, but it is a mind-set, more of a mind-set than a big change. What do you think?

SM Tharman Shanmugaratnam: It’s a very good question. We have to encourage every company to start thinking about its mission in broader terms, which means not sacrificing its business mission - the need for sustainable profits - but finding that intersection between making profit and doing good. But while we want to encourage everyone to get on that journey, it should not be too easy for every company to start calling itself a social enterprise. You need standards. You need some norms that companies need to be performing up to. That requires some scrutiny. Scrutiny, very importantly, on the part of investors, and scrutiny on the part of consumers and employees. So don’t make it too easy for every company to start branding itself as a social enterprise. Just like it mustn’t be too easy for companies to say that we are investing in environmental sustainability. We know that much of that today involves greenwashing.

We need better metrics, and we need a culture where employees, consumers and investors are looking not just at the metrics, but are evaluating companies qualitatively as well.

There is a lot of discussion taking place on this with regard to the environment - getting better metrics. This is a huge challenge. But we are even further behind when it comes to the ‘S’ in the ESG, which is intrinsically less quantifiable. I don’t think we want to make it a mere checklist. Some things may have to be in a checklist, but it has to go beyond that. We need to develop norms, some way of recognizing leaders and role models, and some way of embarrassing those that are staying out egregiously.

It requires investors, especially, to take the lead. An interesting fact, if you look at surveys of family offices, foundations, high net worth individuals, there was a survey done by Campden Wealth Research for example, there has been a very significant increase in the percentage of the portfolios of these players that is now aimed at social impact. The desire is there. They recognize that you can achieve social impact with a decent and sustainable return over time. So, I think investors are going to be very important in taking the lead, and working actively with the senior management of companies. We need better metrics, but we also need this culture.

The World Economic Forum (WEF) has embarked on this in a systematic way. It has an International Business Council, which is comprised, roughly speaking, the leading companies in each sector. It has worked together with the Big Four accountancy firms, to develop meaningful metrics. Core metrics, such as how inclusive your workplace practices are, how you treat your lowest paid employees, and the health and safety of your employees, and expanded metrics like how well you work with unions. And there are broader prosperity metrics, because we should never take our eyes off the fact that if a company does well in innovation, raising productivity and enhancing economic growth, that’s a big asset for society as well. So, there is a range of metrics. None of them to be taken too literally. But we need metrics. We need some way of scrutinizing companies and highlighting the positive role models and letting consumers and markets do their work on those that are the opposite.

It’s the doing that will be important. We know roughly what we want to do, but how we go about it is going to be important.

Mr Banerjee: I think those are really excellent points. These are points which we have also mulled over. For example, raiSE is a membership body. We have had this issue of some of us social enterprises saying that they are social enterprises, but not quite there. In our initial few years, we have kept it a little bit light. We want a thousand flowers to bloom and then give them a bit of a chance and see whether they can get there, rather than be very prescriptive. But I think the time has come, as you said, especially if you want to move it to the enterprise level, there must be some criteria. So we have been in been engaging, essentially, the stock exchange, because I do feel that this ESG agenda, which now everyone has had to do it. It is something which no listed company can ignore because it is something which is in the listing. But it is the ‘S’ of the ESG is the more difficult one. I think there are now, as you said, standards on environment and governance is quite well regulated. But the ‘S’ is the one which is challenging. I think we are in engagement with the with the stock exchange, Sim Boon Ann, who is one of my directors, is actually speaking to them to see how we how we can bring on this. I think, as you said, that is the key.

I agree with you; I think it cannot be too prescriptive. It must be by encouragement, highlight companies that are doing well. The Conference Board has taken a lead in this in the US where they are highlighting companies who have done really well in the ‘S’ part of ESG and just sharing that so that then can lift others. Companies like Unilever, which has a lot of suppliers, but how to bring onto your supply chain, social enterprises. Great examples, instead of just giving things away, training people in IT, training people and giving them jobs in your suppliers. Those are the things that we have to work on.

raiSE also has a bit of an issue as a sector developer, we cannot also be the regulator. There are some of these issues that I will have to come back to our Ministry, MSF, and maybe the Finance Ministry as well, to take this to the next step.

I think we talked about the presence of family offices and foundations in Singapore. That has really taken off, SM. We have encouraged global family offices to be here and some of them are in the room here today. I believe that they will really add to this ecosystem. Any advice you have for them on the social impact bonds, how do we de-risk some of these investment areas? I think what we find sometimes challenging to mobilize capital in areas where there is a big social need but the return can be a bit challenging. You can refer to the social impact bond; it took us an eternity to get there. We had great supporters from Johnson & Johnson. But just feeling a bit impatient that we are not doing enough of this.

SM: You are right. We’ve started. We need to make it something that is common in the minds of investors. But you do need catalysts. Like the social impact bond we were talking about, focused on jobs for persons in recovery from mental illness.

Typically, I think the foundations and family officers can play a very useful role as catalyst, coming in to de-risk the investment, either by providing first loss capital or by sharing in profit but with a cap on their own share. It’s taking place.

There is another good example, listed recently in the Singapore Stock Exchange - the Women's Livelihood Bond for Climate. It essentially raises money that is on-lent in the form of microcredits to underserved women in Cambodia, India, Indonesia and the Philippines. The de-risking was done by the Women's Catalyst Fund, that came in to provide a first loss guarantee, in order that more investors came in to subscribe.

So, there are ways in which the philanthropies and family offices, investors with greater risk absorption capacity, can come in to de-risk investments and crowd in a lot more private capital. We need more examples like that.

If you look around the region, start by thinking: about what are the big problems? The big problems have to do with underinvestment in public goods - in education, health care, water and sanitation, and biodiversity. Public goods are greatly under invested in, across the world, but certainly in the world around us in Asia. Public sector balance sheets are not going to be able to deal with this adequately. They are already quite stretched in many countries. Debt levels are already on the high side. So, you need a way to mobilize private capital for investment in public goods. That requires of course clear regulation on the part of government, so that if someone is investing in water or irrigation projects for example, they are fairly certain that the rules on pricing are not going to change midway through the life of the project. But apart from clear regulation, it requires de-risking. The multilateral development banks, national agencies, plus the foundations and philanthropies can play a very useful role in de-risking investments.

All this is doable; it requires catalysts and leadership. It requires that people see success on the ground, because success spawns more success. We have to get on with this because the underinvestment in critical public goods - education, health care, water and sanitation - an often ignored but critical challenge - and biodiversity and holding climate change at bay is in everyone’s interest. It is Singapore's interests that the rest of Asia sees more investment in these areas. We should be a catalyst.

Mr Banerjee: Those are very good points. In Singapore, I should mention that Temasek and the Temasek stable of companies are doing a lot in this area. In the panel discussions which are going to follow, we are going to have a little bit more discussion and engagement on exactly the subjects that you brought up. But I fully agree with you that this is something which requires cooperation between various groups, whether it is with the regulators, the companies, the public sector. But there are large areas of work that needs to be done, as you pointed out, those sectors which are underserved, not getting enough capital. Certainly, some of the are in Singapore. Perhaps the infrastructure in Singapore is great, we do not have issues like water and sanitation, but inequality, people with issues which prevent them from going straight to employment. All of those things are enough issues for us to be involved in. I think raiSE will work with these organizations which are already very much committed to moving the agenda and also in partnership with the family offices and foundations. Thank you very much for being with us, SM, and hopefully, we can build on what we have done in these few years.

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