Best Practices for Board Excellence

The Majestic Hotel, Kuala Lumpur

Monday, 7 August 2017

Bismillahirrahmanirrahim

Assalamualaikum wa Rahmatullahi wa Barakatuh

Salam Sejahtera, Salam 1Malaysia and a very good morning

Professor Dr. Randel Carlock, Ladies and Gentlemen,

I very much look forward to having this conversation with you today. This is because all of you, with the exception of Dr Carlock, are in an executive position with PETRONAS and/or its subsidiaries; and all are on the board(s) of PETRONAS-related entities. More importantly, you all are on the upswing. I see that a number of you are already in Datuk Wan Zul’s position in your respective area.

2. I know that I am here to do the context setting for your 1-day event today. One that is related to Board of Directors and being a Director of the Board, covering the subject “Best Practices for Board Excellence”. However given your dual roles, I cannot resist saying this: “Best Practices for Board Excellence” is the same as learning about “Best Practices for Management Excellence”.

3. You will learn or has learned that one important responsibility of any Board is related to succession planning. Therefore an event like today, although short, gives a window for me to see so many good timber in our forest. And, an opportunity for me to give my views to an important captive audience on a number of issues which I think are important for us to share.

4. I am therefore very pleased to be here today amongst you – the leaders of PETRONAS – to do the context setting on a learning that is crucial for senior executives as well as board members across PETRONAS Group of Companies to be equipped with. Skills and knowledge to prudently manage risks, champion governance, embrace diversity and investing in human capital effectively in our journey to push ourselves further. Our personal growth. Pushing our Organisation to greater heights.

5. I take great pride, as I am sure you do too, of PETRONAS’ achievements. And what we stand for: the SOUL of PETRONAS. But in a 52-thousand persons entity surely there must be strays and lapses. There must be ZETO for these. On INTEGRITY, on HSSE.

6. So all of you, all of us, jointly and severally, as members of Boards and as senior management, must set and/or drive THE TONE AT THE TOP.

The tone is not only about the NO NO.

We must also set the tone on the YES YES. Such as:
• Sense of urgency
• Collaboration rather than silos
• Trust and consultation.

7. As leaders WE MUST LEAD BY EXAMPLE. And, if we have 2 standards, the standard for us MUST BE HIGHER.

Ladies and Gentlemen,

8. Just 2 weeks ago, we woke up to the news of Britain’s plan to ban the sales of new gasoline and diesel cars starting in 2040. Britain is not alone in pushing for cleaner environment. At least 3 other countries have announced similar plans – France by 2040 as well, India by 2030, Norway by 2025. Another 10 countries: Austria, China, Denmark, Germany, Ireland, Japan, the Netherlands, Portugal, Korea and Spain have all set their electric car sales targets in place.

9. What comes to mind immediately: Growth demand for fossil fuels, our core business, will certainly be impacted. Questions will be asked – for instance, what will our 1,000 plus PETRONAS Dagangan retail stations be selling by 2040? And beyond? What are we going to do with our oil fields when demand is no longer there? These are some questions and scenarios that might just come knocking on our doors not too far away from now. But why wait? If ICE is going to be out, surely other users of oil that we now know may also in time follow suit. And, if “fossil” is so bad, can we not “de-fossilise” ourselves?

10. That is why I am very pleased that the National Blue Ocean Strategy (NBOS) Summit, chaired by YAB Prime Minister, appointed PETRONAS to lead the Transformasi Nasional 2050 (TN50) agenda for the Oil & Gas, Energy and Environment (OGEE) sector. It is an excellent opportunity for us in PETRONAS to demonstrate that the PETRONAS SOUL is beyond the silo of the company’s interest. That we care for the country and for the world. And that we are capable, able and willing to bring the 27th century mind-set forward to today. We must strive to think and act for tomorrow, TODAY.

11. With the aspiration for Malaysia’s OGEE to have a progressive energy market, premised on energy efficiency, sustainability and low-carbon economy, PETRONAS will need to harness key stakeholders such as EPU, KeTTHA, MITI, NRE, MOSTI, Energy Commission, industries representatives as well as academicians – where all of us must think ahead for what’s best for this country – for the sake of our children and generations to come. We in PETRONAS are very familiar in the Oil and Gas but may not be the most competent in other areas of Energy and Environment. We cannot afford to be territorial like a little Napoleon protecting his or her turf. Everybody is expected to go beyond their remit and must be able to see the bigger picture!

12. Likewise, for each one of you here, regardless if you’re from Corporate, Downstream or Upstream, we must leverage on each of our strengths and learn from one another for the greater good of PETRONAS. More so for some of you who would have external peers from differing organisations and industries especially in our Public Listed and Partly Owned entities. We must be united in our greater purpose. Beyond our remit – beyond our OPU or our business. For the COMMON GOOD.

Colleagues,

13. In 10 days’ time we will be celebrating our 43rd anniversary. For many years now, PETRONAS has been a formidable anchor in the nation’s corporate scene. The successes that we have enjoyed to date are testaments to the strong foundations laid by our founding fathers and unifying Shared Values that has been instilled into each one of us in PETRONAS all these years. This has transformed PETRONAS from just a domestic regulator into a reputable and respectable organisation, not just within our region but globally too.

14. To be Malaysia’s one and only Fortune Global 500.

15. Having said so, in the latest Fortune Global 500, PETRONAS’ ranking is now at 184th spot. A massive drop of almost 60 places from last year’s ranking at 125. I believe this ranking will deteriorate further if the price of oil, which is not within our control, remains at the current level.

16. What is more important to me however is the behaviour and mind-set of a Fortune Global 500 Company! That to me is far more important than the ranking itself. And, that is within our control. With CACTUS transformation journey as well as the PETRONAS Culture Beliefs already embarked on and in place, there has to be a sense of urgency in all of us to disrupt ourselves RATHER than us being disrupted! We will go far, whether as individuals or organisations if we always challenge the status quo. It must be in our DNA to always find better, faster solutions. For example leading on Going Digital.

17. Likewise, an effective Board must have similar qualities too. One that encourages conversations with candour that will result in the Board making the best informed decision based on timely access to information that could influence and impact the Board’s views. This is what I and Datuk Wan Zul and the PETRONAS Board are doing. And, encouraging and hectoring everyone in our universe to do. This is the ecosystem that will continue to spur on behaviours and actions of Board members that shall lead PETRONAS towards long term sustainable development.

Ladies and Gentlemen,

18. Last year in 2016, we increased the diversity of our Main Board with the addition of two new Board Members representing the State of Sarawak and the State of Sabah. So when YB Tan Sri Datuk Amar Hj Mohamad Morshidi responded on a call for PETRONAS to show a “more convincing level of seriousness when treating Sarawak’s demand” just in April recently, I thought we are reaping the benefits of diversity and inclusiveness in our Main Board. This, we ought to do more!

19. Given the greater demand for all of us to ‘step-up’ our game, it entails the need for directors who can offer differing views and independent oversight especially in critical areas such as risk and strategy. Diversity can also bring in experience in innovation or having the capability to drive innovation. With more diversity, we are able to appreciate the different opinions or perspectives that will be instrumental for us to arrive at what is best for PETRONAS. It also helps us to see our blind spots and with their inputs we can work towards eliminating or at least reducing the blind spots. Diversity is applicable across gender, age, ethnicity and industry. In this respect, I am glad that PETRONAS has rigorously reshuffled membership to include directors from differing businesses. Without a doubt, the leadership pipeline must remain flowing for future appointments of Board members – in the Main Board as well as its subsidiaries.

20. Specifically on women participation at the Board level, we must make conscious efforts in increasing the participation of professional women in higher roles and functions throughout PETRONAS Group. At the moment, we have only 42 women representation or 9.5% out of total 446 directors across PETRONAS Group of Companies. But it should not only be at the Board level. It is important that there be sufficient pool of ready women talent to be considered for future appointments to Management and to contribute to the funnel at Board levels. I firmly believe that all of us can be instrumental in increasing the women participation, in diversifying our thoughts and views. And, while remaining true to our compass of merit! This tone at the top, we must set.

Ladies and Gentlemen,

21. I sincerely hope, you will make full use of today’s safe learning environment to have an open, frank and constructive discussion with Professor Dr Randel Carlock and everyone here. I strongly urge each one of you to actively seek and give feedback on today’s program for continuous improvement, in line with the spirit of “Tell Me”. The organising team consisting of the Group Secretarial & Board Governance, Malaysian Directors Academy (MINDA), and PLC strive to ensure the program are constantly relevant and comprehensive. Help them, to help us to receive the best learning.

22. I am confident that we will be successful in our pursuit of Board Excellence through the best practices that will be shared and discussed today. This will benefit us so that we can collectively fulfil our Amanah, leaving a lasting legacy for this national treasure. And future generations of our Country.

Thank you.