BRITAIN IN HONG KONG BRITISH CHAMBER MAGAZINE
CITY RESILIENCE JUL-AUG 2022 • ISSUE 79
C O N T E N T S 02 CHAIRMAN'S MESSAGE a letter from the Chamber Chairman to share updates on the Chamber's activities over the past two months
05 WHAT IS A RESILIENT CITY?
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Ir Dr Anne Kerr Managing Director, Greater China Global Head Cities Mott macdonald
PERSPECTIVES FEATURE James Arnett Partner and Head of APAC Capco
15 ESG AND SUSTAINABLE FINANCE BEST PRACTICES BROUGHT TO YOU FROM THE BOARDROOM OF CK HUTCHISON Interview with Ms. Edith Shih, Executive Director of CK Hutchison
19 HOW TO CULTIVATE RESILIENCE IN A NEW ERA OF HYBRID WORK Amber Matthews, Director, WorkSpace Futures APAC & EMEA Research, Steelcase
23 EXPLORING THE ADVANTAGES OF DISPUTE RESOLUTION IN HONG KONG Kenix Yuen, Partner and Adrian Li, Associate Gall solicitors
26 HONG KONG - A CITY OF INTEGRITY AND LEVEL PLAYING FIELD ICAC
CHAIRMAN'S MESSAGE Dear Members “It’s tough to make predictions, especially about the future.” Thus spoke Yogi Berra, the American baseball player who was as famous for his malapropisms as he was for his brilliance on the field. “It’s like déjà vu all over again” was another famous Yogi-ism. I recalled both these pithy observations as I sat down to write this month’s magazine statement and find that I, like the rest of Hong Kong, am still obsessing about COVID. I look forward to the magazine statement that no longer needs to lead with a commentary on border and other restrictions. Perhaps we are making progress with the easing that was announced for 1st May but concerns are still very much “front-of-mind”. Today, as I write, it is true that the level of daily infection is (for Hong Kong, at least) high – at around 1,800 cases. However, the total number of patients in hospital amounts to 558 with somewhere between 60-90 being admitted on
a daily basis (and around the same number being discharged). Of those patients in hospital 12 are in a serious condition and 12 are in a critical condition. Only three are receiving intensive care. The Hospital Authority itself notes that the current level of hospitalisations has “not caused serious impact to the service of public hospitals”. The functioning operation of our healthcare system is not under threat. After a certain level of community immunity has been achieved – through a combination of vaccinations and past infections – the experts have held that social and border restrictions are only needed to protect the healthcare system. There comes a point when the balance of protecting lives over protecting livelihoods tips in favour of the latter. Anyone who has taken a tour of shopping centres and wet markets beyond Central can attest to the struggle of many shopkeepers and restaurateurs simply to get by. So why do we arrangements?
persist
with
our
At the Chamber, we have continued to for travel in and out of the SAR to be normal operating procedure in most world. We want home quarantine XXXXXXX
current
COVID
lobby, in particular, a lot more like the of the rest of the at least and no
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quarantine at best – understanding, of course, that travellers must be able to present the requisite vaccination records (and PCR test results if absolutely necessary). We also stand up for our international school system. One of the great attractions of making a career move to Hong Kong is the quality of our international schools. Children get a first-class international education in Hong Kong. But they need to be in the classroom and parents need to be certain that home schooling will not be imposed on a whim.
Head Offices have not visited Hong Kong, in some cases, for more than three years; we are seeing investment priorities move away to those regions where progress is more immediate and tangible; anyone running a regional business in Hong Kong has been severely challenged in the last half-year as countries and territories elsewhere have re-opened; regional heads have been obliged to move elsewhere so that they can freely travel around their business operations; and we need to ensure a clear message that our schools will remain open unless of course there is really a necessity to protect the children and teachers.
It’s still reading like deja vu all over again! I am pleased to say these arrangements are also front of mind for more than the international chambers. Hong Kong business organisations that twelve months ago were pushing the Government to prioritise an opening of the mainland boundary now recognise that this is probably some way off. I hear very few voices today saying anything other than that international borders need to open now. After all, we waited almost six months in 2021 with zero COVID cases and the boundary remained subject to strict quarantine restrictions. We can stay hermetically sealed only for so long. A small delegation from the Chamber had the opportunity, at the start of June, to put our case for opening the international borders to a group from the China Liaison Office in a meeting which lasted two hours. I have to say I took some heart from this. The CLO group asked many searching questions and were concerned to understand the impact on our membership of current COVID policies. They were in listening and understanding mode. Our frustration, as we said at the start of our meeting, is that we have bags of confidence in the business opportunities for Hong Kong but we find these increasingly difficult to action. The 14th Five Year Plan and last year’s Chief Executive Policy Address set out an ambitious and exciting programme for the future with a clear focus on the GBA and new areas of business opportunity whilst still keeping and promoting the core competencies of financial services, real estate and logistics.
Underscoring all of these messages is the importance of shifting policy away from protecting lives to promoting livelihoods. I finished the meeting by explaining that Hong Kong was at something of an inflection point over this summer. There is a role for Hong Kong solely as an offshore service centre for the mainland. But that is NOT what any of us want and it is NOT how any of us have invested in and run our businesses to date. We see Hong Kong both as a super-connector for the mainland AND as a regional trade and investment hub. But borders need to open. There is now a great opportunity to shift gear. Since the last edition of the magazine, Hong Kong has held its Chief Executive election and determined the make-up of the new administration. John Lee’s manifesto is short and to the point. There is, however, plenty of space given up to the role and importance of international business. The Foreword alone refers to Hong Kong’s “global inter-connectivity”; “its position as a leading international city”; continuing to be “inclusive, diverse and open towards the world”; “market-oriented and international business environment”; “connecting our country and the rest of the world” and being “the best entry point for global business into the mainland market”.
We made four very clear points: There has been a serious loss of talent in the first six months of the year which has been almost impossible to replace; we are hopeful that people will return but the longer they are away the less likely this seems and the more expensive it becomes;
We have sometimes claimed (although, to be honest, never fully verified) that the totality of BritCham’s members in Hong Kong is the largest collection of private sector employers and contributors to the economy through investment and taxes. It is really pleasing to see the role of 03
international business acknowledged Executive-Elect’s manifesto.
in
the
Chief
At the Chamber, we have a plan to connect with the new Administration and will over the course of the rest of this year position ourselves as a thought-leader for business in Hong Kong. Indeed, we have already started and submitted some first thoughts on the manifesto in a letter which you can find through this link. We have in recent weeks also submitted our first thoughts on how the Administration might support the enormous infrastructure and construction plan, set out in the 2021 Policy Address, through the deployment of “Public-Private-Partnerships” (PPP). You can find this submission through this link.
As we come to the half-year point of 2022 and welcome and congratulate the new Administration, I am hopeful for our future. Hong Kong has been through some really difficult times over the last three years but the resilience of its institutions and the enterprise of its people have always shone through. I do think we have the foundations for a new and determined sense of direction. If you were in Hong Kong in 2003 you will recall how business activity grew exponentially when the SARS epidemic was finally over and restrictions lifted. We certainly need that sense of direction. Without it we might end up thinking like Yogi Berra again: “If you don’t know where you’re going you’ll end up someplace else”
One of the questions I have been asked, particularly on my visits to the UK, has been whether we might appeal the so-called “three-year rule” for Hong Kong Permanent Residents. This states that you will give up your PR if you have been absent from Hong Kong for more than three years. We have worked with both the CEDB and the Immigration Bureau to understand the parameters better. In summary, there is no scope to relax the three-year rule but there is scope to determine when the clock starts to tick. This is not necessarily at the point when you leave Hong Kong. You can find the email through this link.
Peter Burnett, OBE Chairman, The British Chamber of Commerce in Hong Kong
WHAT IS A RESILIENT CITY? IR DR ANNE KERR MANAGING DIRECTOR, GREATER CHINA GLOBAL HEAD CITIES MOTT MACDONALD
Gather together with two other people and ask what resilience means to them and it is highly likely there will several definitions given. Then for good measure add in the dimension of resilience in the city context and much broader and wider debates will ensue. At the strategic level resilient cities are better places to live, do business and invest in for the future. Resilient cities are not only better able to withstand the increasing severity of climate shocks, but also non-climate risks, such as seismic, geo-political and other hazards. The consequences of storms, floods, heatwaves and other impacts are evidenced by degradation and destruction of buildings and infrastructure, failure of water, sanitation, energy, transport and communication services, which ultimately affect people’s lives and livelihoods. By focusing efforts on resilience, cities will be better XX
prepared for the future, enabling citizens to work together in their communities for wider benefits to be realized. So if this is the case, then how do we tactically embed resilience into cities and communities?
We firstly need to consider - what is the city? The city is the people. Those who inhabit it, who work in it, who travel to visit and those who yearn to be there! Using the definition that resilient cities are places which can absorb and recover from shocks and be well prepared for future shocks, it is important to note that the “shocks” will be experienced in local XX 05
contexts in very different ways, and the responses will be locally adapted. Many cities are planning for and dealing with shocks today but the response should be to build back better and improve preparedness for future shocks, otherwise the opportunity to increase resilience is lost.
However setting principles for development and regeneration with resilience at the centre focuses attention of decision makers, and investors, and is demonstrably important as Governments local and central seek to reduce and meet decarbonization targets.
Over the last couple of years, however, we have seen similar types of responses to the lock downs and restrictions due to the COVID-19 outbreak. Many people who would hitherto have been spending weekends, and longer, in places far from their daily lives, were in some ways forced to reconnect with their local environs. Here in Hong Kong, many people renewed their connections with nature, as witnessed by the number of people using the country parks and hiking trails, the beaches, the waterways for kayaking and sailing among other outdoor activities.
PURPOSEFUL PLANNING OF OUR ASSETS REAPS BENEFITS
It has long been known, and studies support, the view that spending time in nature boosts employee productivity and is good for students’ learning, while a view of outside helps patients in hospital to recover more quickly and require less medication. Studies also show that humans have an innate attraction to nature and will spend time there – and return repeatedly – if it is accessible and safe. This is why we want safe and resilient cities! RESILIENCE – A COMPLEX ISSUE Resilience is a finely balanced and complex interconnection of social, institutional, economic, health and environmental elements. How to recover may not be the same as preparing for future shocks, and there is no formula for increasing resilience across cities. So a city’s response to resilience in its many forms needs to be tailored to the specific requirements as well as budgetary priorities.
As we are increasingly aware our services and asset systems are increasingly interconnected and interdependent. The current situation of disruptions to fuel and wheat supplies is having consequences from the price of consumables to the disruption in vast and complicated supply chains stretching around the world. Disruption in one sector can have diverse, far-reaching consequences as the failure cascades through others. In urban spaces, water, sanitation, energy, transport and communications are vulnerable and most at risk from such failures. More frequent, intense and enduring extreme weather events, such as flooding and heatwaves, will increase the risk and the level of failure. How we use land within our cities can affect resilience to physical climate risks such as flooding and heat island effects, andover recent years cities and towns have focused attention on becoming greener with emphasis on “green building designs”. But what about the use of the buildings or built environment to solve wider issues of say energy or water or food security? Thinking about food, we import more than >90% of food from outside of HK. Think of the energy used to pack, store, transport and distribute this produce? In Singapore there is a similar food security concern and ambition for decarbonization, the target of 30% of food produced locally by 2030 has resulted in significant efforts to use buildings and other spaces/facilities for local food production creating new sources of revenue and employment X 06
opportunities as well as working towards resolving a food security concern. Setting targets and having defined outcomes will achieve more than relying on good intentions. Adoption of regenerative and biophilic design seeks to create urban spaces and environments that blend perfectly with nature. Such designs go well beyond sustainability. With a focus on renewal, restoration and growth – the desired outcomes are to maximise positive ecological and community outcomes.
buildings, will create habitats that will increase biodiversity, regenerate native species, and provide thriving places for communities. Examples include the recovery of carparks, as pop up gardens and places to pause and reflect. Vegetation including plant food production should be diverse and selected for its ability to sequester carbon, provide natural cooling and purify the air. This will positively tackle climate change, improve health and may even provide food!
It is essential to be able to demonstrate and monetise the positive outcomes from regenerative projects, and demonstrating how they deliver value-for-money. Such outcomes tie in with issues around water consumption, food supplies, energy consumption all of which form the trilemma of insecurity in todays’ world, cities and communities. It is important we nurture a collaborative spirit when seeking to create more resilience in our communities. Collaborators include but are not limited to investors, designers, developers, ecologists, engineers and contractors who come together to deliver buildings and infrastructure that create thriving, biodiverse and vital ecosystems that co-exist with thriving communities. But most importantly collaboration is required with those people living, working, engaging with the communities. NATURE BASED DESIGNS ARE GOOD FOR PEOPLE In order to reconnect people and nature we need to do more than plant some shrubs or the odd green wall. Deliberately rewilding urban areas, even the smallest, leftover spaces and on and inside XXXXXX
Designs should draw on nature. Nature knows how to manage flooding, for example, and nature-based solutions are often cheaper, easier to maintain and more adaptable than many of our conventionally engineered systems. Pak Mong Lake which is located adjacent to the North Lantau Expressway, is an excellent example of such an approach – rather than having huge concrete culverts diverting rainfall from the hillsides of North Lantau the decision was made to retain the embayment and to create “sea-bridges” under the highway. This allows stormwater runoff to flow into the embayment at Siu Ho Wan and the seawater from Siu Ho Wan to flow under and into the lake. This mixing of fresh and saline waters in the lake which was created, provides an enhanced brackish environment which over time become significant in terms of biodiversity and ecological resources. XXXX 07
Many species which would have been eliminated, instead have thrived. A win over simply using concrete. This is only one example of green, blue and living infrastructure in Hong Kong, which can complement or replace grey infrastructure to increase resilience.
through their life to changing social needs and circumstances. This has been evidenced in the relationship many are now having with their workplace, and in an increasingly agile working from anywhere environment the functions of many buildings need to adapt to survive.
Much has been done over the last 3 decades in Hong Kong with the regeneration of Kai Tak and other nullahs and waterways (at Ngong Ping for example as part of the cable car arrivals area), but more opportunities exist – and must be exploited if we are to achieve resilience within the city and especially in the new development areas.
Systems thinking will ensure that multiple long-term benefits are factored into the design and development process to maximise the positive outcomes – in terms of health, jobs, nature etc – from the start and investment decisions are not based solely on capital cost or short-term payback. Returning to the COVID-19 outbreak, this is a stark reminder that society is vulnerable to infectious diseases and as we further encroach on nature similar zoonotic diseases are more likely to emerge.
NATURE BASED SOLUTIONS FOR RESILIENCE RELY ON “SYSTEMS THINKING” Recognising regenerative practices require a systems orientation, we create places and communities that maintain a balance between different environments, and which over time evolve to improve their health and vitality. Like natural ecosystems, buildings need to adapt
We need to understand that if we damage nature, we harm ourselves. Likewise, if we pursue regenerative development and restore and replenish our natural systems, people, communities and society will share in the benefits – and thrive too.
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PRACTICAL ACTION IS URGENTLY NEEDED 1. Owners and operators must look beyond individual assets to understand the extent and complexity of the dependency chains, assessing their vulnerability to climate change and other kinds of shocks and stresses. 2. These interconnections should be identified and, if they cannot be eliminated, a management plan developed or a redundancy plan built into the system to limit the extent of cascade failure. 3. Integrate climate resilience planning with master planning and long-term strategic infrastructure and investment plans to protect against acute events that are already occurring, and prepare for the added impact of both chronic and acute events in the future. 4. Avoid poorly planned infrastructure that could exacerbate climate change or that in mitigating one risk becomes more vulnerable to another. 5. Climate scenarios and risk assessments need to be translated into practical, meaningful action plans and used to make the business case for investing in resilience. 6. Implementing these plans may appear costly, especially when they involve ageing and densely situated assets, but the cost of not having adequate resilience measures in place is far greater. THE RESILIENCE DIVIDEND Whether its increased food production locally or resilience of the cities systems assets there is a clear business case for investment in climate resilience as the asset base continues to grow and as climate impacts increase in severity and frequency.
Resilient cities minimise losses and reduce the future liability risks of assets. There is a dividend in terms of direct and indirect financial returns from investing in resilience, whether that is through improved flood defences or better emergency planning. A city that survives shocks and achieves continuity of, or quickly restores, essential services will be more competitive than rival cities. It will attract greater investment because it will demonstrate that it has the strength and systems to withstand climate change and other hazards. A holistic approach will deliver maximum benefits. As costs associated with climate events continues to rise, and concern increases about levels of debt incurred as a result of COVID-19 responses, the estimated global cost of resilience which was hitherto estimated to be in the order of US$1trn per annum within two to three decades unless there is a major and concerted increase in resilience spending. Asset owners and operators, service providers and communities can’t afford not to invest in improving resilience and require solutions that are cost-effective and sustainable. There is an urgent need to address the shortfalls in resilience funding that occur locally to globally, and initiate projects that respond to increasingly severe climate impacts. Increasing co-operation across the public and private sectors and innovative financial mechanisms need to be developed to unlock the investment needed. Changes in the mindset and fostering a culture change in terms of resilience spend requires a raised awareness. This implies new relationships need to be established, and priorities set.
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It is no longer sufficient to look at assets in isolation and it is essential to take a holistic approach to asset design and funding. Resilience needs to be incorporated into all aspects of urban planning, urban development, urban operation, and urban life.
About Mott MacDonald Opening opportunities with connected thinking. Mott MacDonald is a US$2bn engineering, management and development consultancy and the first company in its class to be independently certified carbon neutral.
Cities need innovative, affordable ways to design new infrastructure or upgrade existing assets to withstand social, economic or climatic shocks.
Our purpose is to improve society by considering social outcomes in everything we do; relentlessly focusing on excellence and digital innovation, transforming our clients' businesses, our communities and employee opportunities. www.mottmac.com
But cities also need to be engaging at all levels with the citizens and stakeholders throughout the development of projects, and in the creation of spaces and developments in the community to enhance resilience of people and places. There is work to do!
PERSPECTIVES In select issues of Britain in Hong Kong, the Chamber checks in with one of its Sterling Members to get a fresh perspective on local businesses, and a peek into the personalities of our captains of industry.
James Arnett Partner and Head of APAC Capco HOW IS BUSINESS? We are in a good place. We grew significantly in 2021 and are targeting even higher growth in 2022. While there is a degree of drag in Hong Kong due to COVID restrictions, we're seeing strong demand from our existing core clients and also robust levels of net new business. That is particularly true in insurance – with significant technology transformation underway across the market, and the convergence of wealth, health and insurance propositions and products, there is a clear opportunity for a dedicated financial services consultancy like Capco. From a capital markets and XX 11
securities services perspective, there is strong demand aligned to robust market growth for our clients across Asia. That work is predominantly around regulation and classic business consulting change. In the wealth, SME and commercial banking spaces it is more of a digital play with new platforms, propositions and millennial-oriented digital-first app offerings. More broadly, as in Western markets, there is a big focus on data management and analytics and on enhancing data commercialization.
WHAT, TO YOUR MIND, HAS BEEN THE MOST CRUCIAL ELEMENT IN THE SUCCESS OF YOUR COMPANY?
WHAT ARE YOUR PLANS FOR THE FIRM IN THE REGION THIS YEAR?
I’ve been in region since January 2021 but with Capco for 11 years, and over that decade or so Capco has grown from 600 to 6000 people globally. That has come from staying very focused on our clients and our core financial services domains. However what really sets us apart is our culture. Capco has retained a real family-type culture that is also highly entrepreneurial, with plenty of freedom to express your ideas and, as we say, to ‘be yourself at work’.
We will be concentrating on four core markets – Hong Kong, Singapore, Thailand, Malaysia – and are confident there is strong growth potential in each across our key domains of capital markets, insurance, wealth and banking. As noted, there is now a massive shift towards digital being the norm, and a focus on the data that drives and underpins that evolution. Both of those trends play directly into our established expertise and experience globally.
The onus we place on diverse perspectives and creative thinking allows us to really change the game – to positively disrupt our clients and the financial services marketplace when it comes to creating and launching products faster, reducing costs from a client’s base or deploying technology in an optimal way. There’s a recognition that we're a ‘big small company’, that we care, that we’re very easy to work with, very collaborative.
WHAT IS THE FIRM’S REGIONAL VISION AND BUSINESS STRATEGY?
WHAT IS YOUR PERSONALLY?
We launched in this region in 2014 and our focus has historically been on international banking. That will not change, given we work with most of the top 50 banks in the world, and indeed I only expect to see that engagement increase. In addition, we now have a greater focus on partnering with local clients to support their transformation needs around data and digital-first, and that is already bearing fruit.
Making Capco the leading financial services digital business consultancy in Asia. We have invested heavily in fresh leadership across the region, which speaks to our commitment to both Hong Kong and Southeast Asia. There is a notable appetite for investment and transformation among our clients and other financial services institutions right now, and we are well positioned to support them on that journey.
A key development has been Capco’s acquisition by Wipro in April 2021. We continue operating as an independent, if wholly-owned, company and brand, but – given Wipro’s status as a global leader in information technology, consulting, and business processing services – that union means we are now positioned to deliver end-to-end transformation at scale. That enhanced capability has already translated on the ground into a number of specific new opportunities.
It is vital to stay relevant and connected to your clients, so I spend up to 60% of my time with them and the rest with my teams. Another key focus as regional head is on how we develop and grow our people and also attract new talent. We have rebooted our graduate programme – that's very important not only to meet short-term talent needs but also for our medium to longer term growth. Today’s graduates are tomorrow’s leaders after all.
DAY-TO-DAY
FOCUS
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WHAT DO YOU CONSIDER THE CURRENT KEY CHALLENGES IN ASIA AND HONG KONG? There are still COVID-related restrictions to consider obviously. The main challenge though is around talent – our work is certainly technology driven, but at heart it remains a people and relationships business, and it is clearly a very tough recruitment market here in APAC. That said, the same challenge exists in London or New York, and while some people are moving out of region, we're also seeing plenty of others wanting to move back or come here for the first time. WHAT DO YOU CONSIDER TO BE HONG KONG’S STRENGTHS AS A REGIONAL FINTECH HUB? There's clear strength in Hong Kong. Fintechs here are well funded and well backed, and we are seeing some unicorns come out of the market. That said, in terms of how fintechs are incubated, more could be done. Looking across other markets globally, the growth, nurturing and mentoring of fintechs is running at extremely high levels – the US or the UK being two key examples. So there's likely more to be done – but the groundwork is very much in place to support that push to the next level. HOW DO YOU SEE FINANCIAL SERVICES IN HONG KONG CONTINUING TO BE TRANSFORMED BY TECHNOLOGY OVER THE NEXT FEW YEARS? We will continue to see an acceleration away from legacy technology and mainframes towards cloud migrations, with an increase in the adoption of Software as a Service in the cloud. The legacy technology core is being removed and modular fintech is being plugged in. Companies are increasingly recognizing the value of fintechs when taking out very manual processes, enhancing cost efficiencies and improving controls, and we accordingly have deep partnerships with InvestCloud, Coherent and Xceptor, to name but a few, to deliver transformation to our XXXX
clients. The area going through the most transformational change on the tech side right now is insurance, due to the high level of legacy IT infrastructure.
PERSONAL HOW LONG HAVE YOU BEEN LIVING IN HONG KONG? I’ve been in Hong Kong 18 months now. I had worked here previously during 2008-09 and again 2015-16, though I was more in and out, but for my wife, who's from Southeast Asia, it's the third time she's lived here. WHAT IS YOUR FAVORITE PLACE IN HONG KONG? Saturday and Sunday mornings on the beach, typically Repulse Bay, with my two young kids. WHAT IS YOUR FAVORITE (NON-PROFESSIONAL) OCCUPATION? Once upon a time it was football, then it was trail running – but now it's probably playing with my kids in a swimming pool or at the beach. IF YOU HAD A MOTTO, WHAT WOULD IT BE? Dream big.
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ESG AND SUSTAINABLE FINANCE BEST PRACTICES BROUGHT TO YOU FROM THE BOARDROOM OF CK HUTCHISON INTERVIEW WITH MS. EDITH SHIH, EXECUTIVE DIRECTOR OF CK HUTCHISON
By Prof. Lapman Lee, Professor of Practice (ESG, FinTech, Governance), Hong Kong Polytechnic University Managing Director, Triniton Advisors, specialised in climate change and sustainability Boardroom strategic advice and training, governance and risk, investor relations and strategic communications. Today’s interview with Ms Edith Shih, Executive Director and Member of the Sustainability Committee. CK Hutchison, and Past International President, The Chartered Governance Institute and Past President, The Hong Kong Chartered Governance Institute, is part of a series of in-depth and in-person ESG interviews with leading Hong Kong-listed companies with the objectives to identify best practices. They include Bank of China (Hong Kong) Limited, CLP Power Hong Kong Limited, MTR Corporation Limited, and New World Development Company Limited covering all five industry sectors which the Financial Stability Board’s Task Force on Climaterelated
Financial
Disclosures
(TCFD)
I realised I was inside the command-and-control centre of a diversified multinational conglomerate with four core businesses (Ports, Retail, Infrastructure, Telecom) and operations across fifty countries. The very first thing I noticed when Edith entered the Board meeting room, with her graceful presence, was that she brought in a thick pile of printed materials (double-sided of course) under her right arm with colourful stickers protruding out of them. This turned out to be the draft of the CK Hutchison 2021 Sustainability Report with her hand-written edits all over the document. She told me that ‘this will see the light of day on Tuesday 31 May’ which was the following day. 1. How does a complex and diversified multinational conglomerate like CK Hutchison decide on which sustainability goals to focus on?
provided
industry-specific supplemental guidance. It was a clear and sunny Monday morning when I entered Cheung Kong Center and pressed the 48th floor for my 11 a.m. meeting with Edith, the most xxxxxx
senior female executive of the 300,000-strong CK Hutchison group, and a member of its seven-person executive board, chaired by Victor Li Tzar Kuoi.
‘It is indeed a challenge to create a set of sustainability goals and make them work for our organisation, considering the breadth and depth of our four core businesses, and geographical reach in over fifty countries,' and she goes on to say ‘though it is an xxxxx
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[1] Business and Sustainable Development Commission [2] Harvard Business Review, The green elusive consumer, 2019
3. As a role model for many in and outside the CK Hutchison group, can you share with us how we can improve diversity, equity, and inclusion?
easier task today to get buy-in, capital investment and dedicated resources compared to ten years ago when the topic of sustainability was not at the top of the mind of many.’ 2. Is ESG all about managing risk, or do you also see opportunities? ‘Yes, while companies and the media tend to focus more on creating awareness of and managing the material risks arising from dynamic and everincreasing stakeholder expectations on ESG issues, there is a significant USD 12 trillion[1] potential economic opportunity (from revenues and savings) out there for sustainable business models and innovations to meaningfully address the UN 2030 Sustainable Development Goals (SDGs),’ Edith shared. ‘For example, A.S. Watson’s 2030 Sustainability Vision focuses on offering sustainable products and services (one of six key sustainability goals at the Retail division) to meet the consumer trend of purchasing purpose-driven brands that advocate sustainability.’ Yet, there appears to be an intention versus action gap that needs to be closed, where two-thirds of consumers say they would like to buy from purposedriven brands, but only one in four do so[2] due to barriers such as the perception of higher pricing and lack of convenience.
‘From a gender diversity perspective at the Board level, we have now five female directors out of eighteen Board members or 28% based on the expertise, perspective, and skillsets they bring to the table. What I would like to see is female directors enter the Boardroom not only as independent Nonexecutive Directors but also as Executive Directors.’ ‘To achieve this, we need to proactively and systematically build a pipeline of more diverse (not just based on gender) next-generation leaders and equip them with the mindset, perspective and skills to take on the top spots based on merit. While we see growing female representation in leadership positions at one or two levels under the Board, where female leaders tend to have stronger representation in areas such as human resources, public relations, and insurance, they are not typically within Board level portfolios.’ ‘Bringing more women into the Board and C-suite is not just a matter of equality of opportunity, it’s a matter of companies fully optimising all the talents at their disposal and enhancing their business performance.’ 4. Not all companies have the resources at their disposal as CK Hutchison does. What would be one piece of advice for companies that are hiring a chief sustainability officer (CSO) or setting up their sustainability function for the very first time? ‘I suggest, beginning with looking at companies they perceive as within their peer group, and then assessing where they are on the spectrum from bestin-class leaders, followers or laggards, decide where they want to be, and communicate that effectively to xxx 16
their key stakeholder constituents’. ‘Not all companies require a dedicated head of ESG or CSO from the start. You can very well invite an existing senior individual or individuals with the right (hard and soft) skills and expertise and ideally passion to wear a double-hat assigning clear additional responsibilities and KPIs. Take it one step at a time, and seek external expertise to augment the management team, if required.' Edith, it was my pleasure to exchange thoughts with you today and I look forward to seeing leading conglomerates like CK Hutchison being pioneers and role models in the sustainability journey to help balance people, planet and profit. Prof. Lapman Lee
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HOW TO CULTIVATE RESILIENCE IN A NEW ERA OF HYBRID WORK BY AMBER MATTHEWS, DIRECTOR, WORKSPACE FUTURES APAC & EMEA RESEARCH, STEELCASE As one of the most diverse regions in the world, Asia represents a mosaic of cultures and perspectives, businesses and opportunities. Naturally, when the COVID-19 pandemic occurred, every company entered the situation with different strengths and vulnerabilities.
robust, adaptable work environment in times of stability and uncertainty. It comes down to people and the power of place – if you invest in these key areas, you can help employees reach their potential and cultivate a better workplace where trust, productivity, innovation and culture thrive.
In some places, an almost immediate shift to remote work sent companies scrambling to digitise their work environments and develop new processes. Other companies continued to work in the office amid rising concerns about physical distancing, indoor air quality and general cleanliness. More still grappled with technology glitches and feelings of isolation, Zoom fatigue and dips in productivity.
Navigating multiple work patterns For many companies in Hong Kong and across Asia, fully remote work was a necessary move during the pandemic, but it did not answer the needs of employers or employees. It did, however, open Pandora's box – employees grew accustomed to working at home and expect a hybrid work model going forward. As a result, business leaders find themselves at a crossroads.
Over the past 2.5 years, companies have had time to figure out how to adapt to the pandemic situation, with some faring better than others. But the pandemic is unlikely to be the last societal upheaval most of us experience during our careers, so how can companies cultivate resilience in the face of turbulent circumstances in the future – be that political unrest, natural disasters or mass migration?
"Eighty per cent of the change management has already been done, which was allowing work-fromhome. It was [a] big [step] for people to accept this, and ask managers to accept that their team will be working from home. Now we are trying to see what really fits our company moving forward,” said a Workplace Experience Manager from the pharmaceutical industry.
While there is no blueprint for navigating such challenges, our Steelcase research, and meaningful conversations with our partners in AsiaPacific can shed light on how to create a more XXXX
Many companies face the same challenge. According to Steelcase’s “Changing Expectations and the Future of Work”, released in 2021, 83% of leaders in China and 85% in India expect to offer a XXXXX 19
hybrid model of work post-pandemic to respond to employees’ needs and preferences. In China, for example, 52% of employees would like to perform focus work at the office, while 48% would like to focus on rejuvenation at home. In India, 55% of employees want to perform focus work at home, while 50% prefer to conduct meetings and collaborative work at the office. Yet, a hybrid model is not as simple as offering a few days of remote work per week. According to “The New Era of Hybrid Work” global report, in which Steelcase spoke with 5,000 professionals in 11 countries in September of 2021, employees are looking for offices that are worth the commute – spaces that create a sense of belonging and control, while boosting productivity, growth and creativity. "We do not want to change anybody's persona to force them to work in a way that is uncomfortable. You want to find the balance that works for that individual that will benefit their mental health, productivity, and connection to the organisation,” shares the Global “Future of Work” Programme Director at a company in the financial services industry. Supporting Employees’ Experiences The Great Resignation – also known as the Great Renegotiation, Great Reshuffle or Great Reevaluation – has seen millions of workers leave their jobs since the start of the pandemic around the world, including APAC. The shifting sands have
caused companies to appraise work culture and, perhaps for the first time, ask their employees to weigh in with their insights and experiences. While some companies have responded to the situation by increasing salaries, expanding benefits and negotiating work-from-home days, our research finds that transactional strategies won’t suffice. Employees long to feel connected to the organisation – a sense of purpose and an opportunity to innovate and create things together. The good news is that every organisation can answer this call. And, as it turns out, the office might be the most important tool you can leverage. According to our findings, the office plays a crucial role in how people connect with their organisation. In China, when people like working from their office, they are 26% more engaged, 18% more productive and 51% more connected to culture and 24% less likely to leave. Meanwhile, in India, they were 31% more engaged, 11% more productive, 26% more connected to culture and 19% less likely to leave. On the flip side, Steelcase data shows that people who prefer to work remotely for more than two days a week are significantly more likely to leave the company within the next six months. This tells us that office culture is essential to creating a place where your team can work better and find that sense of belonging, connection, creativity and shared purpose they’re looking for.
"Every one of our staff has created their own workplace at home now. We've got to have a compelling offer so that they want to come into the office, because we don't want to wait for the culture to erode,” said a corporate real estate leader from an energy company we work with. Leveraging The Power of Place How you use office space can significantly impact all of the above. From contributing to a vibrant culture to supporting teamwork, streamlining processes and accommodating performanceboosting tools, an office has the power to create a better overall work experience. In terms of how to use that space, one thing is clear: employees are looking for culture, connection, comfort and control. And while openplan offices may seem to answer these needs, they can fall short. Our New Hybrid Era survey revealed that employees are craving more dedicated workspaces: In China, 39% of people surveyed have a dedicated workspace at home, but a shared or temporary set up at the office, while 67% expressed the desire to have privacy at the office. When asked if they would trade remote days for assigned space, over half of respondents globally said, “Yes”, which signals that employees need a place to call their own that offers comfort and control in the office. Dedicated or reservable desks are just one piece of the puzzle. In addition, the vast majority of employees in China want a mix of hybrid collaboration spaces and workspaces with full or partial closure for privacy for taking video meetings or calls. Many progressive companies are responding to employee preferences with a flexible approach to space. "The direction for us is to make the space more purposeful, built for flexibility and to align the x
expectation of flexibility from the user, no matter if the users are expecting to have more collaborative space or more focus,” shared one corporate real estate leader from a technology services company. Another approach would be to treat the office like a neighbourhood with a mix of assigned spaces, collaboration areas, private rooms for focus work or rejuvenation, and areas to gather and socialise. Such a work environment would instil resilience in many ways. For starters, creating spaces that foster connection and culture helps employees shift between different types of work. In addition, flexible and multi-modal spaces can adapt to changing levels of office occupancy in the face of turbulent situations while boosting innovation, engagement and productivity. Asia is such a diverse region – companies, industries, teams, and individuals need different things at different times. Naturally, there is no onesize-fits-all approach to cultivating resilience or future-proofing, and work styles will continue to evolve. When it comes to fostering resilience, our Steelcase research insights underscore the importance of developing an interconnected strategy in which space supports a vibrant business culture, effective processes, technology and the needs of your team. About Steecase Leading organisations around the world trust Steelcase to help them create workplaces that help people feel safe and are productive, inspiring, and adaptable with our architecture, furniture, and technology solutions – accessible through a network of channels, including over 800 Steelcase dealer locations. Steelcase is a global, industryleading, and publicly traded company with fiscal year 2021 revenue of $2.6 billion. (www.steelcase.asia) 21
EXPLORING THE ADVANTAGES OF DISPUTE RESOLUTION IN HONG KONG BY KENIX YUEN, PARTNER AND ADRIAN LI, ASSOCIATE GALL SOLICITORS
HONG KONG’S UNIQUE STATUS
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Hong Kong is a Special Administrative Region of the People’s Republic of China and is governed under the “One Country, Two Systems” principle embedded into the Basic Law which provides Hong Kong people with constitutional protection.With such policy in place, Hong Kong maintains the stable and mature common law legal system, together with the strong rule of law and judicial independence. Judges in the Court of Final Appeal, being Hong Kong’s final appellate court, consist of the Chief Justice, permanent judges and overseas non-permanent judges who are judges on the highest courts of other Commonwealth jurisdictions. Its wellestablished legal system also includes a range of legal protections, which provide confidence for businesses to opt for Hong Kong as their location of choice to resolve their disputes. Chinese and English are the official languages of Hong Kong so the language barrier for resolving international disputes is kept to a minimum. Along with its convenient geographical location positioned at the centre of East Asia and with close proximity to the Mainland (now connected to the national high-speed rail network), Hong Kong remains one of the most important international financial centres in Asia. GATEWAY BETWEEN THE MAINLAND OF THE PRC AND THE GLOBE In addition to its geographical proximity to the Mainland, Hong Kong is one of the very few jurisdictions in the world having reciprocal judicial arrangements with the Mainland, making it the venue of choice for disputes relating to the Mainland. Hong Kong also plays a key role in the development of the Greater Bay Area (“GBA”) and was identified in the GBA’s Outline Development Plan released in 2019 as establishing itself as a centre for international dispute resolution for the Asia Pacific region as well as commercial disputes relating to the Belt and Road projects. The GBA, a leading economic powerhouse with a combined GDP of US$1.6 trillion, seeks to create a globally competitive business environment by, amongst other things, promoting the development of a multi-faceted dispute resolution mechanism and a business environment protected by the rule of law. Leveraging Hong Kong’s unique advantages makes Hong Kong a bridge for Chinese businesses going global as well as foreign companies looking to enter the PRC market. RECIPROCAL RECOGNITION AND ENFORCEMENT OF JUDGMENTS A crucial part of dispute resolution is enforcement. Hong Kong’s reciprocal judicial arrangements with the Mainland covers various disputes for certain types of Court judgments and arbitral awards as well as the XXXX 23
ability to seek interim measures from Courts of both jurisdictions in aid of arbitration proceedings seated in either of the jurisdictions. Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region pursuant to Choice of Court Agreements between Parties Concerned made between the Supreme People’s Court of the People’s Republic of China and the Government of the Hong Kong Special Administrative Region allows for enforcement of certain civil or commercial judgments handed down by the Mainland Courts in Hong Kong and vice versa. Aside from the Macao SAR, Hong Kong is the sole jurisdiction with contractual arrangements providing for cooperation between the Courts regarding arbitration proceedings. 1 October 2019 was an important milestone for the Hong Kong dispute resolution community because on that day, the “Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKSAR” (the “Arrangement”) officially came into force allowing parties to arbitrations seated in Hong Kong to seek interim measures from the Mainland Courts. Separately, the Record of Meeting of the Supreme People’s Court and the Government of the Hong Kong Special Administrative Region on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region was signed on 14 May 2021, establishing a framework for recognition and cooperation between the Hong Kong High Court and Mainland People’s Courts in company insolvency and restructuring matters. On 19 May 2021, Part 2 of the Arbitration (Amendment) Ordinance 2021 came into force allowing for simultaneous applications to be made to both the Mainland and the Hong Kong Courts to enforce arbitral awards, further synchronising the law of arbitration in Hong Kong with international arbitration practice. The Foreign Judgments (Reciprocal Enforcement) Ordinance (Cap. 319) applies to the following 15 jurisdictions: Australia, Austria, Belgium, Bermuda, Brunei, France, Germany, India, Israel, Italy, Malaysia, Netherlands, New Zealand, Singapore and Sri Lanka. Other foreign judgments can be enforced by way of common law provided that they adhere to certain requirements. Subject to the laws and legal procedure of the relevant jurisdiction(s) and rights of the judgment debtor to apply to court to set aside the registration, a judgment creditor who has obtained a judgment in the abovementioned 15 jurisdictions may apply within 6 years after the date of judgment (or date of the last appeal judgment, if applicable), apply to have the judgment registered in the Hong Kong court where once recognised, will be treated as a judgment given by the Hong Kong courts. Hong Kong arbitral awards are enforceable in over 150 Contracting States as it is a contracting party to the New York Convention. Parties who have obtained an arbitral award in any New York Convention contracting party can enforce it in any other contracting party state. ALTERNATIVE DISPUTE RESOLUTION (“ADR”) Hong Kong has built a rock-solid foundation for alternative dispute resolution such as arbitration and mediation. Hong Kong is well placed to act as the alternative dispute resolution centre in the GBA for international disputes. 24
ARBITRATION FRIENDLY ATTITUDE OF THE HONG KONG COURTS The UNCITRAL Model Law on International Commercial Arbitration is embedded into Hong Kong law. Article 8 of the UNCITRAL Model Law is embedded in section 20 of the Arbitration Ordinance (Cap. 609, laws of Hong Kong) which states that the Court should refer dispute which are the subject of an arbitration agreement unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. Further, section 21M of the High Court Ordinance (Cap. 4, laws of Hong Kong) provides Hong Kong Courts with the power to appoint a receiver or grant other interim relief in relation to proceedings which have been or are to be commenced in a place outside Hong Kong (including arbitration proceedings) and are capable of giving rise to a judgment which may be enforced in Hong Kong. Hong Kong has the world class infrastructure and international talents for dispute resolution. Internationally well-known arbitration institutions have set up their offices in Hong Kong. The Hong Kong International Arbitration Centre, being a non-profit making and independent organisation, is well equipped with state-ofthe-art hearing facilities for international arbitration and houses a panel of world-renowned arbitrators (with expertise in various practice areas and industries), whereas Hong Kong itself attracts international arbitration practitioners (both English and Chinese speaking, or bilingual). All that enhances Hong Kong’s status as an ideal seat of arbitration and one of the leading alternative dispute resolution centres in the world. MEDIATION The system in Hong Kong has always encouraged parties to resolve disputes through mediation. Mediation can be a cost-effective way for parties to resolve their disputes without incurring the substantial legal costs on full-blown litigations and/or arbitration proceedings. The Civil Justice Reform in April 2009 strongly recommends parties to participate in mediation before their dispute goes to trial. Mechanisms have been put in place in civil actions to encourage parties to attempt mediation. Failing to make such an attempt unreasonably may attract adverse costs consequence in civil actions. Legislation such as the Mediation Ordinance have been enacted to provide suitable regulatory framework for mediation. Various mediation organisations have been established in Hong Kong to provide for the training and facilities for mediation, and to promote the development of mediation. For instance, the Hong Kong Mediation Centre, being the first professional mediation organisation and established in 1999, regularly provides mediation services and training to mediators and practitioners. If you have any questions on settling disputes in Hong Kong, please feel free to contact our team at Contact Us | Gall Solicitors (gallhk.com). BY KENIX YUEN, PARTNER AND ADRIAN LI, ASSOCIATE
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