BRITAIN IN HONG KONG BRITISH CHAMBER MAGAZINE
THE FUTURE OF TRAVEL NOV-DEC 2022 • ISSUE 81
C O N T E N T S 02 MESSAGE FROM CHAMBER CHAIR a letter from the Chamber Chair to share updates on the Chamber's activities over the past two months
06 WHAT WILL THE FUTURE OF HOSPITALITY LOOK LIKE? Sonia Cheng Chief Executive Officer Rosewood Hotel Group
10 THE FUTURE OF TRAVEL FROM A FAMILY LAW PERSPECTIVE Mr. Stephen J. Peaker, Matrimonial Partner at Oldham, Li & Nie
13 AN INTRODUCTION TO CHINA’S FIRST ESG DISCLOSURE STANDARDS Eversheds Sutherland
16 THE FUTURE OF TRAVEL AND RELOCATION FOR LAWYERS – QUALIFYING IN MULTIPLE JURISDICTIONS by Savvas Michael, Associate Dean, The University of Law Hong Kong Campus
19 EMERGING GIANTS IN ASIA PACIFIC KPMG, China
22 CLIMATE CHANGE AND SUSTAINABILITY BEST PRACTICES BROUGHT TO YOU FOR THE BOARDROOM OF CLP Interview with Mr. David Simmonds, Chief Strategy, Sustainability and Governance Officer of CLP.
CHAIR'S MESSAGE Dear Members First of all, I would like to thank the Executive team for arranging the Annual General Meeting on the 14th September 2022 and all the members who participated in that meeting and the subsequent Extraordinary General Meeting. At the AGM we received reports on the events and activities of the Chamber over the past year and were regaled by the Chair, Peter Burnett, with his experiences as Chair over the last four years. Peter has worked tirelessly for the benefit of the Chamber during this time and I wish to thank him on behalf of the new “regime” for his dedication and service. At the AGM a total of fourteen officers were appointed to the General Committee representing many aspects and facets of the Chamber membership. Along with the appointed members of GenCom we also have a number of co-opted members, as well as Committee Chairs. Underpinning and undertaking a huge amount of (often invisible) work on behalf of the Chamber is the Executive team led by David Graham. To one and all, I wish to give a vote of thanks. An enormous amount goes on behind to scenes to make the Chamber run smoothly. I am deeply honoured to have been handed the baton as Chair of the Chamber and to step into those “big shoes” worn by Peter Burnett over the last few years. Equally, I am delighted that Jeremy Sheldon of JLL and James Turner of Prudential were appointed as Vice Chairs with Paul McSheaffrey continuing as the Treasurer. Together we look forward to the opportunities ahead as Hong Kong rebounds in terms of the economy and we all reconnect both from the business as well as social perspectives. For those who attended the AGM you will have heard Peter Burnett commenting on the Chair before him, Mark Greenberg, who upon handing over the reins said you will have enormous fun and meet with a whole range of fascinating people and experts. In my many years of active involvement in the Chamber, I have already had a lot of fun and have met amazing and interesting people, but it is fair to note that in the last couple of years the social side of business has been a little wanting. Looking forward I will be seeking to attend Committee xxxxx
meetings to find out the agenda and directions being set for the year ahead, participating in events, continuing the advocacy role we play so well, along with meeting as many of the members as possible. Together with the aforementioned team, we look forward to working together with the membership as we seek to re-energise Hong Kong and enjoy an economic rebound and “boundless prosperity”. So, the plans for the year ahead? Firstly, it is my express intention to avoid the topic which has dominated all conversations over the last couple of years, and to focus forward! Thinking of the year ahead, and reflecting on the excellent Summit which was held 12-13th October 2022 under the theme of Hong Kong 25 Years and Beyond, the core themes we will be arranging our activities around include: Establishing relationships with the New Administration within the HKSAR Government. Initial communications and outreach for meetings and dialogue have been positively received and we have started some of these meetings, bringing relevant Sterling and Committee members along. This is a fundamental activity of the Chamber as we seek to share views and ideas with the intention of making positive and constructive suggestions for the business community to thrive. We look forward to participating in such activities throughout the year. 02
Advocacy through our excellent Business Policy Unit and the Committees will continue and we will set priorities and align our activities to ensure there is focus and energy in those areas we can create the most impact. In particular, we provided suggestions for the Chief Executive’s Policy Address, which was revealed on 19th October, and our review of our submission versus the Policy Address revealed many of the themes and suggestions put forward were picked up in the address. You can read our policy matching exercise here [LINK]. We will continue to develop the relationships which have already been established with the Mainland Government which includes the Mainland Ministry of Foreign Affairs in Hong Kong as well as the China Liaison Office. We will continue to develop and maintain an excellent relationship with the British Consulate in Hong Kong. Our Consul General, Brian Davidson, has now been in post for a year and has been tremendously supportive of the Chamber and our work, we will strive to deepen the connections. In addition, we will work closely with the Department for International Trade as we see an evolving policy framework emerging from Westminster. And we will continue to engage with organisations such as the Hong Kong Association based in the UK sharing views around opportunities and the Hong Kong stories from here on the ground. Recognising the benefits of consultation and at times collaboration with other Chambers of Commerce we will ensure we maintain an active dialogue across the business community – and seek to find mutual areas of interest to pursue the benefit of the membership.
WHY we are keen to engage: is quite obvious that we have a vibrant community and much energy to deliver on the Chamber’s mantra – “where business gets done” and connections are made. HOW we will engage is via in-person events, with James, Jeremy and I attending Committee meetings to meet the Committee members, to share ideas and plans, as well as being involved in events where we can engage the wider membership. We all recognise that with the long-awaited easing of travel there will be more people travelling, and hopefully more people coming back to visit Hong Kong. So, we are looking forward to welcoming new arrivals, as well as visiting executives to our events including those coming to Hong Kong for the international banking forum and the Rugby 7s in early November among other activities. SO, WHAT do we need to do? We need to reconnect, share our stories, explore opportunities and reach forward. There is much to be done, and there are many opportunities to be explored. I look forward to the year ahead and to sharing activities and experiences as travel on this journey.
Ir Dr Anne Kerr Chair, The British Chamber of Commerce in Hong Kong
There are more connections and relationships to be established, and these will evolve as we move through the Chamber year, with a programme of events and activities under active preparation for both business benefit as well as increasing our long-suppressed social engagements and interactions. The key themes for the year ahead are: Hong Kong rebound with a strong focus on attracting talent. Identifying and exploring opportunities in the Greater Bay Area. Exploring opportunities in ASEAN. Reinvigorating Hong Kong as an International Finance Centre, with a focus on but not limited to green finance and ESG activities. Energising creative industries within the context of international arts and cultural scene.
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The Chamber held a Summit in September 2022 which was one of the largest and most important events for the international business community in Hong Kong. With a key focus of exploring the opportunities ahead for Hong Kong as a catalyst for international business growth in the region, we brought together senior leaders from all sectors to share their opinions and offer valuable insights on the next 25 years for Hong Kong, and beyond. The Summit agenda covered business relevant topics such as the latest developments within the GBA, an exploration of the ASEAN opportunities, the positioning of Hong Kong as a centre for Innovation and Technology, Hong Kong’s response to climate change and the increasing war for talent.
400+
ATTENDEES
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SPONSORS
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SPEAKERS
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DAYS
NEW CHAIR OF THE CHAMBER'S REAL ESTATE, RETAIL & HOSPITALITY AND SME COMMITTEE The Chair of the Chamber’s Real Estate Committee, Jeremy Sheldon is handing over the reigns to Shaman Chellaram. Shaman has 18 years’ experience in the real estate industry across Asia and Europe. As Senior Director | Asia at Colliers, he advises clients across the hotel & commercial real estate sectors in Hong Kong and key international markets. He works with hotel owners, hotel operators, family offices, PERE funds, developers and other investors. He is a member of the ULI Hospitality Development Council and the China Real Estate Chamber of Commerce XXX Hong Kong & International Chapter. He is licensed under the Hong Kong Estate Agents Authority, qualified in 'Hotel Real Estate Investments and Asset Management' and is co-founder of YAMA Foundation (yamahk.org). The Chamber is pleased to announce that Eira Jarvis, Managing Director (Asia) for Pret A Manger, will be stepping into the role of Chair for the Chamber's Retail & Hospitality Committee. Eira has spent her entire career in food & beverage and is currently the Managing Director for Asia for Pret a Manger. Having spent the last 4 years in Hong Kong, Eira was in Shanghai for the previous 4 also with Pret and was active in the Chamber there. Outside of work she is a keen student of wine, currently studying for WSET diploma and when time allows she loves to enjoy Hong Kong’s amazing hikes. After eight years as co-Chair and then Chair of the Chamber’s SME Committee, Phil Aldridge is stepping down from the position and ViceChair, Will Probert, has taken on the role of Chair from October 2022. William is a Co-Founder of Zzzzip Limited and provides holistic advice to corporate groups and entrepreneurs on all aspects of business establishment and market entry from ownership, corporate structure, immigration, and employment to financial and operational issues. An entrepreneur himself, his approach is pragmatic and always mindful of minimising risk.
If you are a member of the Chamber and would like to discuss joining one of the Chamber’s 20 Committees, please email membership@britcham.com. 05
WHAT WILL THE FUTURE OF HOSPITALITY LOOK LIKE? BY SONIA CHENG CHIEF EXECUTIVE OFFICER ROSEWOOD HOTEL GROUP
Travel and hospitality has continued to show strong signs of recovery. Although COVID-19 continues to cast its long shadow across economies, especially in Asia Pacific, the gradual reopening of borders and lifting of restrictions have been exciting to say the least. According to a September 2022 report from the UN World Tourism Organisation, tourism in Europe and the Middle East showed the fastest recovery from January to July 2022, with arrivals reaching 74% and 76% of 2019 levels respectively. While Asia remained 86% below 2019 levels during those early months, we see lots of reasons to be optimistic as the relaxation of border restrictions continues to pick up pace. We have seen the unleashing of pent-up demand as avid travellers go back to doing what they love most.
At home, Hong Kong has made considerable strides to support and encourage the return of international travel safely. As a Hong Kong headquartered company, Rosewood Hotel Group is confident in the outlook for Hong Kong’s travel and tourism sectors and we were among the first companies to convene its global leadership team immediately after Hong Kong’s reopening (0+3) for our annual meeting. Joined by our leaders and hotel managing directors from all corners of the world, we used the annual meeting to reflect on how travel has changed, and how corporates including Rosewood must adapt. The pandemic has done more than change the ways we live, work, and socialise. It has caused many of us to dig deep and think about what truly matters to us, shaping our actions and habits accordingly. At Rosewood, we have observed XX 06
that the concept of wellbeing has also shifted from a purely physical dimension to a more well-rounded one. With the acceleration of digital adoption, businesses across the board have had to refocus, re-evaluate, and reinvent themselves by taking this new mindset into consideration in meeting their customers’ needs. For our group, this means going beyond implementing the most advanced anti-epidemic measures to make a meaningful impact on our guests, associates, communities, and planet.
Prioritising People and Planet Sustainability is the modern cornerstone for success. As travel recovers, Rosewood is looking to lead the hospitality industry by redefining luxury to make it synonymous with responsibility and impact. Luxury to the next-generation traveller no longer revolves around exclusivity and exquisite experiences alone. It encompasses values like diversity and inclusivity – enhanced by personalisation and a deeper sense of connection. Besides the guests, we are seeing these values manifested in the younger workforce, who want to work for companies that are doing good AND doing well. To quote a recent article by Jackie Ferguson in Forbes, “DEI and ESG are not future trends. They’ve already reshaped the way we work, lead, shop, invest our money and spend our time.” Stakeholder expectations have already changed and corporates must keep pace.
To effect change across the whole group, we were careful to define a social impact vision, Rosewood Impacts, to help us accomplish our goals. It covers all the ways with which we impact people and planet, as we commit to enabling equal access to opportunity through Rosewood Empowers and building a closed-loop ecosystem where nothing is wasted so we can achieve carbon neutrality under our circular hospitality initiative, Rosewood Sustains. Under Rosewood Sustains, our dedication to protecting the environment for our future generations is showcased through our group-wide food waste management system, which we rolled out to minimise one of the largest contributors to global warming, as well as the system we put in place to track and reduce our energy and water consumption. To underscore and expand on these efforts, we adopt industry standards and partners to accelerate collective progress. For example, Rosewood São Paulo recently joined Brazil’s largest upcycling project. Besides pledging to use 100% renewable energy for a year by leveraging on-site solar panels, the property removed single-use plastics and an on-site water filtration system produces glass bottled water for guest consumption. The hospitality sector must strike a careful balance between global and local considerations. Each property and its community has nuanced local needs. Through Rosewood Empowers, we are running Opportunity Employment programmes, where we seek out talent from underserved groups who typically have limited options and extend resources to help them overcome barriers in their careers. From mainland China to London to the Americas, we have been recruiting and nurturing people with diverse backgrounds and abilities from the ground up to foster inclusive and equitable growth. Although levelling the playing field is important, we must also focus on the future workforce. The pandemic took a heavy toll on the global workforce in hospitality. As a responsible employer, we are committed to creating and sustaining a pipeline of talent to support our sector’s future growth and development. To set XXXX 07
people up for success, we need to invest in their education and champion their development. Currently, we are piloting a Rosewood Scholars programme that funds undergraduate students from underserved parts of society to offer them exposure to Cornell University’s hospitality programme as we bridge the gap towards higher learning. We have also been partnering with vocational training institutions at all levels – most recently, through Rosewood’s three-year strategic partnership with the Vocational Training Council in Hong Kong – to cultivate future talent in the hotel, hospitality, and culinary fields. This responsibility extends to the communities we serve. In Mexico, our Rosewood Mayakoba hotel has an ongoing partnership with Centro Educativo K’iin Beh, a non-profit kindergarten and school to support the children of resort employees and local underprivileged families. Although we have been ramping up our Rosewood Impacts initiatives, we are aware of the long road that lies ahead. As we continue to put in the work towards addressing the two major existential threats to humanity today – inequality and climate change – we will be executing strategies that ladder up to our goals, anchored by our commitment to do more, as well as a clear sense of purpose: to inspire, enrich, and positively impact all our communities and planet.
An Evolving Definition of Luxury If the pandemic has taught us anything at all, it is that change is constant. To stay ahead of trends, businesses would do well to perpetuate a resilient yet open culture that is rooted in a sense of purpose and empowers employees to be curious, to adapt, and to thrive. For us, we call it “The Calling”, which is about collectively inspiring imagination, enriching lives, and discovering the unchartered. Innovation is also no longer a “nice-to-have”, but a necessity for brands to set themselves apart. Rosewood São Paulo
Technology creates opportunity. In redefining luxury and more, we are drawing on these factors to build a prototype room that offers the “guest experience of the future”, with lower environmental impact and greater comfort. Rooms of the future will feature more thoughtful touchpoints, sensory-friendly ambiences, and settings that are in-room behaviour-driven (e.g., lighting), guest preference-led (e.g., water temperature), and multilingual for a truly universal connection. Yet the values of personalisation and connection are enduring. Rosewood’s “relationship hospitality” philosophy continues to focus on creating enriching connections among people, and between people and a place. Offerings must be increasingly diverse and curated, and at Rosewood we are expanding our brand further within the luxury lifestyle space. Beyond the Rosewood brand, we launched the Carlyle & Co. private members club in Hong Kong last year to offer a space to connect, be inspired, and live life to the fullest. We have also been working on our Rosewood Residences portfolio, comprising branded residential villas, homes, and serviced apartments, incorporating the Rosewood lifestyle – amenities, services, and facilities – into everyday lives.
A Rebounding Asia Following the upward tick in tourism globally, along with the growing number of announcements from many Asian destinations that barriers to travel are being completely removed or greatly diminished, our outlook for the region is only positive. We are going to see more travellers returning to this culturally rich, naturally beautiful part of the world in the months to come; and through our collection of eight hotels and resorts as well as nine future openings in Asia alone, our brand is ready to welcome guests both new and familiar, back into the fold. Hong Kong’s fundamentals remain strong as a finance hub. Its’ cultural dynamism, way of life and institutional set up continue to shine in the Asia Pacific region. In the near-term, the city needs to reboot its workforce in the tourism and hospitality trade so we can be ready to tap the growth as it returns. As demand for travel looks set to soar in the coming years, the hospitality industry will continue to uplift the livelihoods of those around us and lay the foundation for talent to bloom. About Rosewood Hotel Group Rosewood Hotel Group, a privately owned company, is one of the world’s leading global lifestyle and hospitality management groups. It encompasses five brands: ultra-luxury Rosewood Hotels & Resorts®; XXXX upper-upscale New World Hotels & Resorts; KHOS, a lifestyle concept by Rosewood; Asaya, an integrated well-being concept; and Carlyle & Co., a modern and progressive private members clubs. Its combined hotel portfolio consists of 43 hotels in 20 countries with over 30 new properties currently under development. www.rosewoodhotelgroup.com
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THE FUTURE OF TRAVEL FROM A FAMILY LAW PERSPECTIVE Mr. Stephen J. Peaker, Matrimonial Partner at Oldham, Li & Nie In Hong Kong, the quarantine rules have drastically eased after almost 3 years of tight restrictions. In particular, the Hong Kong Government recently removed the hotel quarantine restriction. With the ease of travel restrictions in Hong Kong, what is the future of travel from a family law perspective and the things you should consider ahead of your holidays? Whilst it may be desirable to book flights and pack your bags for a spontaneous trip, it is more complicated when you are divorced or are divorcing and have children to consider. Prior to leaving Hong Kong with the children, an agreement must be reached with the co-parent. If an agreement is not reached, the parent who wishes to remove the children from the jurisdiction of Hong Kong for the holidays must apply to the Family Court for an order allowing him/her to remove the children from Hong Kong. Given the delays with the Family Court, it is a good idea to apply as early as possible as it may take two (2) to three (3) months before it will be decided by the Family Court.
For example, if you are planning a holiday with the children next summer and you are currently in dispute with your spouse about these holidays, you should meet with your solicitor as soon as possible and apply to the Family Court preferably no later than January 2023 to avoid pressure with respect to air tickets and hotel bookings. The Family Court orders have a deadline for the return of children to Hong Kong. However, it is preferable to have flexible dates built into the Family Court order so that if there is a delay caused by a flight cancellation or you or your family member has a sudden onset of Covid-19 whilst traveling, provisions will be made in the Family Court order so that the extraneous events which you have no control over, do not cause you to be in breach of the Family Court order and does not result in further court applications being made. Ahead of travel, another document you may want to consider is a Deed of Parenting. A Deed of Parenting is a legal document that simply states that you and your spouse are the legal parents of the children. On a 10
practical level, you can take with you the original birth certificates of the children (instead of a Deed of Parenting) or preferably have your solicitor sign a certified true copy of the birth certificate so you do not have to take the original documents with you whilst traveling.Whilst a Deed of Parenting is not needed in a “traditional” family, these days families are often made up of same-sex couples where the birth certificates will not assist. In these circumstances, a Deed of Parenting will be helpful. A Deed of Parenting can clearly state the legal parents of your children without any question or issue. This may be important during these travel times when customs and immigration officers are burdened with ever-changing rules for individuals coming in and out of their country. Another legal document parents may wish to consider is a Deed of Guardianship. A Deed of Guardianship sets out guidelines for the caring and well-being of minor children in the event of both parents passing away or temporary unavailability due to unforeseen circumstances such as unexpected quarantine during Covid-19 times, especially if you test positive upon arrival in Hong Kong and are required to quarantine at a designated hotel or quarantine facility. A Deed of Guardianship is a legal document signed by both parents and two witnesses and sets out specific guidelines regarding the care of your minor children. A Deed of Guardianship will set out the minor children’s primary caretakers and can also identify
temporary guardians until such time the minor children can be in the care of their parents or permanent guardians. Deed of Guardianships may be especially important to expatriates living in Hong Kong, especially when family members are not in the same jurisdiction. For many expatriates, having a Deed of Guardianship can provide parents with the peace of mind about the care of their children in emergency situations. It is important to speak with a solicitor who can assist in the preparation of travel with your children. Oldham, Li & Nie (“OLN”) has a full-service matrimonial team well-versed on such topics and can provide comprehensive advice. Having the appropriate documents prior to travel is imperative in this postCovid world and can provide you with peace of mind!
About Oldham, Li & Nie: Oldham, Li & Nie is a highly successful full-service independent Hong Kong law firm. Founded in 1987 by Gordon Oldham, the firm has some 45 qualified lawyers, admitted to one or more jurisdictions, including Hong Kong, the United Kingdom, France, the United States, Australia, Canada and Japan. To find out more, please visit www.oln-law.com About Stephen J. Peaker: Stephen is the head of the Matrimonial Department at Oldham, Li & Nie since 2000 and is a Fellow of the International Academy of Family Lawyers (“IAFL”) and the former Vice Chairman of the Hong Kong Family Law Association (“FLA”). Stephen is an associate member of Resolution (the Solicitors Family Law Association, UK) and member of the Family Law Section of the Law Council of Australia. Stephen has been instructed on many leading cases in the areas of family law and trusts law. Stephen is highly recommended by Chambers and Partners as leading lawyer in Family / Matrimonial (International firms). In addition to Matrimonial Law, Stephen also advises extensively in respect of trusts and wills, wealth protection and tax planning. Stephen can be reached at sjpeaker@oln-law.com or at +(852) 2868 1047.
Mr. Stephen J. Peaker Matrimonial Partner Oldham, Li & Nie
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The BritCham Christmas Countdown is the Chamber’s annual flagship social networking event for 2022. It is the perfect event to network with fellow Chamber members and non-members alike and to kick-start the festive cheer. To ensure you get into the Christmas spirit you will enjoy delicious food and drinks with an iconic Hong Kong view as the backdrop. With over 120 attendees expected from the international business community, this is an unmissable event and a chance to relax and entertain colleagues and clients at the end of a busy year. In the spirit of giving, the Chamber will collect HK$50 from each ticket sale on behalf of HandsOn Hong Kong. Guests will also have the chance to win an early Christmas gift from our amazing selection of raffle prizes. Date: Thursday 8 December Time: 6:30 pm - 9:30 pm Venue: 28/F Harbour & Windsor and The Rooftop Garden, The Park Lane Hong Kong, a Pullman Hotel
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AN INTRODUCTION TO CHINA’S FIRST ESG DISCLOSURE STANDARDS
Guidance for Enterprise ESG Disclosure The State-backed think tank, China Enterprise Reform and Development Society (“CERDS”), recently published China’s first locally developed corporate ESG disclosure standards – “Guidance for Enterprise ESG Disclosure” (the “Guidance”). The Guidance, which came into effect on 1 June 2022, was developed with the participation of over 80 think tanks and companies, and is a key milestone in standardizing ESG disclosures in the PRC. Major corporates that were involved include Ping An Insurance, China Mobile and Ant Group.
Scope of the Guidance The Guidance is applicable to Chinese enterprises of all scales, types and industries, and sets out a 3-tier
disclosure of not only operations emissions but also upstream, downstream and supply chain emissions. Also, the Guidance sees an increased focus on the “S” and “G” aspects of ESG which is a much welcomed development. It introduces social and governance indicators that are relatively new to the PRC, such as social responsiveness, mental health aid for employees, sustainable development and risks from climate change. Disclosures are to be made in the form of an ESG report made available to the general public, and Chinese enterprises are recommended to report annually or on any other disclosure cycle that is most suited to the nature of their business.
ESG in the Chinese context
hierarchy of indicators for measuring ESG targets. The primary indicators are “Environmental”, “Social” and
As a result of the clear shift towards ESG awareness
“Governance”, each of which are split into second and
and responsible investing, a plethora of international
third level indicators, followed by 118 detailed metrics
guidelines have surfaced in the global ESG landscape,
specifying
principles,
most of which are drafted with Western enterprises in
assessment
mind. The Guidance serves as a hybrid that takes
methods. The disclosures requested by the Guidance
inspiration from global frameworks to form a PRC-
include both quantitative and qualitative data, and
compatible structure coherent with existing legislation,
notably, in respect of greenhouse gas disclosures,
effectively
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the
requirements,
various
disclosure
responsibilities
and
bridging
the
gap
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Western
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disclosure conditions.
obligations
and
Chinese
operating
There are a number of references to existing Chinese labour, environmental, and product safety laws and regulations contained in the Guidance, and it is clearly put together with a view to incorporating China’s current national standards. For example, social indicators in the Guidance relating to labour rights utilise social security and the housing provident fund as a metric, both of which are key features of the Chinese social welfare structure. Vice Chairman of the China Securities Regulatory Commission (“CSRC”) recently remarked that there is a need for the PRC to eventually adopt the sustainability reporting standards published by the International Sustainability Standards Board (“ISSB”). The Guidance echoes CSRC’s stance and is a landmark move by CERDS towards ultimately achieving harmonization between ISSB standards and China’s unique legal and regulatory system.
What does this mean for businesses with a Chinese presence? Over the years, Western enterprises have taken the lead on healthy reporting practices and producing ESG data that investors can rely on. While the Guidance remains a voluntary standard, its introduction is a vital step forward towards inevitable international alignment and a more cohesive ESG ecosystem within the PRC. It also reflects a more environmentally conscious world, where stakeholders are growing to expect quality non-financial disclosure.
Going forward, businesses can expect to see increased reference to the Guidance as a benchmark for both peer and self-assessment. International businesses with an existing Chinese presence or considering expansion into the PRC are encouraged to actively stay ahead of the curve, monitor adoption and implementation of the Guidelines in the market, and prioritize investment into internal ESG monitoring and evaluation practices. About Eversheds Sutherland We are a global top 10 law firm providing legal advice and solutions to clients internationally. As a purposeled organisation, we are proud of our culture and the values that guide our behaviour. We have over 5000 colleagues globally across over 70 offices in more than 30 countries.
Charles Butcher Partner | Head of M&A, Asia
Richard Cao Principal Associate
Jack Cai Managing Partner, Shanghai
Gabrielle Honey Senior Associate
Christie Chow Associate
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Shrewsbury International School Hong Kong marked the arrival of their fifth academic year since foundation with the visit of British Consul-General, Brian Davidson CMG, earlier this month. Marking a first school visit since his arrival into the region, he was accompanied on a full school tour and a meeting with a group of student representatives by Shrewsbury Principal, Ben Keeling. Mr Davidson spoke warmly about the nature of his role and listened intently to students keen to share news of their latest initiatives, which include the delivery of a school-wide dining survey. ‘It was an honour to mark this special milestone with the Shrewsbury team and wonderful to see this icon of British education flourishing here in Hong Kong.’ Brian Davidson CMG, British Consul General Mr Davidson and Mr Keeling were joined by Chair of the Board of Govenors, Bernard Chan, and School Supervisor, Stephen Wong, for a ceremonial ribbon cutting and the uncovering of a plaque positioned proudly upon a commemorative bench. ‘We were proud to be able to welcome Mr Davidson to Shrewsbury and greatly appreciate his support as an ambassador for business in the region and a strong advocate for the benefits of a British education.Bernard Chan, Chair of the Board of Governors at Shrewsbury “With memories of a sun baked groundbreaking ceremony in the latter half of 2016 deceptively clear in my mind, it is difficult to envisage the passing of such a substantial period and yet here we are: five years, thousands of interconnected relationships, countless treasured memories. To all who have supported our journey, thank you.” Ben Keeling, Shrewsbury Principal A new school no longer, Shrewsbury International School Hong Kong is the sole provider of premium level primary education in the region. 15
THE FUTURE OF TRAVEL AND RELOCATION FOR LAWYERS – QUALIFYING IN MULTIPLE JURISDICTIONS BY SAVVAS MICHAEL, ASSOCIATE DEAN, THE UNIVERSITY OF LAW HONG KONG CAMPUS
The Covid-19 pandemic has seen countries around the world imposing restrictions on travel and movement of people. As an academic specialising in European Union Law, I teach the free movement of persons pillar of the EU every year, outlining that one of the only and rare exceptions to this is public health. This is outlined in Article 29 of Directive 2004/38, which states ‘The only diseases justifying measures restricting freedom of movement shall be the diseases with epidemic potential as defined by the relevant instruments of the World Health Organisation and other infectious diseases or contagious parasitic diseases if they are the subject of protection provisions applying to nationals of the host Member State.’ Covid-19 has since shown that this exception can very much become a reality, to the surprise of both myself and my students. For lawyers, the need for travel is important, particularly in Hong Kong, which is the home to many international law firms, with offices around the globe. Hong Kong qualified lawyers may need to travel to the headquarters of their law firms, in the UK or US for example, or attend trips to visit clients. Lawyers also thrive on secondments, particularly as trainee or newly qualified solicitors, allowing an opportunity to work temporarily in another office of an international law firm and gain experience in a new jurisdiction. Law is very much a profession which requires travel, both for business and development purposes. Whilst the Covid-19 era has seen virtual solutions to travel restrictions in law, the desire for face-to-face interaction with clients and colleagues certainly means that the future of travel has not been jeopardised in the legal profession following the pandemic. 16
Beyond temporary trips and secondments, we have also seen changes in routes to qualification as a lawyer over the last few years, which have perhaps influenced and opened the potential for the more permanent relocation of lawyers. These changes have made it somewhat simpler to qualify in another jurisdiction, meaning that lawyers who have qualified in one jurisdiction (or even potential lawyers who are based in another jurisdiction) have more options to qualify in another. Lawyers from all parts of the world are acknowledging the value in qualifying in multiple jurisdictions, both to work within their own jurisdiction (for example, international law firms which would benefit from overseas qualified lawyers) but also to gain opportunities abroad. In recent years, the best example of a more flexible route to qualification is the introduction of Solicitor Qualifying Examinations (SQEs) in England and Wales in November 2021.
SQEs in England and Wales The SQEs are a new set of centralised exams, split into two parts (SQE 1 and SQE 2), which students must pass to become a qualified solicitor in England and Wales. The other new feature of qualifying as a solicitor is the need for ‘Qualifying Work Experience’ (QWE). QWE requires two years of legal experience, which must be ‘signed off’ by a solicitor who is qualified in England and Wales, but on a more flexible basis than previously (the highly competitive training contract requirement). This SQE option offers an accessible alternative to overseas students who want to qualify and work as solicitors. Using Hong Kong as an example, it is home to international law firms, most of whom have an interest in employing foreign registered lawyers, including those who are qualified in England and Wales. Whilst qualifying as a solicitor in England and Wales will not allow individuals to practice HK law, they will be allowed to be an employee who is practicing the law of the jurisdiction in which they are qualified in (ie England and Wales) and become foreign registered lawyers in HK. It will of course also open opportunities for these individuals to work as solicitors in the UK. This new route to qualification in England and Wales is also relevant for qualified lawyers. The Solicitors Regulation Authority (SRA) provide an exemption of QWE to any foreign qualified lawyer; however, HK qualified solicitors (and even potentially HK barristers) have also been granted an additional exemption from SQE2. This means that for all qualified lawyers who may wish to relocate to the UK, the requirement is to complete SQE1 and (if needed, depending on the jurisdiction) SQE2.
US – New York, Washington and California Bar In the US, each State sets their own requirements on what is needed for prospective lawyers to sit for the Bar exam. There is a Uniform Bar Examination (UBE), employed by many States, but not all. In New York, to be eligible to sit the Bar Exam, students must have completed a law degree of at least three years in duration – this can either a Juris Doctor (JD) but also can be a common law LLB degree, completed XX 17
in the UK or HK for example. In California and Washington, similar eligibility rules apply to sit the Bar exams however the major difference is that both the California and Washington Bar also allows qualified lawyers in other jurisdictions to sit their exam. Therefore, US States allow for both foreign graduates and foreign qualified lawyers to sit their Bar Exams, again making qualification in multiple jurisdictions flexible and creating viable options for relocation as lawyers.
The Future of Relocation of Lawyers? David Graham, Executive Director of the British Chamber of Commerce in Hong Kong, spoke of his experiences of working as a lawyer in the UK, New York and Hong Kong, in an interview with The University of Law in May 2022. The legal team I worked within before moving into academia included lawyers qualified in Italy, Greece, Romania, Australia, New Zealand and New York as well as England and Wales. Whether they came from a civil or common law system, these lawyers all brought a mix of expertise and perspectives, which resulted in an immensely talented and vibrant legal team. There is no doubt that the desire for lawyers to relocate to other jurisdictions is still high, as is the demand for foreign qualified lawyers in international law firms, given the value they bring. However, in recent years, we have also seen developments in regulation, particularly in England and Wales, which makes multijurisdictional qualification an option and will certainly encourage travel and relocation of lawyers in future years.
About ULaw ULaw is committed to supporting the legal careers of individuals in the UK, Hong Kong and around the world. Academics and practice-qualified tutors bring invaluable real-life experience into the classroom. With 19 campuses, including Hong Kong, ULaw programmes maintains high standards and promoting diversity into the profession, with an awardwinning Employability and Careers Service supporting the future legal talent every step of the way.
Savvas Michael, Associate Dean, The University of Law Hong Kong Campus
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TO SUPPORT THE GROWTH OF HONG KONG’S “EMERGING GIANTS”, MORE REGULATORY CLARITY IS NEEDED ON THE FINANCIAL REPORTING AND TAXATION OF DIGITAL ASSETS BY KPMG CHINA
The heightened pace of digital adoption during the COVID-19 pandemic has created many opportunities for technology-focused businesses. As conditions continue to normalise, the scale of digital transformation now underway and the availability of funding supporting that transformation is expected to continue to drive the growth of technology start-up ecosystems in Hong Kong and across the Asia Pacific region, according to a KPMG/HSBC joint study of 6,472 technology-focused start-ups with valuations up to US$500 million in 12 key regional markets, including Hong Kong SAR and mainland China. The study identified the Leading 10 “Emerging Giant” companies for each of these markets, as well as the overall Leading 100 Emerging Giants in Asia Pacific. One noticeable trend is the prevalence of newer technology “subsectors” in addition to traditional sectors associated with new economy businesses such as fintech, biotech, and software as a service XXXX
SAAS). Among these subsectors identified, non-fungible tokens (NFTs) and decentralised finance were most commonly associated with emerging giants, with over 25 percent of the companies studied identifying with those verticals. Blockchain real estate and decentralized autonomous organisations (DAO) were also common, reflecting the current focus across the region on digital assets, the metaverse and Web 3.0 (see chart below).
Sustainability and ESG verticals were also prominent, with three (EV charging infrastructure, sustainable packaging, sustainable fashion) included among the top 20 subsectors, making sustainability-related products and services a key focus for roughly 15 percent of emerging giants identified. The top 20 list also included four healthcare associated verticals, including assistive tech, AI-powered drug discovery, neurotechnology and mental health technology. Meanwhile, smart cityassociated areas, including IoT security and digital twins, were present in the leading 10.
pandemic, the city’s buoyant start-up sector continued to expand, raise funds and launch new companies. According to InvestHK, Hong Kong was home to more than 3,750 start-ups in 2021, up 12 percent on 2020 and nearly 70 percent over 2017. In particular, the city’s financial strengths have supported the emergence of a host of fintech and cryptocurrency firms, including unicorns Airwallex, TNG, Amber Group and WeLab, the latter holder of one Hong Kong’s eight virtual banking licenses. In addition, Hong Kong’s history as one of the world’s great trade hubs has supported the emergence of a host of digital logistics and delivery businesses, including three unicorns – on-demand delivery firms Lalamove and GoGoX, and travel and tourism platform Klook. But the city’s new economy range extends much further. Other of its dozen unicorns include vertically integrated fashion company Trendy Group International, e-commerce platform Cider, diagnostic testing firm Prenetics, which became the first Hong Kong-based unicorn to list on the Nasdaq in May 2022, and Animoca Brands, a world leader in digital entertainment and gaming. “Hong Kong’s many start-up advantages include pro-business policies, a simple and low tax system, excellent universities and the prospects offered by the Greater Bay Area,” says Irene Chu, Head of New Economy and Life Sciences, Hong Kong, KPMG China.
Source: KMPG and HSBC ananysis of 6,472 companies originating in Asia Pacific with valuations of US$500 million or less, based on Pitchbook data
Five of Hong Kong’s 10 leading “emerging giants” are digital asset-focused: KPMG/HSBC study Hong Kong remains one of the best locations in Asia Pacific to launch and grow a new economy business, the KPMG/HSBC report noted. Throughout the XXXXXX
Financial reporting and tax clarity critical to the growth of digital asset platforms in Hong Kong With many of the city’s leading emerging giant companies focused on digital assets (refer to table above), there is an urgent need for further clarity on financial reporting and taxation of these assets in order for institutional investors to increase their allocations.
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An October 2022 survey of Hong Kong-based family offices and high net worth investors by KPMG China and digital asset service provider Aspen Digital found that 75 percent of respondents think that the accounting treatments under the existing accounting standards may not provide relevant information for their investment decision making. The challenge with the financial reporting requirements for digital assets that are held for investment purposes is not so much a lack of clarity over the accounting that is required, but rather that the required accounting does not meet investors’ needs. “There are multiple categories of digital assets, including governance tokens, cashflow/utility tokens, vote escrow tokens and NFTs. The underlying value of these assets depends on a number of factors, including specific rights attaching to them,” says Barnaby Robson, Partner, Deal Advisory, KPMG China. “While it is fair to say there is no consensus on how to value these assets, often there is more real-time information regarding the performance of the underlying protocol than would otherwise be seen in traditional investments such as equities.” What would be needed, Robson says, is a neutral or symmetrical accounting model that measures digital assets at a current value (such as fair value) and recognises the resulting gain or loss in profit or loss irrespective of whether it has been realised. To get there, International Financial Reporting Standards (IFRSs) would need to be changed.
Further, nearly a third (29 percent) of respondents said a current lack of tax clarity makes them less likely to invest in digital assets. In addition, 54 percent said that more beneficial tax treatment would lead to greater allocations in digital assets. “The current lack of certainty regarding the taxation of cryptocurrency means that investors who are solely Hong Kong-based may opt not to use Hong Kong structures,” Nigel Hobler, Partner, Tax, KPMG China explains. “At the same time, if investment groups have little ‘substance’ outside Hong Kong, this may increase their risk of challenge by the Inland Revenue Department for their use of ‘offshore’ cryptocurrency investment holding structures.” Until Hong Kong’s tax legislation is updated to expand the scope of the exemption provisions for all forms of cryptocurrency, for instance by allowing cryptocurrencies to be taxed in a way similar to traditional securities or commodities, Hobler adds, investors will need to take care how they structure such investments. To download the full KPMG/HSBC study of Emerging Giants in Asia Pacific, visit https://assets.kpmg/content/dam/kpmg/xx/pdf/2022/07/e merging-giants-in-asia-pacific.pdf. To download the full KPMG China/Aspen Digital survey report on Investing in Digital Assets, visit Investing in Digital Assets - KPMG China (home.kpmg).
THE SUSTAINABLE CEO INTERVIEW SERIES: CLIMATE CHANGE AND SUSTAINABILITY BEST PRACTICES BROUGHT TO YOU FOR THE BOARDROOM OF CLP POWERING THE GLOBAL RACE TO NET ZERO INTERVIEW WITH MR. DAVID SIMMONDS, CHIEF STRATEGY, SUSTAINABILITY AND GOVERNANCE OFFICER OF CLP.
By Prof. Lapman Lee, Professor of Practice (ESG, FinTech, Governance), Hong Kong Polytechnic University
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team, on CLP’s purpose to be the leading responsible energy provider in the Asia-Pacific region, from one generation to the next.
supplying,
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electrifying,’ (some of) you may recall are lyrics from the 1978 Grease movie soundtrack, which happens to be one of the first movies I ever watched in cinema. The lyrics would not be out of place as the company slogan for CLP, which was incorporated as China Light & Power Syndicate in 1901, which supplied electricity to the Kowloon peninsula, and subsequently also began electrifying the rural areas in the 1960s.
1. Sustainability sits at the heart of CLP’s business strategy according to the 2021 Sustainability Report. What does that mean in practice and how do CLP’s priorities map to the UN Sustainable Development Goals (“SDGs”)? “It means that our strategy is to have a sustainable business over the long term and so our thinking on sustainability is integrated into the development of our strategy, it is not an after-thought or an add on for reporting purposes. In relation to the UN SDGs, CLP made the decision to prioritise four of the seventeen goals that we consider as the most relevant to our business and where we can make the biggest impact,” David kicks off the interview with.
Electricity, available at your fingertips today, was a novelty at the turn to the twentieth century and well CLP never stopped investing in innovation to power millions of homes and businesses in Hong Kong and the rest of Asia-Pacific. It is now servicing more than
“Affordable and clean energy (SDG7) is one of our four priorities, alongside Decent work and economic growth (SDG8), Industry, innovation and infrastructure (SDG9), and of course Climate action (SDG13).”
six million people in Hong Kong, and operates in Mainland China, Australia, India, and Southeast Asia. Today, I am delighted to interview David, who is CLP’s Chief Strategy, Sustainability and Governance Officer and part of its ten-person strong senior management XX
SDG13 Climate action, according to Prof. Lapman Lee’s definition, in essence consists of three components: 1) Reducing and mitigating climate change risk XXX 22
through initiatives in cutting greenhouse gas emissions (actioning against climate change). 2) Resilience building to droughts, flooding, and other extreme weather events impacting a business’ assets and communities it operates in (adapting to climate change). 3) Raising awareness and understanding of the causes of climate change (acknowledging climate change and advocating climate change actions). 2. The topic of climate action (SDG13) is not surprisingly dear to my heart. What is CLP’s Climate Vision 2050 and CLP’s vision to become a Utility of the Future? And what risks and opportunities does climate change pose to CLP? “Climate Vision 2050, first launched in 2007, sets out the blueprint of CLP’s transition to net-zero greenhouse gas emissions across CLP’s value chain – including CLP’s upstream suppliers and downstream customers (Scope 3 emissions). As such, we took the bold move in 2021 to bring forward the date of the complete phase-out of coal-fired assets by 2040 (instead of 2050),” David shared. “As part of Climate Vision 2050 and the scenario analysis which informed the targets we set, we recognise potential climate change related risks and opportunities not only for CLP but also for the communities and markets where we operate.” Short term (0-1 year): Extreme weather events pose a potential risk to the integrity of CLP’s assets or that of the power system, whereas there may be emerging opportunities in introducing new business models such as energy-as-a-service and increased demand for energy transition enablers, such as innovative energy storage, transmission, and distribution systems.
Medium term (1-5 years): Emissions standards tightening, and other lowcarbon policies for the power sector such as carbon pricing regulations pose potential risks, whereas the fast-growing demand for low carbon electricity should spur investment in sustainable electricity generation, storage, transmission, and distribution capabilities and spur investment in innovation and R&D in the power sector. Medium to long term (5+ years): The risk of fossil fuel assets becoming stranded (due to asset devaluation, asset being writing down prematurely, or even conversion from an asset to a liability) and climate pattern changes adversely impacting the projected performance of renewable assets (biomass, geothermal, hydropower, solar, wind) in the energy transition journey. The electrification of transport and other industries increases demand for electricity and energy infrastructure creating new earnings streams. In terms of CLP’s vision to transition to a Utility of the Future, it revolves around five strategic goals: 1) creating a sustainable business portfolio, 2) accelerating our response to climate change for the business and the communities in which we operate, 3. Electricity is projected to double its share of the global energy mix from 20% as of today to 40% by x 23
2050, which combined with the projected uptake of hydrogen has the potential to offset and replace fossil-fuel consumption (according to a 2022 McKinsey study). What is your perspective on energy transition, and can you share what transition enablers CLP invests in? “Beyond the current energy crisis, there is a clear and present need for the global energy sector to shift structurally and swifty - from fossil-based (oil, natural gas, coal) systems of energy production and consumption to renewable energy sources (in particular, solar and wind). Once the electricity supply has transitioned to zero carbon and renewable energy it can really help accelerate the decarbonisation of other industries (e.g., Transport) through electrification. So, electricity is at the very heart of the energy transition” David shared. “CLP invests in a broad range of transition enablers to transform the energy system as decarbonization of the generation portfolio cannot be achieved by simply building lots of renewable energy. For instance, renewable energy sources must be complemented with energy storage and a range of digital technologies that can help integrate distributed and intermittent power sources without compromising reliability and accessibility.”
“Another clean energy source we are engaged with is green hydrogen, which is an alternative to natural gas with zero emissions at the point of use. When you burn hydrogen, energy is generated, and the only byproduct is water. We are looking to use green hydrogen as a fuel for our gas fired power stations here in Hong Kong and Australia. Green hydrogen can be used to deliver heat to buildings, generating power for heavy transport through hydrogen- fuel cells as well as a, source of energy for high-temperature processes (think cement, petrochemicals, refining, and the hard to decarbonize steel industry). The question is when it will become commercially viable at scale to produce and transport and there is a huge level of investment and focus globally to address these challenges.” “Lastly, I am proud to share that part of our material topic of shaping and executing the transition to net zero, 76% of our operating earnings in 2021 came from non-carbon generating assets and transmissions, distribution and retail.” David, it was an absolute delight to exchange thoughts with you today and I look forward to seeing more leading listed companies like CLP act as pioneers and role models in the sustainability journey to help balance people, planet and profit, one company and business sector at a time.
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