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As the push towards ESG-focussed business practices gains momentum, Asian law firms are playing a vital role in guiding clients through the complex regulatory landscape, helping clients identify regulatory risks and potential opportunities, as well as providing legal protection and solutions. In this inaugural ranking, ALB spotlights 15 law firms that are delivering exceptional legal services in the ESG space.

Can you discuss the types of services your firm offers to help clients meet their ESG goals and objectives?

Ogier has a three-pronged approach to sustainability and ESG. Firstly, we look at our own D&I and environmental performance and that helps to ensure we can be a credible partner for our clients who also have ESG goals and objectives. To ensure our journey is ‘expert led’, our Head of Sustainability oversees our processes and has developed a management system using ISO 14001 Standard as a framework. We have committed to SBTi and to acquire net-zero membership from the Net Zero Lawyers Alliance. We also have a number of active projects on the D&I front and have published our gender pay gap report.

In terms of legal services, we were the ﬁrst to establish a dedicated Sustainable Investing and Impact Funds practice and this remains a key area for us. However, our ESG-related transactions continue to grow and we have been working on green bond offerings, social bonds, sustain-ability linked notes and loans and so on. We continue to develop our legal services to ensure we are able to provide tailored legal advice within the context of sustainable investing and ESG.

Our legal practice is also uniquely supported by Ogier Global’s Sustainable Investment (SI) Consulting team which supports clients with design, integration, and management of ESG and impact strategies.

How does your firm assist clients in understanding and navigating the various issues and guidelines related to ESG issues?

Thought leadership is key and we do this through written content and speaking at educational events. Of course, we also advise clients directly on ESG matters. Regulation has been in sharp focus in 2022 and we have supported clients with navigating the EU Sustainable Finance Disclosure Regulations, the EU Taxonomy and aligning to frameworks such as TCFD and UN PRI.

Of course, one key component of “ESG” is that of governance and that is an area that is very relevant to the work we are doing in all our jurisdictions, particularly in our corporate, private wealth and funds service lines.

Can you provide examples of how your firm has helped clients develop and implement sustainability strategies, such as reducing their carbon emissions or increasing their use of renewable energy?

As a member, we work with the Net Zero Lawyers Alliance on industry best practices. In addition, our Head Of Sustainability has recently volunteered to be part of a working group developing climate-friendly business travel policy for law ﬁrms. Another example is that in the Cayman Islands Ogier is now part of (together with a large number of Cayman law ﬁrms) the ESG Working Group for the Chancery Lane Project, a collaborative initiative of international legal and industry professionals whose vision is a world where every contract enables solutions to climate change.

Access to renewable energy is one of the biggest challenges faced by our ofﬁces in the Caribbean, even though the region has great potential in relation to solar, tidal and wind energy. We hope to explore collaboration to accelerate local renewable energy development in the region.

Our SI consultancy also speciﬁcally works with asset owners, asset managers and institutional investor clients, helping them design and build sustainability strategies aligned to their portfolio goals – this typically involves building their governance, investment and risk management processes and disclosures procedures to implement and manage climate-related risks and wider ESG risks (including carbon emissions and other factors).

How does your firm collaborate with clients to ensure ESG considerations are integrated into their business operations and decision-making processes?

There are a number of areas where we can support. As mentioned, this is a key area of focus for Ogier Global’s SI Consulting practice. But we also have learning tools such as Ogier’s ESG Align and bespoke training that we offer to clients to ensure boards and senior management are aware of the risks and how such integration can be carried out.

Can you discuss the role your firm plays in advising clients on ESG-related risk management and how you help them identify and address potential ESG-related challenges and opportunities?

Advising on regulation has been a key area for us. However, even where regulation is not currently the driver we can be in a position to spot ESG risks which we can bring to a client’s attention. For example, in the context of a fund launch we might point out greenwashing risks in terms of the naming of the fund or the use of certain terms. SI Consulting also helps clients identify key dimensions of risk and opportunities, measuring portfolio exposure and impact, assessing portfolio vulnerability to different climate scenarios and so on. Many of the processes adopted are built around a TCFD framework where we set governance, strategy and risk management processes and put targets/metrics in place.

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After a relatively quiet couple of years on the AML front, 2020 onwards saw a number of signiﬁcant changes to the Cayman AML regime as well as pertinent industry reminders. The Anti-Money Laundering Regulations (2020 Revision) (as amended) (the AML Regulations), which replaced the 2018 Revision, apply to persons engaged in relevant ﬁnancial business (as deﬁned in the Proceeds of Crime Act (Revised)), which includes Cayman Islands regulated funds. Also in 2020, the Cayman Islands Monetary Authority (CIMA) published the updated Guidance Notes on the Prevention and Detection of Money Laundering, Terrorist Financing and Proliferation Financing in the Cayman Islands (as amended) (the Guidance Notes), replacing the 2017 version, as amended.

The updates to the Cayman AML regime during 2020 included the following key topics (amongst others):

Removal of the Equivalent Jurisdiction List. Prior to the AML Regulations one of the factors in assessing whether it was appropriate to apply simpliﬁed due diligence (SDD) on an applicant for business was whether the applicant was from a country included on a list published by the Cayman Islands Anti-Money Laundering Steering Group called the “List of Countries and Territories Deemed to have Equivalent Legislation” (the Equivalent Jurisdiction List). However, from 5 August 2020, the Equivalent Jurisdiction List provision was removed and ﬁnancial services providers (FSPs) were henceforth required to consider whether the country of the applicant for business could be considered as having a low degree of risk of money laundering and terrorist ﬁnancing.
Eligible Introducer Requirements. Rules on the use of eligible introducer letters became more stringent during 2020. The Cayman AML regime continues to permit FSPs to rely on third parties for the veriﬁcation of identiﬁcation of applicants and beneﬁcial owners provided that the risks are low and where there is no suspicion of money laundering or terrorist ﬁnancing. However, any AML comfort letters provided by third-party introducers of business are now required to state, in addition to the name of customer being introduced, the name of the beneﬁcial owner(s) of the customer amongst other requirements.
Reliance on AML service providers. FSPs, including investment funds, engaging non-Cayman service providers must speciﬁcally consider country risk prior to entering into the outsourcing arrangements. Under the reliance model, a regulated fund will rely on a third party to carry out AML in accordance with their own policies and procedures. However, where the AML service provider implements AML procedures in accordance with the anti-money laundering regime of a jurisdiction other than the Cayman Islands, the fund has to consider and document the risks associated with such reliance including country risk. In addition, it is now a requirement that for the purposes of identifying the beneﬁcial owners of customers or applicants for business (when required under the AML Regulations), a 10% threshold (10% Threshold) must be applied, even if the AML service provider is subject to an AML regime which permits a higher threshold. It should therefore be a requirement of the appointment that the 10% Threshold is applied when carrying out identiﬁcation and veriﬁcation of beneﬁcial owners (or generally that the Cayman Islands standards are adopted where the relevant standards of the third country AML regime are lower when compared to the Cayman Islands).
CIMA Inspections of Registered Persons. In 2020, CIMA commenced inspections of registered persons under the Securities Investment Business Act (RPs) (predominantly investment managers and investment advisors). The focus of these inspections was not on investment funds, however, as RPs are subject to the same Cayman Islands AML Regime as regulated funds, certain lessons can be taken from the CIMA ﬁndings arising out of these inspections. Weaknesses were found across the spectrum of requirements for AML/CFT programmes including across employee training, outsourcing policies and risk assessments, application of the risk-based approach, on-going monitoring and the establishment of an effective audit function, amongst others. Details of the ﬁndings can be found in CIMA’s December 2022 report on its website.
AML Officer Reminder. In an industry notice dated 7 June 2021, CIMA reminded all persons carrying out relevant ﬁnancial business that they are expected and required to ensure that their AML Compliance Ofﬁcers, Money Laundering Reporting Ofﬁcers and Deputy Money Laundering Reporting Ofﬁcers (AML Officers) are aware of their respective duties and responsibilities as set out in the AML Regulations and will act in accordance with them. CIMA further reiterated that AML Ofﬁcers must be able to dedicate sufﬁcient time for the efﬁcient and effective discharge of their respective functions and stressed the importance of other roles not compromising their independence. CIMA Circular July 2022. CIMA published a circular on 12 July 2022 setting out the ﬁndings from on-site inspections conducted on RPs for the period 24 October 2020 to 31 December 2021 (see above). At the end of the circular CIMA reminded all FSPs (i.e. addressed not just to RPs but to all FSPs which would include regulated funds) that any breach of a law, regulation or rule or non-compliance with a statement of guidance may result in an enforcement action by CIMA.
AML audits for RPs. On 25 January 2019, CIMA announced in a notice that it was requesting RPs (such as investment managers and advisors) pursuant to Section 5(5) of the Securities Investment Business Act (revised) to have their AML/CFT systems and procedures audited, by suitably qualiﬁed entities, for compliance with the AML Regulations. Over the last few years more clariﬁcation on the requirements of AML audits for RPs has become available. There has been no further issued guidance on AML audits for FSPs other then RPs, but the position remains that, in accordance with the AML Regulations, all FSPs (including regulated funds) are required to have in place an appropriate and effective risk-based independent audit function as may be appropriate for the ongoing monitoring of business relationships or one-off transactions. Further, the Guidance Notes anticipate that AML/CFT systems and programmes should include an audit function to test the AML/CFT system.

news — Nicholas Plowman, Anthony Oakes, Kate Hodson

In its annual list, ALB highlights some of Asia’s distinguished lawyers working with offshore law firms. These legal professionals have outperformed their peers and earned wide recognition from their clients with high-quality advice and support.

Nicholas Plowman

Can you tell me about your notable work in the past year?

We have been busy with a broad diet of investment funds work in both the Cayman Islands and BVI. With the recent advent of the private funds law in both jurisdictions, we have seen a number of single investment project vehicles being established, generally domiciled in the BVI. We have also seen a real rebound in crypto-related work structured through Cayman and BVI using Cayman foundations and BVI SPVs. We are also seeing the evolution of decentralised autonomous organisations (DAOs) in this space and the demand for Cayman vehicles to represent the legal personality for these organisations. We expect to continue to see the evolution of these types of blockchain arrangements in Asia, with Cayman and BVI being at the forefront as domiciles in this context.

What are some of the attributes that clients look for in their offshore lawyers?

Intimate knowledge of the law combined with genuine commerciality, so the client is getting the best outcome they possibly can. The best offshore lawyers don’t advise in a vacuum and have to understand the onshore requirements in detail as well, working with onshore counsel to get the best result.

What motto or philosophy do you live by?

Enjoy what you do or you will suffer the consequences.

Anthony Oakes

Can you tell me about your notable work in the past year?

There continues to be a mixture of work – both new money deals and some down-market aspects. The downmarket work has included liquidations, sales of assets of distressed clients and opportunistic mergers and acquisitions around distressed or undervalued assets. As the effects of Covid continue in Hong Kong, much of my focus has been internal – checking that colleagues and team members are well motivated and happy.

What are some of the attributes that clients look for in their offshore lawyers?

I think some of the main attributes are responsiveness, willingness to help and the ability to explain concepts clearly. I ﬁnd that the ability to tailor responses, depending on the client, is also important. As offshore lawyers, we are lucky that many of our clients are knowledgeable and experienced, often being lawyers themselves. Accordingly, their questions will typically be quite speciﬁc – for example, how does Cayman/BVI law differ from, say, Hong Kong or English law, on a particular point. However, less experienced clients seem to appreciate it if you set out more background and colour in your response. Remaining calm and focused is also helpful, closer relationships with clients are often forged when challenging issues arise.

What motto or philosophy do you live by?

I am currently reading the new autobiography of Billy Connolly, the famous Scottish comedian and actor. One of his philosophies that I like is, “Do what makes you happy, be what makes you happy.” Finding what makes you happy is not always easy. However, if you are lucky enough to ﬁnd it,

then I think it is really worthwhile to follow through with it, even if others disapprove. Within Ogier, I have seen lawyers become happier just through pivoting their roles – whether it be having employer support to work remotely more often, joining an internal committee (in relation to diver-sity and inclusivity, or ESG, for example) or taking on some pro bono work.

Kate Hodson

Can you tell me about your notable work in the past year?

Demand in Asia for offshore investment fund structures (predominantly Cayman and BVI) has remained strong over the last year, despite headwinds arising from the challenges of the pandemic and competition from other onshore fund products. Notably, we have seen a rise in interest in BVI fund structures, particularly in the closed-ended context. Our work with funds focused on or incorporating sustainability themes into their investment strategies has really picked up over the last year and this topic is probably one of our most well-attended webinars. Working with such clients has been particularly rewarding as Ogier is in a position to provide a value-add which is unique in the offshore context. Namely, combining sustainability expertise with legal expertise and backed up by our ability to advise on European sustainability-related regulations given our Luxembourg offering (which is soon to be further enhanced following our merger with Leman Solicitors in Ireland).

What are some of the attributes that clients look for in their offshore lawyers?

Clients need lawyers who can adapt to the speciﬁc needs of that client. Lawyers that can spot potential issues, thereby helping to allay challenges down the line, as well as being creative in helping to solve problems. Giving to the point and commercial advice is also key. An approach I encourage my team to take is to put themselves in the shoes of the client; have we told them all they need to know, in a manner which is clear and concise, and in good time?

What motto or philosophy do you live by?

Don’t do things by halves, and if you say you’re going to do something, do it.

Nicholas Plowman
Partner
E: nicholas.plowman@ogier.com

Anthony Oakes
Partner
E: anthony.oakes@ogier.com

Kate Hodson
Partner and Head of ESG (Legal)
E: kate.hodson@ogier.com

A conversation with Ogier, one of ALB Asia's 2023 Top 15 ESG Law Firms

Cayman AML - key updates in the context of Cayman regulated funds

Q&A with Nicholas Plowman, Anthony Oakes and Kate Hodson -who feature on ALB Asia’s Offshore Client Choice List

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