Writer: Esteban Pages
2 min read April 2023 — ESG reporting is slowly but surely transitioning from a corporate nice-to-have that attracts investors and unlocks access to financial capital and new clients to a legal requirement. The European Union is spearheading this regulatory push on sustainability reporting as early as 2025. For both John Morris, managing partner at Crestwood Advisors Group Boston and Chris Nasson, managing partner at K&L Gates, ESG is the talk of the town in Greater Boston’s professional services industry. Both executives also go in detail on Greater Boston’s appeal to businesses and residents alike.
John Morris, Managing Partner, Crestwood Advisors Group Boston
How are emerging trends like ESG and blockchain impacting your wealth management strategies?
There has been a lot of chatter about crypto and blockchain over the past couple of years but that has faded along with the valuations. And while crypto is something we don’t have a problem with, including in conversations with clients, it’s a peripheral investment in the long term. At the end of the day, it’s our job to build a time-tested portfolio that is based on sound fundamentals that will build capital gradually over time and avoid adverse risks. All that said, we stay up to speed with crypto and blockchain because we want to be knowledgeable with our clients and offer them the best education and advice that we can. ESG is also of great interest across the board with Gen Two and Three, as they are looking more toward investments that aren’t doing long-term environmental damage. This is one of the bigger shifts we’ve seen between them and Gen One.
Chris Nasson, Managing Partner, K&L Gates
What are your thoughts on how ESG is influencing client decisions and business choices in the Boston market?
Our firm took a lead in ESG regulatory counseling for financial services and asset management clients in the last several years. We have had client roundtables on ESG investing and have counseled clients on ESG regulatory issues because the SEC has begun to scrutinize some ESG fund offerings. Some state legislatures have really begun to scrutinize ESG offerings as well. The Texas Senate, for example, has really been digging into ESG offerings and whether it is appropriate for pension funds and the like to be invested in ESG. It offers a lot of opportunity because many of our clients want to focus their investments and capital in areas that they think will promote ESG issues. Several of our clients want to structure funds that focus on what their clients want when it comes to investing their hard-earned dollars. You want to structure these funds so that they protect our clients from regulatory enforcement, from legislative scrutiny. While there is a lot of demand in the market, we are also seeing the pendulum start to swing in the other direction, where regulatory authorities and state legislatures are starting to look into whether this is an appropriate place for things like pension funds to be investing in; whether the ESG funds that are being marketed in a certain way are actually living up to the statements they are making to investors and prospective investors in their marketing materials.
What is your assessment of the overall Boston market?
Morris: Housing will continue to be a challenge and this is why we will likely see more people moving further out from Downtown. But this is where hybrid and remote work will be a key discussion moving forward as people consider their job prospects. And while there are a lot of jobs available, many are skilled jobs because of how industries have grown here in the past 20 years. None have probably taken a greater foothold than life sciences. Add in our tremendous higher education institutions and vibrant finance and law sectors, it’s a thriving market for those with the talent and specialization. It used to be that venture capital firms would require companies they invested in to be based in Boston, but that’s no longer the case as more and more companies around the world are looking to move into the market.
Nasson: There have been a lot of economic headwinds domestically and globally over the last six to nine months. We feel them in Boston, just as everyone has felt them across the globe. The economy in Greater Boston is as strong and diverse as they come, so that positions us to weather economic headwinds better than other cities that tend to be very focused in just one or two industries. Because Boston is the global city for education, we tend to be on the cutting edge of development. The new ideas emerging from the classrooms and labs of MIT, Harvard, Boston University, Tufts, Amherst College and many of our other leading academic institutions spill over into the business world. You also see the talent spill over into the business world.
Many of the city’s business leaders, community leaders, health leaders, nonprofit leaders and education leaders did not grow up in Boston. They came to Boston to attend one of our great colleges and universities, and they fell in love with the city and stayed and made it their home. Boston is leading the way in everything from healthcare innovation to life sciences to new financial services products. That is not by accident, coincidence or fortune. It is because we draw the best and brightest to our academic institutions.
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