How to have more impactful ESG conversations with clients


On this week's episode of the Financial Planning Podcast, Christopher Knapp explains that advisors don't need to fear the three letters that have created controversy in the investing space all year long.

Knapp, managing director and principal at Robertson Stephens, understands that there is plenty of discussion around the merits of ESG, its origins, the social implications and the political climate surrounding it.

Christopher Knapp, managing director and principal at Robertson Stephens

But Knapp, a 36-year industry veteran, takes the stance that sustainable and green investing are fiduciary issues, not political issues. Because of that, he champions the idea of advisors flipping the script and approaching ESG conversations by grounding them in problem solving and real-life impacts.

"If you go into a room of people and start talking about going green or going sustainable, too often what you're going to see is people will tune you out, thinking that you're trying to make some sort of political assessment, or telling them how they're supposed to live," Knapp said. "If you go into the same room and say, I want to talk to you about businesses that are solving problems that are affecting all of us directly. Very expensive problems on top of that. How do we mitigate those expenses or perhaps prevent them? I think you have a very different story.

"Climate is not a political issue. It's a fiduciary issue. It's devastatingly real in terms of its economic and personal impact."

During his conversation with FP Podcast host and lead editorial producer Justin L. Mack, Knapp talks about meeting clients where they are in ESG conversations, provides his thoughts on the national discourse around ESG investing and explains that his job is all about helping clients create the world they want to live in.

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Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.

Justin L. Mack (00:03):
Good morning, good afternoon and good evening. Welcome to the Financial Planning Podcast. I'm your host, Justin L. Mack, and it is my pleasure to introduce this week's guest, Christopher Knapp, managing director and principal at Robertson Stephens. Chris, thank you so much for joining us on the show this week.

Christopher Knapp (00:19):
Delighted to be here.

Justin L. Mack (00:20):
Now, Chris brings 36 years of experience as an investment advisor and entrepreneur, as well as decades of ESG and impact investing know-how to this week's edition of the FP Podcast. He previously worked at Houston's Collaboration Capital, a wealth management and advisory firm focused on impact in ESG investing. Chris founded Collaboration in 2016 after stepping down as CEO of Houston-based money management firm Chilton Capital Management. And as we all know, there is no shortage of discussion at the moment about the merits of ESG. It's hard to miss it, the social implications and the political climate surrounding it. But Chris has his own perspective, believing in meeting people where they are and understanding that sustainable and green investing are fiduciary issues, not political issues. His practice is predicated on ESG principles and the power of for-profit enterprise to solve for complex problems. So an interesting perspective around a topic that, like I mentioned, it's everywhere. Not just in our industry, but nationally.

The conversation has evolved so much along with the industry itself. But Chris, before we get into that topic and the work you're doing in regards to it, as a new guest here on the podcast, you have to pay the first-timer's toll. Which is telling us how you got into the business in the first place. I always love hearing where the folks who have been in the industry, especially at the level you have for as long as you have, got started. Like I said, 36 years of experience, a number of different positions held over the years. So what got you here on this journey in the first place?

Christopher Knapp (01:51):
Well, a couple different things. So much of my education was humanities based. I was very lucky to have that. My actual education and degrees are in art history and history. But one of the things I liked the most about art history was the social history component of what was happening at any given moment that influenced or informed a specific movement in art. Usually with something social or going on a social movement. I happened to grow up in a family of what we would now think of called community bankers. Community banks don't really exist anymore, but my father and grandfather were both in the business of effectively making character loans. This is days before technology and FCRA scores, and you were really making an assessment on any given day of someone walking into the bank asking you for a loan for what sometimes might've seemed like a crazy idea. And you were making a character assessment of that person. And so as a kid, I was dragged around by my father and grandfather to what the acronym today is, SME, small- and medium-sized enterprises. Those are businesses with anywhere from five to 500 employees. Mom and pop shops. Often locally owned businesses. And I think I saw firsthand, although I didn't really know what I was seeing, the power of access to credit. The power of access to capital and how that influenced an entire ecosystem of prosperity within the communities where we live.

Justin L. Mack (03:12):
Absolutely, absolutely. And going into the industry from those roots. From childhood. and interesting you mentioned being an art history major, which my mother was also an art history major. And similarly was always very deeply involved in what was happening in the community. Being aware of those issues. So I don't know what it is about the art history majors, but you guys start looking at the world a little different, which is pretty cool to hear. But I love hearing that experience because it always illustrates that there's no right background to have to be in this business. I think we don't talk about that enough. Wealth management, financial services, what you do is so unique that you can have a skillset that doesn't seem traditional and still make it here. So I always love to highlight that here on the podcast. And again, certainly not the typical path or background for someone who's been in the business as long as you have. So transitioning from that, I want to get into ESG as it continues to be a hot issue across our industry and at large. But at times it veers into more political and personal conversation instead of practical application. So I wanted to start just by getting your thoughts on the current tone of the national ESG conversation. Not necessarily just it relates to the work that advisors do or financial planners do, but what you're seeing and how that conversation has changed with all your years of being in that world specifically.

Christopher Knapp (04:28):
Absolutely. Well, I guess I would say at the outset that I think the semantics within this conversation are all wrong. I think ESG in itself, as you know, it's an acronym standing for environmental, social and governance, are confusing to many people. They don't really know how to make an assessment historically in the investment advisory business or in the stock selection business. The "G" component, the governance, how well a company was run, often informed the longevity, the prosperity, the predictability of the returns. A company that scores highly in the governance aspect, more often than not, will score well in the environmental and social. But semantically. I think the expression is confusing. And I think if we think about it more in terms of problem solving, solving for a problem that I think is clear and immediate to most people. Climate, for example. We've never seen the incidents, if you will, of either cold spells or heat spells or storms or devastation from fires touching people as tangibly as we see today.

So in my opinion, if you go into a room of people and start talking about going green or going sustainable, too often what you're going to see is people will tune you out, thinking that you're trying to make some sort of political assessment, or telling them how they're supposed to live. If you go into the same room and say, I want to talk to you about businesses that are solving problems that are affecting all of us directly. Very expensive problems on top of that. How do we mitigate those expenses or perhaps prevent them? I think you have a very different story.

Justin L. Mack (05:56):
I've got to ask as a follow-up, how do you navigate that when you're trying to have a conversation with someone who, like you mentioned, is clearly in that process of the tune out because they've already kind of determined what you're going to say based on the conversation itself? Because as advisors in a position where you have to have those conversations at times with clients, advisors have to figure out how to navigate that in a way to keep a relationship strong. Say they're having this conversation with someone who is important from a business standpoint, but then it starts to get personal because of different viewpoints. That's got to be a tough room to be in. How do you manage that?

Christopher Knapp (06:31):
Well, I think we have to think about the fiduciary issues here. In my assessment or opinion, climate is not a political issue. It's a fiduciary issue. It's devastatingly real in terms of its economic and personal impact. But going back to your earlier question, and this goes back to my education in humanities and this idea that everything is connected, wealth advisory is ultimately a people business. We're dealing with how people process information, and how they think about prosperity. Financial security, of course, is paramount to the overall conversation. But I think what's missing sometimes when we think about the philosophical tenets of ESG or impact investing is at the root of so much wealth in our country. And remember, senior generation wealth is now being passed to the next generation. This is the largest wealth transfer in history. So these are huge macro factors going on. But if you look at the root of so much wealth in the United States, more often than not, once upon a time, maybe a few generations ago in any family, maybe one generation, maybe two or three or perhaps more, it came from a family that owned a local business. A local manufacturing company. A utility. A bank. Any one of those enterprises that ultimately was not only wildly successful, but often sold to a much larger enterprise, often in the public markets. A number of our existing clients today are wealthier than their grandparents or great grandparents ever could have imagined.

And the reason I bring that up is that those local businesses, many of the ideas we associate with ESG that sometimes people perceive as new ideas, these are ideas actually learned from my great grandparents. It's like, how do you treat your employees? How do you think about supply chains? How do you think about the integrity of your process? How do you think about the impact your business has on your local community? How are you engaged in your community? So I think it's very important to recognize that many of those businesses … also, it wasn't unusual that the people who led those enterprises were themselves products of the Depression or World War II or what we now call the greatest generation. They were wildly ambitious. They were intent on making a profit and being prosperous. I think there was a larger understanding of how the employees, how the enterprise, how everything else fit into the overall picture of the local community and local prosperity. So in my assessment here, I think that what we're seeing with ESG or many of those same principles are coming back to bear. It's just we have technological ways of assessing the data today that we didn't have at the time.

Justin L. Mack (08:57):
Yeah, and I'm sure that helps quite a bit. And you also mentioned meeting clients where they are when it comes to ESG and approaching these issues. So I wanted to go a little bit deeper. Meeting clients where they are. What does that mean in this context, and how can advisors successfully pull that off?

Christopher Knapp (09:13):
Well, I think sometimes, again, going back to the people aspect of the business, I think one of the things I think I've probably enjoyed the most about being a financial or wealth advisor is you get to know people in an intensely personal way. It's effectively piercing the veil. We call it blood and money. You get to understand the family dynamics, how people think about prosperity, the mechanics of wealth, how it was made, the ambition, what's personally important to any one given client. So for me, when I think about expressing any of the terminology around problem solving as I call it, I try to understand if there's any application I can think about that touches the family tangibly. What's fascinating in the U.S. is that you'll notice that across a lot of my career has been working with multigenerational family members. And what we see is the family that is justifiably proud of the fact that their family's gone for three or four generations to, let's say, the University of Texas. Or perhaps it's Texas A&M, close by here in Houston.

What's fascinating to see is that the current student, the grandchild, is going to a school that looks vastly different than the parents or the grandparents went to in terms of its demographic composition and in terms of the student body. And it's not uncommon for that arguably intensely traditional family member, their best friend might be someone who's a first-generation immigrant or someone from Bangladesh or from whatever country for whom things like climate or social equity means something very different. Where it gets really interesting is when that person becomes a family member. They actually marry that person from a country that demographically is completely different from anything else in the family. So what we see is that conversation around the dinner table when the family dynamic changes, and what we see in a lot of these multigenerational families is that composition of those families is quite different.

It might be adopted children from another country. It might be marrying someone from a different ethnic group, a different color. It might be two men or two women as couples. So the dynamics about what, for example, social equity or the impact of climate or the impact of labor practices, that's a very different family conversation. For me, in terms of being able to address it within the families to try to bring it home, make it real in some thoughtful way, because the same person who might dismiss social equity or a priority to promote people of color, minorities and women to corporate leadership as political correctness. If they thought for a moment that their grandson or granddaughter, who it turns out that this is an Anglo or white family that now has a grandchild of color, if they thought for a moment that their grandson or granddaughter was being treated differently because of his or her color, they'd be apoplectic.

But again, when it touches them tangibly, they often see it very differently. Like, we don't invest in companies that have anything to do with opioids, for example. Well, tragically what we see increasingly is across multiple clients is we see one degree of separation from someone who's lost a child to opioid overdose. Fentanyl is another crisis. So would that family or that family member ever want to own a company that had anything to do with opioids or addiction? The answer is probably no. But at the same time, none of this as we see, as I expressed it earlier, none of this is our political issues. It's just that we believe these are fiduciary issues that must be taken into account when we think about overall portfolio composition and construction.

Justin L. Mack (12:37):
Absolutely. Well said, well said. And with that, we're actually going to take a quick break and enjoy a word from our sponsors, but when we'll return, we'll have a lot more with Christopher Knapp, managing director and principal at Robertson Stephens, talking about ESG, how the conversation has evolved and how advisors should be approaching it now as the conversation continues to evolve. Stay locked. We'll be right back after this break. 

And welcome back to the Financial Planning Podcast. I'm your host, Justin Mack, and we're jumping back into our conversation this week with Christopher Knapp, managing director and principal at Robertson Stephens. So Chris, I wanted to talk a little bit about noise. And not so much from a negative standpoint. I think sometimes when we talk about the noise that comes into the conversation about ESG between advisor and client, it's all bad external forces. However, it is really just acknowledging that there are a lot more people engaged in this conversation than before as it has continued to grow and evolve and become more of an issue.

You do get people active. Sometimes they're active in maybe the wrong direction or based on how you feel. But as a reporter, I believe when we have more people engaged, there are more opportunities for people to learn something. To grow. To change if they need to as far as their perspectives, or just gain a little bit more knowledge. So I think sometimes the fact that there's a lot of noise indicates that there are a lot of engaged folks, which is great. However, it can be, again, difficult if that noise is coming from a source that doesn't have their best interests at heart, and they're taking all their takes and opinions on ESG from someone else who has a different agenda that's not about the solutions, the fiduciary aspect of it. So how do you keep people on track? You want 'em to stay engaged, but you want to make sure that the noise is appropriate? Because it's going to be there.

Christopher Knapp (14:20):
I guess I would say that when anything gets popular, it's not uncommon that a lot of garbage comes in. So it's certainly true that in the movement around ESG and impact investing, which has obviously grown tremendously over the last decade or so, that some bad actors come into the game. There's a lot of greenwashing, there's false claims, and I think that the criticism there against the movement is certainly justifiable. However, I would hardly say that the good practitioners should be penalized for this because I think that the issues that we're trying to deal with are real. And I think they're tangible to just about everybody. So here, critical thought really matters. I think I touched upon it earlier. To politicize climate, I believe is a fiduciary breach because these are fiduciary issues. And when you get into an endless debate about climate, you're often paralyzed and you do nothing.

And I think anybody who's tried to solve a problem in the past that is clearly getting bigger to paralyze oneself and not take action only prolongs the inevitability of another crisis. So to me, I think action is really important, and I think it's important to recognize sometimes what we see is the oversimplification of very complex issues. Everything here is connected, and I think that ultimately we're in the storytelling business. I don't mean that in a flippant way, but I think we need to be able to tell these stories in a way or make them relatable to people that understand how tangibly real these issues are. If you talk about social equity, for example, and you look at the demographic reality of say, Houston, which is where I grew up and where we're based, the demographic reality of the city is such that it's among the most diverse cities in the country.

So for someone as a business owner or investor to be thinking about, what does the job pool look like in my city? One generation from now, chances are it looks very different from what that job pool looked like a generation ago. What are the tools we're using? What are we investing in today that makes the city even more prosperous a generation from now in terms of employee base, a labor pool, intellectual talent, intellectual capital for the businesses in which we're invested? So all of these are very real issues that affect the economic prosperity and viability, frankly, of every community.

Justin L. Mack (16:35):
Absolutely. And I want to look forward a little bit too, because we are talking now at a time where the year is winding down, we're heading firmly into 2024. It's a new year and things are going to continue to evolve and people are going to step back and take a look at their goals, their priorities, and a lot of big picture conversations always come at the end of the year. You've been in this industry long enough. So I'm going to ask you one of those questions of, what are your predictions or your thoughts going forward? We've seen ESG grow from this niche market to one that has trillions of assets associated with it globally, a huge transformation. So what trends do you think are most important for advisors to be paying attention to right now as we head into 2024?

Christopher Knapp (17:19):
Well, I touched on the senior generation wealth transfer. I think it's really important to be listening to our clients. I like to say that the job of an advisor in my capacity that's working with three generations is to be able to manage assets for the senior generation. What I think is really critical here is to also be paying attention to what that next generation or two generations is thinking about. How are we relevant as advisors? What are the issues that those generations are caring about? And if we're that good of an advisor to the senior generation, can we be equally relevant to the younger generation?

That's where I think all of these issues come to bear. Climate is probably the most visible in the most recent year just because we've never had a year quite like this where we've had devastating climate events really all around the world. Constant headlines. Again, I would say that it's easy to dismiss climate, perhaps until your house burns down. Not only your house, but your whole town burns down. Or all of a sudden there's four feet of water in your living room. Well, you might think, oh, that's a freak event, and that's not going to happen again. But then it happens two years later. If you're an astute businessperson and that was another similar type of crisis happening in your business, if you didn't take action around that as a business owner or a CEO, you'd be out of a job or out of a business.

So I think, again, all of these things, the immediacy of them and moving more quickly. Secondly, I would say that I think the data will only become more robust. So much of the early data around ESG was somewhat fragmented, often mom and pop businesses and services. But I think the transparency of the data, the integrity of the data will only get better. As advisors, I think the relevance across multiple generations, what are the issues that people think about and care about that are touching them tangibly? And also being able to tell the story through an integrity of process, an integrity of data that makes it real and identifiable to people just as they would expect when they're making consumer choices. For example, the food they eat, the restaurants they go to, the clothing they buy. I think our abilities as advisors to be able to tell that story around those investments that we make on behalf of our clients is equally important.

Justin L. Mack (19:34):
Absolutely. And like you mentioned earlier in the show, making it real, making it tangible. That example you give about when you're talking about climate, you point to the very real, tragic loss that people are facing all over the world. We're talking about solving a problem. If we can do something to solve a problem, that doesn't sound like a political conversation unless you really want to make it one. But that's talking about how we prevent tragedy, loss of life, the eradication of everything that people hold dear. That's a conversation that sounds pretty important to have. So I think approaching it by starting with what you're mad about that you heard on another podcast a week ago or something would be kind of a bad way to derail a very important conversation. So I really appreciate your perspective on all of these issues today.

And as we come to the close of our show, we are going to transition into something that has become a tradition here on the Financial Planning Podcast, which is ending with some good vibes. And Chris, we talked a lot about your origin story that brought you into this industry, kind of as a child. Seeing the impact and how local communities can be shaped by the power of credit and money, and then taking that into your work in humanities and being involved in the very human aspect of our business and then doing this for so long. I have to ask, what do you love most about your job? What's the thing that keeps you coming back and that makes you say, I can't wait for this weekend to be over so I can get back to work? I mean, I don't know if you say that, but if you do, congratulations! But what is that thing that gets you up on Monday morning ready to do it for another week?

Christopher Knapp (21:09):
Well, I said this a few moments ago, but ultimately, we're in the people and relationship business. And I think what brings me the most joy is being able to show our clients that they have the tools in front of them to do what I call making the world they really want to live in. Whatever it is that brings them joy. As I mentioned, financial security being paramount, but is it the house they live in? Is it the city they live in? Is it the job that they choose to take? Is it the job their children choose to take? How do they find ultimate joy and happiness in their lives? And what's a curious paradox about the U.S. is that someone who's got investable capital in this country of, let's call it a $1 million or $2 million, statistically among the wealthiest people on the planet, I think it's very easy to lose perspective. That's not to say that you should be reckless with your assets or that you should spend endlessly. But I think it's really important to try to put into context what are the tools we have in front of us again, to make that life or that world that we really want to be living in. I think that is the joy and the satisfaction of this business. It is around catalyzing that opportunity for our clients.

Justin L. Mack (22:14):
For sure. And I can't think of any vibes better than creating the world you want to live in. So on that, I want to thank you, Chris, again for sharing your time and your passion with us this week on the Financial Planning Podcast. Thank you so much for coming by.

Christopher Knapp (22:28):
You're welcome. It's an honor to be part of it.

Justin L. Mack (22:30):
And I want to thank everyone for listening to the Financial Planning Podcast. This episode was produced by Arizent with audio production by Kellie Malone Yee. Special thanks to our guest, Christopher Knapp, managing director and principal at Robertson Stephens. Rate us, review us and subscribe to all of our content at For Financial Planning, I'm Justin Mack. Thanks for listening.