Thank you Steven Rothstein for a thoughtful and well articulated article. The integration of financially material ESG considerations into security valuation and risk management is entirely consistent with investment professionals' fiduciary duty and with well-functioning capital markets.

The first challenge that arises with discussion about ESG issues is the different definitions or perspectives adopted by discussants. Some take the perspective of this article - ESG data can contain important information that is not reflected on traditional financial statements - while others view ESG issues as morals-based assessments used to screen companies from portfolios. The first perspective was codified by the UN-backed Principles for Responsible Investment in 2006 (though its practice predates the PRI), while the second is much older and has roots in religious, ethical, and values-based screening and in the Socially Responsible Investing heyday of the 1960s, 1970s and 1980s. The PRI's approach is entirely consistent with traditional financial analysis; the SRI approach is more in line with behavioural finance. There is an excellent and up-to-date summary of these divergent 'valuation' vs. 'values' perspectives in Laura Starks' presidential address to the American Finance Association and published in The Journal of Finance (https://onlinelibrary.wiley.com/doi/pdf/10.1111/jofi.13255).

The second challenge that arises is one of materiality, time horizon, and cost. The financial materiality of an ESG issue can change with time horizon; what is material to an investor with a short time horizon (e.g., hedge fund) may be much different that to an investor with a very long time horizon (e.g., pension fund). The US has historically taken a middle of road approach to time horizon for materiality, using a 'reasonable person' test for utility. This brings the cost issue to the forefront, both for investors as they integrate the sometimes inchoate data needed for more accurate risk assessments, and for issuers as they provide the data in the first place.

The balancing of materiality and cost has forever underpinned active management and the pursuit of alpha. The nature of many ESG issues connects alpha to CFA Institute's mission and vision, and its leadership of the investment profession for 'the ultimate benefit of society'.

Prohibiting the use of ESG information does not appear to be consistent with well-functioning markets given its growing financial materiality. As US SEC commissioner Allison Herron Lee (2021) noted in a speech, the fact that an ESG issue may have a political dimension does not preclude it from being financially material. To this I would add that investors should also feel welcome to use ESG information for values-based decisions - it has always been the right of investors to include or exclude securities they 'like' or 'dislike' (though in theory they are transferring wealth to non values-based investors) - but the fact that some investors do so should not preclude the rest of the market participants using material ESG information in their analysis.