Hi Nicolas,

Here are a few counterpoints:

- Heads I Win, Tails You Lose: You say that your personal biases don’t affect your research, but look at the game you’re playing: When the evidence supports your a priori belief, you consider it conclusive, but when it doesn’t, it is because of some exogenous factor, like the outperformance of the technology sector.

- On Free Lunches: ESG investing is hardly a free lunch; in fact, analyzing extra-financial information is much more costly than analyzing financial information. You are treating it as a free lunch only because you are relying on quick and dirty metrics to identify “ESG stocks”, much like how naive investors use P/E and P/B ratios to identify “Value stocks”. Indeed, why would the market reward either one of these naive approaches? Perhaps that’s why your long-short portfolio is increasingly looking like a random walk.

- On ESG performance: As you know, I never made the claim that ESG investing outperforms traditional investing. You made the claim that ESG underperforms and therefore should be avoided, I simply critiqued the flimsiness of your analysis and challenged your conclusion.

My position has always been that ESG investment strategies can perform as well as traditional investment strategies when adjusted for cost and risk differentials, and so far, your research supports my claim better than it supports yours.

Peter