Mr. Bowman, thank you for the ESG label dismantle call. Your choice of words fired up the reader’s motivation for change. I want to do my bit and stand by you not only in agreement about full consequence investing, doing the right thing, and adopting a more integrated approach, but also reinforce that the ESG immeasurability along with a feel-good approach is still connected with a bigger lack of alpha problem in the industry. 

If the non-ESG industry was already underperforming and now with an ESG wrapper the expectation of alpha has been discounted because doing the right thing may not be operationally profitable, the industry needs a dramatic change to make market participants wake up, notice and reward the sincere efforts of companies trying to effect real change. We need a network effort rather than repackaging to save the world.

Moreover, if factor investing itself posed anticipatory challenges owing to the flipping nature of factors per se and statistical assumptions behind them, the new characteristics of ESG data complicate the tasks for machine learning startups trying to make sense of data coming from this burgeoning space, making it even harder to build models to extract persistent behavior out of alternative data.

I believe your emphasis on calculation and measurement is the critical message for companies building ESG methodologies and compiling data who are disconnected from the question that if we are doing the right and consequential thing, what would be the metric and measurability that will make sense for the shareholders to look up and take notice and reward these initiatives. If the data can not make the value add starkly clear, we have created more confusion than clarity.

I am sincerely hoping that your call starts a more thoughtful revolution so that assets shifting to the moniker adopt a more proactive conscious approach, demanding answers from the ESG shops. In the end, hope has little voice when it competes with the instant gratification times that we live in, which only leaves us with the market’s ruthless price discovery. Invariably the impending climate problem should take precedence and create shareholder activism against greenwashers and any other corporations not sincere in their contributions to saving the world.

Thank you