Wall Street's top securities regulator has reportedly sent a number of examination letters asking fund managers for details on their sustainability-focused products.
According to The Wall Street Journal, regulators in the SEC's Los Angeles unit are leading the agency's effort to better understand how asset managers determine their environmental, social and governance investing criteria and how those standards are applied.
The examination, which the report distinguishes is different from an investigative probe, comes as big and small investors funnel large sums into fund strategies dedicated to addressing ESG issues such as gender diversity on corporate boards and fossil fuel emissions.
It remains unclear what specific firms received letters from the SEC, according to the report. The SEC sent a number of similar letters to fund managers in 2018.
ESG has become a dividing topic among the SEC's five commissioners.
Hester Peirce, one of the agency's Republican commissioners, has been a vocal critic of the growing movement around ESG. In June, Peirce said ESG was being used to shame companies based on incorrect or misleading information.
But the agency's two Democratic commissioners, Robert Jackson Jr. and Allison Lee, have been more open to the ideas behind ESG and standardizing how companies report that information.
"It won't help if each individual executive inside of a company is making their own decision about what is material," Lee said in September while testifying on Capitol Hill. "It makes it difficult for investors to compare. You have to balance that."