It’s the latest trend du jour, according the The New York Times: so-called ESG makeovers.

This term refers to rebranding certain investment funds as more socially desirable, coupled with directing their investments more heavily into companies with good environmental, social and governance (ESG) policies. That seemingly good business strategy, which answers investor demands, has attracted the attention of regulators. The Securities and Exchange Commission is questioning whether these ESG-dedicated funds popping up all over are really what they say they are.

To answer that question, the SEC has set up an ESG enforcement task force to root out greenwashing, which Investopedia defines as "conveying a false impression or providing misleading information about how a company's products are more environmentally sound."

Rules and guidelines are being considered to clarify what really constitutes an ESG investment product or strategy. The Times cites Morningstar’s tally of 588 sustainable funds and exchange-traded funds in the United States, an increase from 203 in 2017. The assets in them have grown to $296 billion from $70 billion.

Goldman Sachs is currently under investigation for turning one of its longtime mutual funds into the Goldman Sachs International Equity ESG Fund. The fund's prospectus claims that it avoids investing in alcohol, gambling, tobacco, pornography, guns, for-profit prisons and oil, gas and coal stocks.

But some ESG-branded funds still invest in some of these forbidden products. DWS ESG Core Equity Fund owns stock in Exxon Mobil, “in part because the energy company gets relatively high marks for worker pay and promoting diversity in hiring,” according to the Times.

Regulators continue to grapple with what really counts as an ESG fund. In May, the SEC proposed a rule “to promote consistent, comparable, and reliable information for investors concerning funds’ and advisers’ incorporation of environmental, social, and governance (ESG) factors.” Another proposed rule would require a certain percentage of investments in a particular area of focus in order for a fund to call itself by a certain name.  Specifically, the latter rule would apply to "any fund name with terms suggesting that the fund focuses in investments that have (or whose issuers have) particular characteristics. This would include fund names with terms such as 'growth' or 'value' or terms indicating that the fund’s investment decisions incorporate one or more environmental, social, or governance factors."

As the regulators attempt to sort this out, the definition of what an ESG fund really is remains murky. But one expert has a definite, simple solution to the issue of ESG makeovers.

“Many ESG funds are doing very little of anything in fact, as they are quasi-index funds with minor tilts and with no engagement/stewardship capabilities,” said George Serafeim, a Harvard Business School professor and paid adviser to several fund managers and Wall Street firms selling ESG products, an email to the Times. “In fact, in my opinion, eventually there should not be any ESG funds. ESG analysis should be part of good corporate and investment management.”