If it was ever easy to be the manager of an ESG fund, it certainly isn't any more.

Demand for these environmentally friendly investment options is skyrocketing, but scrutiny from the Securities and Exchange Commission is increasing along with it. Late last month, BNY Mellon paid the agency $1.5 million to settle a claim that it misled investors about how it applies ESG principles to some of its mutual funds. Also, the SEC released proposed regulations imposing new requirements on funds that advertise themselves as ESG.

Will all of this have a chilling effect that may halt or even reverse the rapid growth of this area of investing? To find out we, hear from two attorneys who represent fund managers that work on ESG investments.

George Raine and Robert Skinner are partners at the firm Ropes & Gray who specialize in the financial services industry. They spoke with Bloomberg Law's Andrew Ramonas about why the SEC is doing what it's doing, and why it's more important than ever for ESG fund prospectuses to be bulletproof.

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