The U.S. Securities and Exchange Commission (SEC) has expanded its crackdown on greenwashing with a new probe focused on whether fund managers that are marketed as sustainable are trading away their right to vote on ESG issues, according to news reports.

An August 15 Bloomberg report citing people close to the matter revealed that SEC enforcement lawyers have questioned institutional investors offering ESG funds on how they lend out their shares and whether they recall them before corporate elections, which would impact the fund’s ability to cast ballots.

In response, asset managers have pointed to their policies put in place to prevent firms from borrowing shares for the purpose of voting on shareholder proposals.

The investigation calls into question the ability of ESG investment funds to combat societal ills through long-term investments, especially if they lend shares to short sellers taking an opposing view.

Short-term bets against companies often make it more difficult for an ESG fund manager to influence a portfolio company to become more sustainable over a longer period. It also creates the appearance of fund manager’s supporting investors who are short the fund manager’s own portfolio companies.

“When the vote matters, mutual funds recall their shares,” said Josh Galper, managing principal of Finadium. “The funds most equipped to respond to shareholder concerns or the SEC are those that have internal ESG policies that make clear what they’re going to do when a vote comes up.”