The U.S. Securities and Exchange Commission has fined BNY Mellon’s investment advisors $1.5 million for allegedly misreporting and omitting information about environmental, social and governance (ESG) investment considerations in mutual funds it managed.

The case marks the first time the SEC has settled an ESG statement with investment advisers, two days before the agency will propose rules that determine how financial firms can incorporate ESG or other green labels into investment funds. The agency is increasingly looking for potential “greenwashing.”

From July 2018 to September 2021, BNY Mellon investment advisers recommended in filings that all investments in these funds were reviewed for ESG quality, which was not always the case, the SEC said. As of the time of investing, some funds held investments that did not have ESG quality review scores, the SEC said.

“We allege that BNY Mellon Investment Advisors does not always perform the ESG quality review of its disclosures as part of the investment selection process for certain mutual funds it recommends,” said Sanjay Watts, Executive Deputy Director of the SEC. Deva said in a statement on Monday.

BNY Mellon Investment Advisors held more than $380 billion in assets as of March 31, 2022. The company said none of the sustainable funds it offered were targeted by the SEC. BNY Mellon has updated its fund materials and said it is pleased to have resolved the issue.

According to the SEC’s order, between January 2019 and March 2021, 67 of the 185 investments made in mutual funds recommended by BNY Mellon Investment Adviser were said to be under-invested at the time of the investment. ESG quality review scores, accounting for nearly a quarter of the fund’s net assets as of March 31, 2021.

The regulator charged the BNY Mellon investment adviser with “failure to adopt and implement policies and procedures . . . to prevent the inclusion of untrue statements of fact in prospectuses and other documents,” adding that compliance officers had until March 2020 Only realized the lack of quality review.

The case is the latest in a series of ESG-related enforcement actions by the SEC last year after the agency’s enforcement arm formed a dedicated green-washing task force. In April, the U.S. Securities and Exchange Commission accused Brazilian miner Vale of misleading investors about the safety of the dam before it collapsed in January 2019 and killed 270 people. The SEC also charged Trevor Milton, the founder of electric car company Nikola, with making misleading statements.

On Wednesday, the Securities and Exchange Commission plans to propose new rules to determine what language mutual funds can use to describe themselves as green.