ARK Invest Europe has unveiled a guide targeting fund selectors with practical strategies to navigate the rapidly evolving sustainable investment landscape in 2025.

The guide comes further to the European Securities and Markets Authority's (ESMA’s) Guidelines on funds’ names using ESG or sustainability-related terms becoming into force.

The guide, titled “How to Navigate Sustainable Investing in 2025: Useful Tips for Fund Selectors” offers fund selectors clear, actionable insights to enhance fund scrutiny, drive real accountability, and ensure authentic alignment with sustainability mandates.

Stuart Forbes, Head of ARK Invest Europe and co-author of the guide, said: "Sustainable investing is facing a critical credibility moment. With the shifting policy landscape and increasing investor scepticism, fund selectors now serve as the gatekeepers of truth. They must look beyond marketing labels to ensure that funds genuinely contribute to sustainable outcomes."

ARK Invest Europenotes that with sustainable investing regulations continuing to tighten, fund selectors need to examing what fund providers are actually delivering in practice. The guide tackles the challenge across both passive and actively managed funds, highlighting five key due dilligence tips:

  1. Verify the availability of methodologies – Request full transparency regarding fund methodologies. This includes understanding how companies are scored, selected, and weighted for sustainability, and critically, how "sustainable investment" proportions genuinely link to real-world economic activities, not misleading metrics. Lack of detailed information is a major red flag.
  2. Ensure Methodologies are followed in practice – Go beyond documentation. As an acid test, one could choose 5 portfolio companies at random and request evidence of the applied approach. This could include a one-page scorecard for each, detailing how each company has been surfaced, scored, selected and weighted by the fund in accordance with the stated methodology, including any impact scores.
  3. Assess Regulatory Preparedness – Select Fund Issuers who demonstrate a proactive, informed approach to evolving standards and who haven’t diluted their sustainability claims in response to regulatory scrutiny.
  4. Evaluate Governance Integrity – Robust ESG governance, including independent oversight, is essential to avoid greenwashing and ensure that sustainability commitments are enforced in practice.
  5. Scrutinise Impact Funds– Impact-labelled funds must be held to the highest standards, with a transparent link between forward-looking assessments and backward-looking impact reporting. Outsourcing this reporting without integration raises questions about the strategy’s credibility.

Kate Naumova, Associate Director – Sustainability at ARK Invest Europe and co-author of the guide, said: "We have leveraged our unique expertise in sustainable and thematic investing to support Fund Selectors in navigating today's uncertain regulatory landscape. As one of very few ETF providers that did not re-categorise any of their Article 9 sustainable or impact ETFs during the introduction of SFDR Level II and did not remove “ESG” or “Sustainability”-related terms in 2025, we have a deep understanding of sustainable investing."

"In a market where many ETF providers rely heavily on third-party indices – often sacrificing transparency and thematic precision – we own the commercial rights to the indices used by our sustainable funds, maintaining a consistent approach to methodological transparency and integration.

"We believe that as sustainable investing regulations continue to tighten, Fund Selectors must now examine what Fund Issuers are actually delivering in practice."

In June 2025, RIZE by ARK Invest will be launching its own internally developed Impact Calculator for investors. It will be a free service to clients who utilise RIZE by ARK Invest's sustainable and impact funds in their own funds and mandates; RIZE by ARK Invest will be able to calculate the impact of its clients’ own fund portfolios to the extent of the overlap in companies held by those clients' funds and RIZE by ARK Invest's funds.

RIZE by ARK Invest is the brand name for the sustainability ETF range formerly run by Rize ETF before being acquired by ARK Invest in September 2023.

Further information on the guide can be found here.