Regulatory Clarity for Impact Investing
A Timely Proposal
From Practice to Regulation
Rather than introducing a rigid new category, the position paper proposes a principles-based structure for Impact Investing as a complement to the existing SFDR system. It aims to provide clarity without overregulation. The proposal follows a pragmatic approach: it builds on existing strategies and offers the flexibility needed to reflect market diversity. The suggested definition is based on established principles within the impact investing community: investments made with the intention to generate both financial returns and positive, measurable social or environmental outcomes.
What Defines Impact Investing
The paper outlines four core principles that distinguish Impact Investing:
- Intentionality – A clear, strategic intention to achieve impact that goes beyond ESG integration
- Measurability – Demonstrable contributions from both the investment and the investor, supported by defined KPIs
- Impact Management – A structured approach to steering, monitoring, risk management, and active engagement
- Transparency – Regular and transparent reporting on progress towards stated impact objectives
This framework allows for a clear distinction from general ESG approaches while acknowledging the variety of strategies and asset classes in the market.
Why Now Matters for Institutional Investors
The timing is politically favourable: the upcoming SFDR review presents a window of opportunity to shape the future of European investment regulation. The EU Platform on Sustainable Finance has already laid the groundwork, proposing categories such as Transition, Sustainable, and general ESG investments. While it highlights the need for a dedicated Impact Investing category, it has left the detailed design of such a framework open. At the same time, market demand is growing. According to recent surveys (e.g. bfinance, GIIN), many institutional investors are planning to significantly increase their allocations to impact strategies – viewing them as a logical evolution and intensification of their ESG efforts.
A Step Towards Market Maturity
This proposal for how SFDR could approach Impact Investing marks an important milestone towards greater clarity, visibility, and scalability of impact strategies across Europe. It provides a shared foundation for channelling capital more effectively towards sustainable transformation. The consultation paper is an open invitation to investors, market participants and associations to engage in shaping the future. The more stakeholders contribute, the more accurately the framework can reflect the diversity and depth of impact-driven strategies.
Note: The authors of the proposal are part of an open working group made up of industry associations, market participants and institutional investors. Christian Schütz, Managing Director & Head of Sustainable Investing, and Dr. Andreas Nilsson, Managing Director & Head of Impact Investments at Golding, were involved in the drafting process.
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