Impact investing: regulatory clarity is needed; here's how to integrate it into the SFDR.

Amid the ongoing review of the European regulatory framework for sustainable finance, Christian Schütz , Managing Director & Head of Sustainable Investing at Golding Capital Partners, discusses for ESGnews a concrete proposal to integrate impact investing into the SFDR . Schütz highlights how the current regulatory ambiguity is hindering the sector's evolution, despite growing institutional demand. Developed by a multi-stakeholder task force, the proposal introduces a framework based on four key principles—intentionality, measurability, impact management, and transparency—that draw a clear line between impact investing and traditional ESG strategies. Schütz highlights how the current context represents a turning point: the revision of the SFDR could mark the definitive entry of impact investing into a phase of maturity, making it a scalable and fully recognized pillar of the European financial system.

Institutional investors' interest in impact-oriented investment strategies has been steadily growing in recent years. However, from a regulatory perspective, impact investing has remained a gray area in Europe. A new initiative promoted by a multi-stakeholder task force, supported by industry associations such as BAI and BIII, is now putting forward a concrete proposal defining how impact investing could be integrated into the SFDR regulatory framework.

Rather than introducing a rigid new category, the position paper proposes a principles-based framework for impact investing, designed to complement the existing SFDR system. The goal is to provide clarity without creating excessive regulation. The proposal takes a pragmatic approach: it builds on existing strategies and offers the flexibility needed to reflect market diversity. The suggested definition is based on principles recognized in the impact investing community: investments made with the intention of generating both financial returns and positive, measurable social or environmental outcomes.

The document identifies four fundamental principles that distinguish impact investing:

• Intentionality : a clear and strategic intention to generate impact, which goes beyond the simple integration of ESG criteria;
• Measurability : Demonstrable contributions from the investment and the investor, supported by defined KPIs;
• Impact Management : A structured approach to management, monitoring, risk management and active engagement;
• Transparency : Regular and transparent reporting on progress towards declared impact goals.

This framework allows for a clear distinction from generic ESG approaches, while recognizing the variety of strategies and asset classes present on the market.

The context is propitious: the upcoming revision of the SFDR represents an opportunity to help shape the future of investment regulation in Europe. The EU Platform on Sustainable Finance has already laid the groundwork, proposing categories such as transition, sustainable, and generic ESG investments. While acknowledging the need for a dedicated category for impact investing, it leaves open the question of its concrete configuration. At the same time, market demand is growing: according to recent surveys (e.g., bfinance, GIIN), many institutional investors plan to significantly increase their allocation to impact strategies, which they see as a natural progression and a strengthening of their ESG commitment.

This proposal for how the SFDR could address impact investing represents a fundamental step towards greater clarity, visibility, and scalability of impact strategies in Europe. It offers a shared basis for more effectively directing capital toward the sustainable transition. The consultation document is an open invitation to investors, market participants, and associations to actively participate in shaping the future. The broader the participation, the more the framework will reflect the true diversity and depth of impact strategies.

Note: The authors of the proposal are part of an open working group composed of industry associations, market participants, and institutional investors. Christian Schütz, Managing Director & Head of Sustainable Investing, and Andreas Nilsson, Managing Director & Head of Impact Investments at Golding, contributed to the drafting of the document .