Highlights

• 65 EU impact funds propose a new “Impact/Solutions” category in SFDR to attract private investment.
• Clear differentiation between ESG, transition, and impact investing is needed to guide investors.
• Measurable outcomes for environmental and social projects could accelerate Europe’s 2030 climate and social goals.

A coalition of 65 impact investment funds from 17 European countries, known as #UnitedforImpact, together with Impact Europe, has urged the European Commission to introduce a new investment category in the Sustainable Finance Disclosure Regulation (SFDR).

The coalition believes that the ongoing SFDR revision provides an opportunity to channel private capital into projects that deliver measurable environmental and social solutions. They say that clarifying the difference between ESG, transition, and true impact investing will help investors identify funds with a clear positive purpose.

The European Union faces a huge challenge in meeting its 2030 climate objectives and requires over €800 billion in investments every year. At the same time, urgent social issues, including education and healthcare, demand more and more funding.

Read More: What is Impact Investing: Definitions, Types & Returns Overview

While venture capital and private equity could help fill the gap, current SFDR rules create barriers for investors. Many funds with a genuine impact focus struggle to be distinguished from general ESG products, which primarily address risk rather than delivering measurable outcomes.

The coalition has proposed creating a separate “Impact/Solutions” category within SFDR. This category would exist alongside the existing Sustainable and Transition classifications. Its purpose would be to guide investors to products that offer tangible solutions to social and environmental challenges.

Not just that, it would also establish clear criteria for measuring impact outcomes and accommodate companies at different stages of development, from early-stage startups to more mature businesses.

According to Jana Bour, Director of Policy & Advocacy at Impact Europe, Europe has a large number of entrepreneurs and investors ready to tackle urgent challenges, but regulatory clarity is essential to help these initiatives scale.

Servane Metzger-Corrigou, coordinator of #UnitedforImpact, added that defining impact investing separately from ESG is necessary to channel capital and enable investors to confidently back businesses with measurable benefits.

Also Read: Understanding ESG Investing: Meaning, Types, and What Lies Ahead

The coalition emphasises that this reform could help attract private investment and accelerate innovation in sustainable solutions, as well as make Europe a hub for enterprises that prioritise social and environmental outcomes in their operations.

Ends/

Searching for sustainability experts to support your business?

Discover our ESG Marketplace, where you'll find over 750 providers offering a wide range of sustainability and ESG services.

Stay informed with our latest Investor News—bringing you regular updates and insights.

Don’t miss our newest ESG Course updates to build your career in ESG and sustainability.

Source: SET Ventures