#UnitedforImpact, a coalition of 65 impact investment funds across 17 European countries, together with Impact Europe, is urging the European Commission to use the revision of the Sustainable Finance Disclosure Regulation (SFDR) as a key chance to unlock private capital for transformative environmental and social solutions. To advance the EU’s 2030 climate goals, and tackle pressing social challenges, the coalition calls for a distinct ‘Impact/Solutions’ product category that focuses on investments delivering measurable outcomes, and for clearer differentiation between ESG, transition, and true impact. Far from being “just another EU green regulation,” SFDR can become a decisive tool to mobilise impact investing and channel substantial capital toward Europe’s long-term transition.
The need for reform
The EU must double annual investments to over €800 billion to meet its 2030 climate objectives. Similarly, urgent social challenges in areas like education and healthcare require colossal investments. To make up for this investment shortfall and allow transformative solutions to scale, venture capital and private equity play a key role. Despite rapid growth in the European impact investing market — from €80 billion in 2022 to €190 billion in 2024, impact funds face barriers under current regulation. While SFDR could facilitate greater capital redirection, its current lack of clarity inhibits investors from easily identifying assets with a clear positive environmental or social mission integral to their business model, beyond ESG risk minimisation. The ongoing revision presents a pivotal opportunity to improve transparency on sustainable finance for private investors and individuals. However, product categories envisioned by the EU Platform on Sustainable Finance and the European Supervisory Authorities miss the point of driving a systemic shift in the sustainable investment market.
The coalition’s call to create a distinct ‘Impact/Solutions’ category in SFDR revision
In the SFDR revision consultation, 73% of respondents supported a voluntary category targeting products focused on measurable solutions to sustainability challenges, closely aligning with the European Impact Investing Consortium (EIIC) definition of impact investing. The #UnitedforImpact coalition and Impact Europe urge EU policymakers to design a new SFDR category — alongside the existing ‘Sustainable’ and ‘Transition’ categories, that targets products delivering measurable solutions to environmental and social challenges, and clarifies the difference between ESG, sustainable transition, and true impact. This category should reflect the goals of impact investing: a clear investor thesis, measurable positive outcomes, and flexibility adapted to company maturity.
“Europe has no shortage of entrepreneurs and investors ready to deliver meaningful solutions to our most pressing challenges. What we need is a regulatory framework that empowers them to scale. By clearly, distinctly and visibly defining an “Impact/Solutions” investment strategy within SFDR, the EU can provide the clarity and confidence needed to accelerate innovation and strengthen Europe’s leadership in building enterprises that put impact at the core of their business model.”, said Jana Bour, Director of Policy & Advocacy at Impact Europe.
“Clear classification is the foundation for driving the capital needed to scale transformative environmental and social solutions. By defining impact investing separately from ESG, the EU can unlock the full potential of the market, ensuring that investors can confidently direct their capital toward businesses that are truly making a difference.”, said Servane Metzger-Corrigou, coordinator of the #UnitedforImpact initiative and Chief Impact Officer at Ring Capital.
