Sustainable Finance 3.0: The Emerging Regulatory Framework for Impact Investing under EU Law

Of all the investment approaches taking sustainability-related factors into account, impact investing is considered to be the most advanced one. The approach aims to achieve positive impact on the planet and society, help the transition to a more sustainable economy, alongside generating financial returns. Impact investors see the transition as both a necessity and an opportunity. As the approach gains in popularity among the investors, it attracts increasing attention from the European financial market supervisor ESMA, which addresses impact investing primarily from greenwashing prevention perspective. Impact investing is expected to play a major role in achieving United Nations Paris climate agreement and sustainable development goals. The lead article in our European Law Journal’s March 2025 issue aims to help the reader understand the concept of impact investing and the European approach to regulating it.