The LSFI Impact Investing Advisory Board has submitted feedback on the proposal for the revision of the Sustainable Finance Disclosure Regulation (SFDR).
The LSFI IIAB welcomes the European Commission’s proposal to revise the SFDR, and in particular, the explicit recognition of impact investing within the framework.
For this recognition to be effective, the IIAB emphasises that it must be supported by a clear and robust regulatory framework, with impact claims underpinned by a common definition based on core principles such as intentionality, measurability, and transparent reporting across the investment lifecycle.
Key LSFI IIAB Recommendations:
- Introduction of an explicit and operational definition of impact investing, including the use of Theory of Change methodologies and measurable outcome-based KPIs.
- Establishment of a minimum quantitative threshold at product level to ensure financial products using impact in their name or classification contain a substantial proportion of genuinely impact-driven investments.
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Development of principle-based reporting guidance to ensure comprehensive, end-to-end disclosure of both positive and negative impacts, including the use of relevant Principal Adverse Impacts (PAIs), while maintaining flexibility and proportionality.
Overall, the IIAB supports a framework that enhances credibility, comparability and transparency, while preserving sufficient flexibility to reflect the diversity of impact investment strategies and promote the continued growth of the impact investing ecosystem.
