Inves­ting with Pur­pose: The Why, What, and How of Impact Inves­ting

In the Autumn of 2024, Impact Finance Belgium invited the Financial Forum to co-host a conference on Impact Investing. By the time it took place, the world had already changed.

On June 13th 2025, nearly 250 participants gathered at the National Bank of Belgium to consider a pressing question: Does investing with positive impact still matter in today’s volatile climate? The event brought together leading voices from Belgium and Europe’s financial ecosystem—from institutional investors to pioneering impact fund managers.

Amid global challenges such as climate change, inequality, and the need for sustainable development, impact investing is increasingly seen not just as a moral choice but as an economic necessity. Capital allocation can—and must—be part of the solution.

During the event, experts explored the why, what, and how of impact investing, which I briefly introduce in this article.

Why Impact Investing?

For decades, the dominant narrative in investing was simple: maximizing financial returns. Social and environmental concerns were often seen as distractions or, at best, philanthropic side projects. But that mindset has been changing—and fast.

Why? Because the world is changing.

We are facing systemic risks that threaten not just communities and ecosystems but also markets and portfolios. Climate change is disrupting supply chains. Social inequality is fueling political instability. Water scarcity, biodiversity loss, and public health crises are no longer distant concerns—they are here, and they are costly.

Investors have woken up to the fact that long-term value creation is inseparable from sustainability. According to the Global Impact Investing Network (GIIN), the impact investing market surpassed $1 trillion in assets under management in recent years. This is not a fringe movement anymore.

But it’s not just about risk mitigation. It’s also about opportunity.

The transition to a low-carbon economy, the expansion of inclusive healthcare, the digitization of education—these are massive growth areas. Impact investing allows us to tap into these opportunities while driving meaningful change.

And let’s not forget the generational shift. It is said that Millennials and Gen Z -unless they invest in cryptos …- are demanding more from their investments. They want their money to reflect their values. They are said to want to invest in companies that are solving problems, not creating them.

So the “why” seems clear: because it’s necessary.

What Is Impact Investing?

Now, let’s briefly touch upon the what.

Impact investing is often misunderstood. It’s not charity. It’s not just ESG screening. And it’s not about sacrificing returns.

• Impact investing is the intentional deployment of capital to generate both a financial return and a measurable social or environmental impact. It implies:
• Intentionality: The investor sets out from the beginning to achieve positive impact. It’s not a byproduct, it’s a goal.
• Measurability: Impact must be tracked, assessed, and reported. This is what distinguishes impact investing from vague notions of “doing good.”
• Additionality: the impact would not have taken place in the case of no investment.
• Financial return: Impact investments can be market-rate or concessionary, but they are investments—not donations.

Impact investing spans asset classes—from public equities and fixed income to private equity, venture capital, and real assets. It also spans sectors: clean energy, affordable housing, microfinance, sustainable agriculture, education technology, and more.

A few examples:

• a fund that invests in solar energy projects in underserved communities.
• a fintech startup providing microloans to women entrepreneurs in rural Africa.
• a real estate investment trust focused on affordable housing in urban centers.

These are not just feel-good stories. They are viable, scalable, and often profitable ventures.

So, what is impact investing? It’s often called capitalism with a conscience, finance with a future.

Today however, impact investing is not as such a legal concept. When Steven and I spoke for the first time, I asked him “but where are these impact investment initiatives? Which types of investors and actors play the key role?” – as for the regulators retail investors are “protégés par excellence” , and as the regulators’ toolkit is the law, we had and still have only a partial view of the impact investing scene.

Over the last 5 years, within the framework of the EU Green Deal, the EU legislator put in place a comprehensive framework to allow investors to channel their capital, including private savings, into economic activities that are considered sustainable according to the European consensus. CSRD, the Taxonomy regulation, SFDR regulate all elements of the investment chain, from investee companies to the end investor.

The regulatory framework focuses on disclosure by enterprises and product manufacturers, for investors to be able to compare information and make informed investment choices. 

Impact investments will normally fall under investments that are sustainable according to the European framework. On the other hand, if so called ‘article 9’ funds are aimed at 100% sustainable investments, the definition of sustainable investment in the SFDR still leaves considerable leeway for the product manufacturer to determine its investment policy. Sustainable investments according to SFDR are investments in an economic activity that contribute to an environmental objective (such as climate adaptation or circular economy) or a social objective (such as social justice or human capital), without significantly harming other environmental or social objectives, and where the companies involved apply good governance practices. Especially intentionality and additionality are not legal criteria.

Some examples could clarify the difference between a fund that is focused on sustainable investments in the sense of SFDR and an impact investment fund. 

A fund that aims to make sustainable investments with a thematic focus on health, could invest in high quality care homes for the general population of elderly people where there is widespread availability to ensure the continued provision of care, even if this is at a level not everyone could afford. An “impact investing” fund would, for example, rather invest in healthcare services to low-income populations in countries which currently have no or limited access to local, quality healthcare due to a lack of market or publicly funded infrastructure.

From an investors’ perspective, the complexity through the insertion of an additional layer of requirements inherent to impact investing is an issue. Investors don’t like alphabet soup. They like comparable information. And that raises the question of how to fit impact investing in the current regulatory framework that aims specifically at standardising information. Today, they are forced to screen each and every investment policy of funds in the light of the abovementioned criteria.

From a regulators’ perspective, it is also an issue. As a supervisor we put on regulatory glasses and as mentioned, impact investing is as such not a legal concept. Not only is it not a legal concept, it also raises issues of correct investor information. Information is the cornerstone of investing. As said, impact investing is also about  measurability, about tracking, assessing and reporting impact. That is key but it is complex.

Supervisors tend to be suspicious – it is their job to be suspicious. The risk of greenwashing also exists in the impact investment sector. Regulators look at impact investing from another angle: not all projects might be profitable, the illiquidity of the investment, the risk of misinformation of investors arising from unfounded impact claims, or from lack of measurable data.

What is more, today, the further coming into force of the EU regulatory framework has been put on hold by the so-called stop the clock provision in the omnibus package on sustainability. The disclosure obligations under CSRD and the Taxonomy regulation are considered too complex and burdensome. We also expect a review of SFDR.

Burden reduction and simplification are the order word now, and rightly so.

This edition is dealing with impact investing today against the background of the actual EU regulatory context, and of the current radical shift in the EU policymakers’ mindset.

How to Do Impact Investing

As for the ‘how’, this is, first and foremost, a challenge if one also wants to offer a perspective on returns. It requires a great deal of knowledge, insight, and research to find the right projects. In other words, setting up and managing impact funds is a costly business. And one knows how much management costs weigh on returns.

In this edition we will read a number of success stories, and that is important.

Second, the regulatory framework impact investors operate in again is important for the ‘how’, in particular for the question of what type of investors can be reached with impact investments.

Traditional plain vanilla investment funds, UCITS, will rarely serve as an appropriate vehicle for impact investing. They require liquidity, and therefore investments in listed companies.

Alternative investment funds are a more appropriate form- their investment policy is much less strictly regulated- but they cannot be marketed to retail investors.

Does this mean that genuine impact investing remains the preserve of more affluent investors? Of family offices and institutional investors? For regulators, the challenge will therefore be to create the appropriate instrument to open up impact investing to all investors, within the limits of a balanced risk profile.

To wrap up 

We are at a crossroads. We all agree that a model of investing that externalizes harm and prioritizes short-term gains—is not necessarily sustainable. Aligning profit with purpose is central to long-term prosperity.

Impact investing is maybe not a silver bullet. But it can be a useful tool. A tool that empowers investors to be not just investors, but changemakers. If used in the right way. Forward-looking, there are certainly opportunities to create more legal instruments to make impact investing more accessible, if accompanied by the necessary awareness of the risks, especially of illiquidity.

I am therefore happy that this edition can contribute to grant more visibility of the impact investment scene in Belgium, because it is necessary.