The Maturation of Impact Investing: Building Consistent Frameworks for Sustainable Growth
Ahead of the Excellence in Impact Awards, Judge Zoë VanderWolk, ETF Partners, writes about how Europe is leading the shift in impact investing, evolving from experimental innovation to a mature discipline with robust frameworks and transparent accountability.
Europe's impact investing landscape has reached a pivotal moment. What began as an experimental approach to addressing urgent environmental and social challenges has evolved into a sophisticated investment discipline with the potential to unlock billions in additional capital for mission-driven companies. However, to fully realise this potential, our industry must embrace a fundamental shift from innovation-focused approaches to consistency-driven frameworks.
The UK and European impact investing ecosystem has demonstrated remarkable growth over the past decade. We have witnessed an explosion of creative methodologies, bespoke measurement systems, and innovative approaches to quantifying environmental and social returns alongside financial performance. This experimentation was necessary and valuable during the sector's formative years, enabling practitioners to explore what works across diverse markets and impact themes.
Yet as we enter the next phase of industry maturation, the emphasis must shift from novelty to reliability. The most successful impact investors are those who have moved beyond the initial phase of methodology development to focus on consistent execution, robust measurement, and transparent accountability over multiple investment cycles.
The Case for a “Common Language”
At ETF Partners, our experience investing across the clean technology value chain has reinforced the importance of predictable, measurable frameworks and a common language that everyone can understand. Over the past twenty years, we've learned that sustainable impact requires disciplined approaches that can be replicated and scaled. This isn't about stifling innovation—it's about creating the infrastructure necessary for the sector to attract the institutional capital it needs to address global challenges at scale.
The benefits of standardised impact measurement extend far beyond individual fund performance. Common frameworks enable better capital allocation across the ecosystem, facilitate more meaningful benchmarking, and provide the transparency that institutional investors—particularly pension funds and insurance companies—require to commit significant capital to impact strategies.
When we examine the most successful infrastructure investments or established asset classes, we see the power of predictable, well-understood frameworks. Impact investing deserves the same foundation of consistent measurement, clear communication and transparent reporting that has enabled other sectors to attract institutional capital at scale.
European Leadership Opportunity
The UK and Europe are uniquely positioned to lead this standardisation effort. Our regulatory environment, with frameworks like the UK’s SDR and EU’s SFDR, provides a foundation for common standards that can be adopted more broadly. The challenge now is ensuring that these regulations complement rather than constrain the development of practical, industry-led measurement approaches.
The transition from experimentation to standardisation requires industry leadership and collaboration. Organisations like the BVCA play a crucial role in facilitating this evolution, bringing together practitioners to identify best practices and champion approaches that prioritise accountability and consistency alongside innovation.
Accountability Through Measurement
True impact accountability means being willing to tie investment outcomes to measurable results over extended timeframes. At ETF Partners, we've structured our carry to reflect our commitment to impact delivery, not just impact reporting, tying our entitlement to carry to the achievement of a minimum viable impact for each portfolio company. This approach, similar to the hurdles now common across the industry for financial performance and accountability, demonstrates how we can use our fund structures to demonstrate alignment between stated intentions and actual outcomes.
The industry's growing emphasis on accountability reflects a broader maturation. Impact investors are moving beyond the question of whether companies can generate positive environmental and social outcomes alongside financial returns—that has been proven. The focus now is on how consistently and predictably these outcomes can be delivered across diverse portfolios and market conditions.
The Path Forward
As impact investing continues to scale, the industry must embrace the discipline required to attract institutional capital whilst maintaining focus on meaningful outcomes. This means celebrating firms that demonstrate sustained commitment to their impact mandates through robust measurement, transparent reporting, and consistent execution over multiple investment cycles.
The next era of impact investing will be defined not by the creativity of individual approaches, but by the collective effectiveness and common language of our shared frameworks and standards. This evolution promises to unlock the patient capital necessary to address our most pressing global challenges whilst delivering the returns institutional investors require.
We have the opportunity to lead this transformation, establishing the measurement infrastructure that will define impact investing globally for the next decade.
Authored by Zoë VanderWolk, Partner, ETF Partners
Zoë is a member of the BVCA's Excellence in Impact Awards judging panel.
