Impact investing has gained place in Europe particularly in the past decade. However, certain regions and countries have grown more quickly and earlier than others , despite the policies that promote impact across the whole continent.
Britain has been at the top of the field when it established the Social Investment Task Force (SITF) in 2000 . It followed up with the development of policy, investment funds, and financial tools that are specialized. France was also an innovator by making solidarity-based funds at the beginning of 2001. in 2012 Britain has since advanced the field considerably with the creation of Big Social Capital, one of the first wholesale investment companies focusing on combining financial and social returns. The development within Central as well as Eastern Europe has been slower as a lot of countries still at the beginning of their journey of attracting capital and using it.
The varying levels of maturity send an important message to both policymakers and investors must not ignore in order to push forward the field of impact investment within European areas, they must be aware of the different maturity levels across subnational, national or municipal marketplaces.
It has been a priority for policymakers to steer clear of overregulation, which could limit innovation within an ever-changing market. They also aim to increase both the supply and demand of capital. They have also aimed to meet the requirements of the social enterprise as the recipients of funds and the requirements of investors as well as intermediary organisations as the funders.
In 2011 in 2011, The European Commission launched the Social Business Initiative to aid in the development of social businesses, social economies as well as social innovation. This led to significant changes including the establishment of an Expert Group on Social Entrepreneurship ( GECES) which was operational between 2011 and 2018 and the creation of the Expert Group on Social Economy and Social Enterprises (also called GECES) which is scheduled to operate through 2024. The GECES brought together representatives from both civil and private sector organizations such as associations, networks, and associations to engage with governments of all nationalities and provide advice to members of the European Commission on social economy policies.
GECES and other organizations were involved in numerous significant policy innovations in the sector. GECES came up with an European standard for measuring impact in 2014, which was later part of the European Social Entrepreneurship Fund ( EuSEF) regulation as well as the Programme for Employment and Social Innovation ( EaSI). It was the European Commission, supported by the Social Business Initiative, created numerous financial instruments for social companies across Europe. These include the EaSI guarantee scheme, which eliminated the risk of the funding by financial institutions for social enterprises. It also allowed to the European Investment Fund to launch innovative instruments, like The Social Impact Accelerator.
Policies across Europe have been crucial in establishing legitimacy for impact investing. They have also urged the national governments to create their local markets and facilitated the development of financial instruments that lower the risks of making private investment in social companies.
The EU taxonomy for Sustainable Finance is especially exciting as per key experts such as Karl Richter, who lectures at the Frankfurt School of Finance and Management and is a part of the Impact & Sustainable Finance Faculty Consortium. The taxonomy aids investors in being able to evaluate sustainability by taking into account the impact of climate change, but not environmental or other issues that affect the financial performance. By using this exact framework investors who are focused on the purpose of sustainability as a social issue are able to more quickly and effectively discover opportunities that match their needs, and could increase the amount of funds flowing to the cause.