This study examines whether the financial literacy of micro, small and medium entrepreneurs has a positive impact on their attitudes and awareness towards sustainable finance and impact investment decisions. To achieve this, we used data from a 2021 Bank of Italy survey that measured the financial competences of 1998 entrepreneurs, building measures of financial literacy and sustainable finance variables from the responses to the survey questions. We examine the associations among the variables through a multivariate regression approach and find positive and highly statistically significant relationships between entrepreneurs’ financial literacy and several sustainable finance variables, showing that entrepreneurs with higher financial literacy are more familiar with sustainable finance and impact investment decisions. The contribution of this work is to demonstrate how financial literacy can be considered among the determinants of sustainable finance and impact investing decisions in enterprises, and to shed light on the role that financial literacy could cover in supporting entrepreneurs in pursuing sustainability in their businesses.