During the last decade, increasing attention has been paid to the emerging concept of Positive Energy Districts (PED) with the aim of pushing the transition to clean energy, but further research efforts are needed to identify design approaches optimized from the point of view of sustainable development. In this context, this literature review is placed, with a specific focus on environmental sustainability within innovative and eco-sustainable districts. The findings show that some sustainability aspects such as sustainable food, urban heat islands mitigation and co-impacts, e.g., green gentrification, are not adequately assessed, while fragmented thinking limits the potential of circularity. In this regard, targeted strategies should be developed. On the other hand, the Key Performance Indicators framework needs some integrations. In this direction, indicators were suggested, among those defined in the Sustainable Development Agenda, the main European standards and initiatives and the relevant literature experiences. Future outlooks should be directed towards: the harmonization of the Life Cycle Assessment in PEDs with reference to modeling assumptions and analysis of multiple impacts; the development of dynamic environmental analyses taking into account the long-term uncertainty due to climate change, data availability and energy decarbonization; the combination of Life Cycle Assessment and Key Performance Indicators based techniques, from a holistic thinking perspective, for a comprehensive design environment and the analysis of the contribution of energy flexibility approaches on the environmental impact of a project.