Sandro Pierri, CEO of BNP Paribas Asset Management, has said ambiguities in the European Union’s Sustainable Finance Disclosure Regulation (SFDR) could increase the risk of greenwashing.

Speaking at the FundForum conference this week, Perri (pictured) said different interpretations of the rules on sustainable investing across Europe are creating “confusion risk” for investors, Ignites Europe reported.

Perri, who joined the French asset manager in July, welcomed the new regulation and the attempt to have a pan-European effort to classify products but bemoaned its added complexity.

“On one side this is not only a complexity for us…but in my view, it increases greenwashing for end investors because if you are in a country where the same product can be categorised in different ways, depending on the label you choose, this is going to be very confusing for the end investor,” he said.

“Regulation on ESG is welcome and [it is] raising the bar for everyone, but that will have, I believe, significant implications.”

Asset managers have been rushing to label their products as Article 8 or 9 but many believe it has caused confusion.

Perri added there is a lack of differentiation among sustainable products as more firms expand the number of funds labelled Article 8 or 9.

Earlier this year, the vague definition of Article 8 led to “bemusement” in the market due to the requirement for a fund to “promote” environmental, social and governance (ESG) characteristics.

According to a Morningstar report, many asset managers view the term promotion in this context as to mean there must be a “binding element” in the investment selection process but many believe it has become a “catch-all category”.

These unclear definitions have led some national regulators to impose their own local rules on the minimum requirements for the marketing of sustainable funds.

Earlier this week, the UK government outlined plans for its Sustainable Disclosure Requirements (SDR) which will require every investment product to set out the environmental impact of the activities in finances and justify any sustainability claims it makes.