LONDON - The European Union's executive body sought on Friday to clarify how investment products can be sold as "sustainable" to investors after asset managers downgraded many of their funds due to uncertainty over the rules.

Financial services commissioner Mairead McGuinness published amendments to the European Commission's guidance on how to interpret the bloc's sustainable finance disclosures regulation (SFDR), a core plank of EU efforts to reach a net zero economy.

"The application of the SFDR requirements represents a challenge to industry and regulators and these Q&As aim to offer guidance to facilitate the proper implementation of the rules," McGuinness said in a statement.

"In parallel, we will continue our comprehensive assessment of the SFDR with a focus on ensuring legal certainty, increased usability and the mitigation of greenwashing. A public consultation is planned for the autumn."

Asset managers have downgraded funds holding a total of 175 billion euros ($193 billion) of assets from the SFDR's highest sustainability classification, known as Article 9, to the broader, less demanding Article 8 label, which requires sustainability to be only one of the factors informing investment decisions.

Many say there is no clear definition of what constitutes a sustainable investment. As recently as mid-January, some Article 9 funds had invested in assets such as thermal coal, which is a big climate change contributor.

The downgrades come at a time when regulators are becoming more vocal in their fight against so-called greenwashing or inflated environmentally-friendly claims.

The amendments on Friday reiterate that Article 9 funds must have sustainable investment as their objective, but then add that SFDR "does not prescribe a single methodology to account for sustainable investments".

Asset managers can include investments for certain specific purposes, such as hedging or liquidity, in an Article 9 fund, but only if they are in line with the sustainable investment objective, the amendments say.

And any given mix of assets in an Article 9 fund - which are often sold at a premium - must also be in line with the sustainable investment objective to comply with the overall aim of the rules to do no significant harm to the environment. ($1 = 0.9048 euros)

(Reporting by Huw Jones; Editing by Alexander Smith)