Nest backs eco-friendly investment with UBS

He said there was "strong interest" in this sort of strategy from global institutional investors, singling out Northern European and Nordic pension funds in particular.

Currently UBS has no plans to make the fund available to retail investors.

Regarding investment strategy, UBS head of systematic and index investments Ian Ashment said the fund would not take the divestment approach favoured by comparable investment strategies.

He said companies that did not meet its standards would be underweighted rather than sold off altogether. This would allow the shareholder to influence the company and push for change. 

This, he said, meant the fund would invest in, for example, major oil companies.

Jon French, and independent financial adviser with AW Financial Management who specialises in ethical investment, welcomed Nest's move.

"It's good if institutional investors can do things like this, because it opens up ethical investment options to retail investors," he said.

However, he said the decision to put such a large chunk of money into the fund was a "bold move".

In the retail world, Mr French said there was significant latent demand for this sort of investment. However, he said many advisers often failed to explain such investments to their clients, meaning take-up was lower than it could be.