The Nottinghamshire Pension Fund has invested £320 million of its £6.1 billion fund into a new sustainable pot.
The ‘Global Sustainable Equities Active Fund’ has been launched in conjunction with Cheshire, Shropshire and Worcestershire Pension Funds and is worth a total of £1bn.
However, Coun Lee Waters said investment in the new fund could be seen as ‘greenwashing’.
The Nottinghamshire pension fund has 145,000 members and covers 300 public service employers including district and borough councils as well as Nottingham Trent University.
Coun Eric Kerry, chairman of the pension fund committee at Nottinghamshire Council, which looks after the fund, said he was ‘delighted’ at the investment.
The pension fund, which still has millions of pounds invested in fossil fuel companies, has faced criticism in the past from environmental campaigners.
Coun Kerry previously said divesting from fossil fuel companies entirely is a ‘last resort’ and engaging with them to become greener is a priority.
He said: “It’s not just about climate change and renewable energy, it can be anything that helps create a better world in the future – including research, innovative businesses and plant based food companies.
“Broadly speaking we are looking at long-term issues facing the world and investing in companies to provide solutions.
“We had already moved money into sustainable companies and far more than we have in fossil fuels. That will continue as the world moves towards a greener economy.
“It won’t happen overnight and there is a lot of disruption right now but it is good that we have achieved what we said we were going to.”
Coun Waters, pensions spokesman for the Independent Alliance at the council, said: “Nottinghamshire’s 5 per cent investment in this fund is done purely for PR purposes.
“Five per cent of monies will be put into this ‘branded segregated ethical portfolio’. If this wasn’t a publicity stunt – why have they not put more than 5 per cent in?
“This whole investment looks to me like deliberate greenwashing as they can continue to invest in unethical stocks.”