The call followed a decision by the NZ Super Fund to shift its passive global share investment portfolio into low-carbon investments.

There was no legal definition of a green fund, making it hard to police claims, Russell McVeagh said.

"Given the difficulty of classifying exactly what is 'green'... it is difficult for regulators to take any effective action to police what can be offered as a green fund."

The law firm, which believes defined rules could encourage the growth of green investing, said the Guernsey Financial Services Commission had begun a world-first project to set green fund rules to provide a "transparent and consistent" approach which did not confuse investors.

In New Zealand the tag "green" fund is not common.

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