Auckland Council has voted to withdraw all investments in companies that produce and extract coal, oil and gas.
Members of its finance and performance committee yesterday agreed to change the council's responsible investment policy.
Investment in a number of activities and industries, including in the manufacturing or development of weapons, tobacco, production of fossil fuels, will be excluded under the revised policy.
Investment managers will also be roped in to monitor and screen council exposure to companies selling high-sugar low-nutrient products.
A further review of the Diversified Financial Asset Portfolio as a whole will also be undertaken and a report is expected back to the committee by June.
Committee chair Councillor Ross Clow welcomed the decision.
"This is an issue that many people, including those round the council table, feel very strongly about," he said.
"It has been clear for some time that our policy should meet certain ethical standards and changing the policy to exclude investments in some areas is a good outcome for all."
Clow said the council had already been increasing the divestment of the portfolio over the past two years, and with only about $130 million left, it was right to review the value of the portfolio.
Climate group 350 Aotearoa said it was delighted at the result of the vote, which would see the council pull all $15 million of its current investments out of the industries.
"This has been a massive win for climate justice and environmental health," said Niamh O'Flynn, Executive Director of 350 Aotearoa.
"We have been campaigning for years now to get the council to behave consistently with its environmental commitments and values."
Campaigners and some concerned members of the public attended the meeting on Tuesday, April 11.
The Council voted that "funds invested in should at a minimum exclude ... fossil fuel (specifically oil, coal and gas) reserves," and to "confirm divestment of existing investments that are not consistent with the revised responsible investment policy as soon as practicable."
"We are so excited that the council has decided to be a climate leader," said O'Flynn.
"It is really important that we show our Pacific Island neighbours that we stand with them and will not support the industry that is destroying their nations.
"Auckland now stands with Dunedin, Sydney, Melbourne and other cities in the region against the financing of climate change."