Much of environmental investment is now been driven by regulation, according to experts.

Governments are taking on “specific targets” in order to reduce their greenhouse emissions and that is propelling other prospects for green energy companies, leading European investment house F&C; has said.

Commenting on the issue, Jason Hollands, head of group communications for F&C;, said: “The UK government sign up for targets, and that will drive support for, not only renewable energy firms, but also firms involved in areas like efficient energy and waste management.”

Such regulatory trends are now making investment funds more attractive for funds that focus on things such as stocks, say the group.

He added that such a trend, alongside increasing pressure from corporate and consumer pressure on ethical issues, provides a powerful argument for green investment.

Elsewhere, F&C; has said that retail investors were beginning to panic as the industry posted substantial losses in December.

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