There's mixed reaction to the Dunedin City Council's decision not to invest in fossil fuels and other industries deemed unethical.

Just one vote swung the council's decision against investing its Waipori Fund in such industries.

That includes tobacco, arms, gambling and pornography.

The decision's being welcomed by Oil Free Otago members, who shun unethical public investment.

But Dunedin-based National MP Michael Woodhouse says the council's decision is narrow-minded and idealistic.

He says Dunedin's economy relies on fuel, and the council is wrong to liken oil companies with those dealing in tobacco and arms.