The creation of Europe's first "ethical finance hub" in Edinburgh has taken a step forward following agreement between the fund industry, advisers and the Scottish Government.

An action plan is to be drawn up after a meeting at Holyrood, attended by 50 financial sector professionals, backed the concept of the hub, which has been promoted by the Islamic Finance Council and law firm Tods Murray.

The firms represented included Standard Life Investments, RBS, Alliance Trust, Green Investment Bank, Kames Capital, Triodos Bank and Deloitte.

The organisers said there was "unanimous agreement to develop plans for an ­ethical finance hub, which would act both as an R&D centre for establishing new financial products and initiatives and as a focus for business incubation".

Finance Secretary John Swinney, who hosted the meeting, said: "The potential for an ethical finance hub in Scotland is an exciting development for our financial services.

"We will now work with industry and other partners to investigate the options for establishing such a hub."

Graham Burnside, who is chairman of Tods Murray and an executive board member of the IFC, said: "We know the financial services industry is fully behind the hub concept and Scotland is ideally placed to deliver this."

Graeme Galloway, Triodos Bank relationship manager in Scotland, said: "Establishing the ethical finance hub demonstrates Scotland is serious about the transition to a sustainable and socially useful financial system.

"Scotland has a great opportunity to place itself as a centre for excellence for sustainable banking, and reap the rewards from it, environmentally, socially and financially."

Sally Fulton-Foster, convener of the Church of Scotland's Church and Society committee, said: "The Church of Scotland looks forward to being part of the process of developing the ideas we discussed further."

The IFC has said Scotland could attract significant funding for public projects through the issue of Shariah-compliant bonds.