Climate action group 350.org Australia said the Medibank decision was critical in the absence of strong federal government action on the issue.
"At a time when we are seeing no federal leadership on climate change, Medibank's decision to drop polluting, high-carbon investments, and instead invest in low carbon alternatives, shows that the health sector is stepping up to fill the void," chief executive Blair Palese said.
"By citing the health impacts of climate change as the driving reason for its decision, Medibank has shown that moving from fossil fuels not only can be done, but must be done to protect customers, our environment and to mitigate risk."