Five superannuation funds managing a total of $1 trillion of retirement savings have been accused of greenwashing by not doing enough to rein in major fossil fuel companies.
The claim has been made by the Friends of the Earth-affiliated and environment-focussed financial lobby group Market Forces in a report released on Wednesday.
It alleges the super funds from a mix of retail and industry providers - AMP, Australian Retirement Trust, AustralianSuper, Aware Super and Commonwealth Super Corp - have failed to effectively engage with companies they invest in from the fossil-fuel sector.
That is despite the funds being publicly aligned with the Paris Agreement on climate change and net-zero emissions targets.
Brett Morgan, report author and superannuation funds campaigner at Market Forces, said the funds had failed to use their market clout to hold "the most climate-damaging companies to account over their fossil fuel expansion plans".
In the report, entitled "Stewards of Climate Disaster", Market Force points to investments in Australia's two biggest oil and gas producers, Woodside and Santos.
"There's an appalling gap between climate commitments and real action by our biggest super funds and this is a slap in the face for members who deserve a safe future to retire into," Mr Morgan said.
Market Forces further claims the funds and their directors could expose themselves to allegations of misleading and deceptive conduct because financial institutions that make net-zero commitments are legally required to have reasonable grounds to believe they will achieve their goals.
"Super funds relying on active ownership to fulfil their climate commitments but failing to rein in rampant oil and gas expansion plans are greenwashing and exposing themselves to legal action for misleading conduct," Mr Morgan said.
The report comes amid a crackdown on so-called greenwashing claims from companies and investment funds as both the corporate and consumer regulators probe potentially false or exaggerated environmental claims.
The Australian Securities and Investments Commission last month launched landmark legal action against super giant Mercer over allegations it made false and misleading statements about the sustainable nature of some of its investment options.
Meanwhile, institutional investors angry at Woodside's approach to climate change announced they will take their fight to its board at a shareholders meeting in April.
Vision Super and fund manager Betashares believe three long-standing directors should be denied re-election to the board of Woodside, which they claim does not have a credible climate strategy and continues to pursue new oil and gas projects.
The directors are Queensland Resources Council chief executive and former federal resources minister Ian Macfarlane, Singaporean oil and gas executive Swee Chen Goh and former oil boss Larry Archibald.
