These images greet visitors to the websites of some of Australia’s biggest superannuation funds.

They show hands cradling seedlings, fondling fruit and immersed in trickling water.

Hikers, enthralled by nature, gaze longingly at trees.

They are selling a message of growth and prosperity, balanced with sustainability and concern for the planet.

The images come from the websites of 19 super funds that offer members a sustainable or ethical investment option.

We have spent months investigating what these funds promise those members …

… and how these promises match the reality of where their money ends up.

Despite the compelling marketing imagery, it turns out most of these funds are investing in industries that are not so green.

Almost all of Australia’s big super funds offer their members an investment option that avoids environmentally unsustainable industries like coal, oil and gas.

Most of them also promise to exclude investment in industries like tobacco, gambling, uranium, alcohol and weapons.

They often invest in renewable energy, social enterprises and many have targets for their portfolios to become carbon neutral in the next few decades.

It is an attractive product for workers and retirees who want to use their compulsory super contributions to help fight climate change.

These funds hold more than $60 billion worth of members’ retirement savings.

But an ABC analysis of financial disclosures of the sustainable or ethical-labelled super options has revealed 12 of them collectively hold almost $1.2 billion worth of fossil fuel industry shares.

They also hold hundreds of millions of dollars worth of investments in companies that make money from gambling, alcohol, uranium and defence.

The findings have outraged some members.

“It’s quite shocking and really disappointing,” said Kathy Macdonald, a member of industry fund NGS Super, which has investments in fossil fuel companies.

“I feel like we’ve all been lied to.”

The analysis has been made possible by new transparency rules imposed on the superannuation industry.

Since March last year, all super funds have been forced to regularly disclose how they invest their members’ money.

Every six months they are required to publish spreadsheets on their website detailing all investments in shares, bonds, cash and other assets — including for their “sustainable” and “ethical” labelled options.

The format of the disclosures is inconsistent between the super providers and can contain thousands of rows of data for each portfolio. For the average member, assessing a fund’s offering and comparing it to a competitor can be an onerous task.

The ABC cleaned and collated this data, and compared the shareholdings in these disclosures with lists published by Bloomberg of public companies globally that report revenue from fossil fuel mining and exploration, tobacco, gambling, alcohol, uranium and weapons manufacturing and military contracts.

The analysis looked at their holdings in Australian and international shares, known as listed equities in the disclosures, which make up about half of the total assets in these funds.

The figures we have used represent the value of these holdings at June 30 this year.

“Save your planet by saving for your retirement” is the marketing message on the website for NGS Super, which manages about $14.5 billion on behalf of more than 114,000 members.

“We’re aiming to achieve a carbon-neutral investment portfolio by 2030, and investing responsibly and sustainably will help us get there,” it says on its website.

NGS has a responsible investment policy that applies to all, except one, of its investment options, and promises to limit holdings in fossil fuel companies.

Yet NGS’s most recent financial disclosures reveal millions of dollars invested in the world’s biggest oil and gas producers, including ExxonMobil.

It had $3 million invested in the Norwegian oil giant Equinor.

In total, NGS has almost half a billion dollars invested in 26 publicly listed fossil fuel companies.

It is not the only green-labelled fund with substantial investments in fossil fuels.

Our investigation analysed the shareholdings of all “sustainable” or “ethical” options offered by Australian super funds — as well as funds that apply sustainable or ethical principles across all their investment options.

Twelve of them had a total of almost $1.2 billion invested in shares of fossil fuel companies.

Of those 12 providers, 10 had more than $1 million of members’ money invested in the fossil fuel industry.

The analysis didn’t just pick up fossil fuel shares.

The ABC found hundreds of millions of dollars invested in companies that make money from alcohol, gambling, weapons and uranium.

So why are super fund options labelled “sustainable” or “ethical” investing in these industries?

The explanation for these surprising holdings is found in the fine print of the funds’ investment policies.

In many cases, they do not completely prohibit investment in fossil fuels.

For example, NGS Super’s policy excludes investment in companies that make more than 30 per cent of their revenue from thermal coal mining.

As a result, BHP is not excluded because the $US3.5 billion it earned mining thermal coal last financial year only accounted for 6.6 per cent of its total revenue.

At June 30, NGS held about $306 million worth of BHP shares, making it the fund’s single biggest shareholding.

NGS’s exclusion policy on oil and gas companies appears, on the face of it, to be more prohibitive.

“We restrict holdings with companies … who are in the oil and gas production and exploration sector,” it reads.

How, then, does the fund explain its millions of dollars invested in multiple global oil and gas companies?

The answer, NGS says, is that these companies are not solely in the oil and gas production sector.

It pointed to a footnote to its responsible investment policy that defines oil and gas producers according to an industry classification called “the GICS sub-industry”.

Under this classification system, Exxon, BP and Chevron are labelled “integrated oil and gas companies”. That’s because they produce other products in addition to oil and gas.

“We stand by the fact that all our current investments are consistent with this position,” NGS said in a statement.

“BP and Shell and Total Energies are investing in renewable energy projects such as wind and solar.

“Chevron and ExxonMobil are looking at later stage solutions which need more time to become commercial at scale such as carbon capture, hydrogen and bio fuels.

“If we wanted to decarbonise the portfolio tomorrow, we could, but it would come at a significant cost to our members’ investment performance and their retirement savings. Abruptly divesting currently held assets is not in members’ best financial interests.”

But the technical distinction between “oil and gas producer” and “integrated oil company” is lost on Kathy Macdonald, who said she was shocked to find the oil and gas companies listed in NGS Super’s portfolio.

She said she signed up with NGS Super because of its messaging around sustainable investing.

“It’s a real disappointment,” she said.

When we told Kathy about the list of oil and gas companies in NGS Super’s portfolio she replied: “I’d like them to have a plan to get rid of all the things you just listed.”

The wording of other funds’ exclusion policies also leave the door open to investing in fossil fuels.

Tasmanian-based fund Spirit Super’s sustainable investment option only excludes fossil fuel investment in the “infrastructure asset class”.

That means there are no fossil fuel exclusions on its shareholdings.

The disclosure shows it had invested more than $10 million in fossil fuel companies, including oil and gas giants Saudi AramCo, Woodside, Santos, as well as coal miners Anglo American and Glencore.

In a response to questions, Spirit Super said the concept of “sustainable investment” was not clearly defined.

“Without an agreed definition funds are free to develop their own bespoke explanations and approaches, and some have more exclusions than others,” it said.

“Spirit Super rejects the premise implicit in the questions that to be sustainable a fund has to include/ exclude certain things.

CareSuper’s sustainable investment option only excludes companies that make more than 10 per cent of their revenue from fossil fuels, which allows it to hold $11.8 million of BHP shares.

CareSuper sustainable option member and Olympic speed walker Rhydian Cowley said he was shocked to learn that almost 8 per cent of the option’s shareholdings were in fossil fuels.

“I don’t think the [investment] filters they have are strong enough for what they say that they’re going to do,” he said.

Mr Cowley said he believed CareSuper may have carefully worded its exclusion policy to maintain its investment in BHP.

“They just hope that investors aren’t savvy enough to cotton on and hopefully you won’t get too outraged by it,” he said.

In a statement, CareSuper said revenue thresholds were commonplace in sustainable super exclusion policies.

“Our 10 per cent revenue threshold for fossil fuels reflects the fact that companies are multi-dimensional and acknowledges those companies making genuine efforts towards the energy transition in parts of their businesses,” it said in a statement.

CareSuper updated its online investment policy shortly after being contacted by the ABC to make clear that it does not consider metallurgical coal — which accounted for 13.8 per cent of BHP’s revenue last financial year — a fossil fuel for the purposes of the 10 per cent exclusion.

The ABC cross checked its findings against a second list of companies, supplied by financial data and analysis company Morningstar.

This list was made up of public companies that reported generating revenue from oil and gas, as well as coal production and exploration. Unlike the data from Bloomberg, this also included companies that earn revenue from fossil fuel power generation.

It also captures investment companies and other financial institutions that have holdings in companies that produce fossil fuels.

This method identified more than $2 billion invested in publicly listed companies generating revenue from fossil fuels.

The analysis comes as the Australian Securities and Investment Commission (ASIC) leads a crackdown on super funds committing “greenwashing” by overstating their sustainability credentials.

ASIC deputy chair Sarah Court said that includes funds that market themselves as “sustainable” but have highly permissive exclusions for industries like fossil fuels in the fine print of their investment policies.

“If there is marketing material that’s got people wandering through forests, and it’s called clean, green, environmentally friendly and sustainable, you cannot fine-print yourself out of those representations,” she said.

“If it says in your disclosure statement that, on page 97, ‘Oh, actually, we can invest in fossil fuel companies’ in ASIC’s view that does not cure that upfront representation.”

In the first big win of ASIC’s crackdown, superannuation giant Mercer agreed to pay a penalty of more than $11 million after admitting to misleading members about the holdings of its Sustainable Plus investment option.

ASIC sued Mercer in February after discovering it had extensive holdings in fossil fuel, gambling and alcohol shares, despite promising members via marketing materials it would exclude those sectors.

The ABC’s analysis of the disclosures found, on June 30, Mercer still had substantial fossil fuel holdings, including Woodside and Santos.

About 15 per cent of its total shareholdings are invested in companies that make money from fossil fuels.

Mercer did not respond directly to questions about its holdings, saying it could not go into details while the ASIC proceedings are still before court.

“Mercer’s Sustainable Plus investment options aim to reduce exposure to certain industries and securities compared to the other investment options we offer,” it said in a statement.

“We agree that it’s important members and potential members are fully aware of the investment criteria we apply across all of our options, which are detailed in our investor materials.”

ASIC has also this year launched legal action against Active Super for allegedly misleading its members about the exclusions in their sustainable-labelled options.

In the case of Active Super, which manages $14.5 billion on behalf of 89,000 members, ASIC claims the funds investment committee knowingly maintained holdings in gambling and fossil fuel shares that it had told members were restricted.

It still has more than $500 million invested in companies that make money from fossil fuels, including BHP, Woodside and Santos.

However, its website shows its responsible investment policy is currently under review so it is difficult to compare its most recent financial disclosures with its exclusion policies.

Active Super said it could not comment while its case was before court.

ASIC’s Ms Court said she hoped the two cases demonstrated the risks of greenwashing.

“The purpose of that is to put the sector on notice and to say, if you engage in greenwashing activity, if you are found to have contravened the laws that protect investors, then there can be significant implications, significant costs and significant reputational damage,” she said.

Jeremy Cooper, who conducted the last major review of Australia’s superannuation system in 2010, believes there are regulatory reasons for the reluctance of some funds to completely divest from fossil fuels.

He now chairs the superannuation think tank the Conexus Institute, which this year released research showing investment managers at super funds were worried about the impact of sustainable-themed investing on financial returns.

Mr Cooper is calling on the government to alter the annual super industry performance test, which threatens to penalise funds that do not match the performance of a set of financial benchmarks.

“Firstly, you would widen the family of benchmarks that currently apply to their performance to include appropriate sustainable indexes,” he said.

“The second is to make it clear that of course, you must act in the best financial interests of your members. But there are other considerations as well, which include having regard to environmental factors.”

Assistant Treasurer Stephen Jones said the government was considering such changes as part of a review of the super industry performance test.

“Any investment that a superannuation fund makes has to be in the best financial interest of its members,” he said.

“What the government wants to do is ensure that funds aren’t discouraged from investing in sustainable energy, sustainable energy and other sustainable interests.”

Additional research by Kate Newton

Watch this story tonight on 7.30 on ABC TV or ABC iview.