Data from Platform London found local authorities - including Teeside, East Riding and North Yorkshire - could have millions wiped off the value of their funds as pressure mounts on the fossil fuels sector.
Manchester Pension Fund has taken a £148m hit alone in the last 18 months, due to its investments in firms including BHP Billiton, Rio Tinto, Glencore and Anglo American, Platform London said.
Fossil fuel investment is coming under increasing scrutiny, with Goldman Sachs describing the coal sector as in “terminal decline”.
Last week, Bank of England governor Mark Carney warned about the financial valuation of fossil fuel companies and the implications of ‘stranded assets’ - resources that can never be used because of their environmental impact, and are therefore essentially worthless.
Mika Minio-Paluello, researcher at Platform London, said: “Carney is right about stranded assets. But this is a problem for today, not tomorrow.
“Our local councils are risking pension funds by investing into coal and fossil fuels, as advised by City firms raking in millions in fees.
“The burden of failing coal companies will be dumped on the public and pensioners. Local government workers deserve more say over where their pensions are invested.”
Council pension funds manage pension benefits for local authority workers, as well as a range of other public sector employees, including school workers, care workers, some hospital staff and college and university lecturers, among others.
Local authorities are responsible for managing the schemes and must make top-up payments towards investment deficits. As a result, losses due to fossil fuel stranded assets risk being transferred to the public, Platform London said.
According to the research, Manchester lost 1.1 per cent of its value, with £147.9m losses between April 2014 and October 2015.
Teeside Pension Fund was ranked as the second-most affected fund, with losses of £46.9m - equal to 1.45 per cent of its fund value last April. East Riding was third, with £35.4m - or 1.07 per cent - knocked off its fund price.
North Yorkshire also made the top 10, with £17m lost - equal to 0.82 per cent of its fund.
Merton, which was ranked 10th with £6.8m losses, had the highest overall exposure to fossil fuels of any UK pension fund.
Platform London’s Ms Minio-Paluello added: “If councils had divested from coal and reinvested into public transport and social housing two years ago, then pension holders, the climate and public services would all be better off. Divest-Reinvest is a win-win-win solution.”