Extracted from tar-soaked shale or sand, so called unconventional oil extraction uses more energy and resources and creates about eight times the greenhouse gas emissions of conventional oil production.
The Co-operative says such production methods are both environmentally and economically unsustainable.
The organisation's asset management division will urge investment companies to put pressure on British firms which are leading the rush to exploit unconventional oil. Members of the United Kingdom Social Investment Forum are meeting in London today and will be asked to use their combined influence to help halt the investment.
Ian Jones, head of responsible investment, said: "As investors, we understand the challenges global energy companies face in terms of geo- political pressures, scarcity and resource nationalism.
"However, the days when oil companies can escape their environmental responsibilities and payment for carbon emissions are increasingly numbered."
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