The Auckland Council has been told it might have more than $700,000 indirectly invested in British American Tobacco.
A review of the council's investment funds is being carried out after an investigation by RNZ News found one of the 11 funds in the council's $320 million investment portfolio held shares in tobacco and sugary drink companies.
The council has been told by the Janus Global Research growth fund that it might have more than $700,000 invested in the tobacco giant, although the council is still waiting for the fund to give an official confirmation of the amount that has been invested.
Auckland Council chief financial officer Sue Tindal said: "We calculate at the present point in time that Janus may, and I emphasise may because we are awaiting absolute confirmation from them, have invested approximately $770,000 of our funds in British American Tobacco."
Treasurer John Bishop said all of the council's investments were legal and were made in accordance with its responsible investment policy.
Councillor Chris Darby has called for that policy to be reviewed, to ensure all tobacco and weapons manufacturers have been excluded.
"I am very concerned that the policy we have in place at the moment, which we are complying with, has allowed an investment in this particular tobacco company to slip through."
A more detailed report - listing all the companies that the 11 funds invest with - should be available in a month's time.