PensionBee Environmental, Social & Governance (ESG) Policy

PensionBee has a global approach to integrating material ESG factors into its business and investments for the long-term benefit of customers, society and the planet.

Our global approach
UK policy
US policy
Engagement and active ownership
Climate commitments
ESG benchmarking
Working with others

1. Our global approach

PensionBee’s vision is a world where everyone can enjoy a happy retirement.

Every day we work to make that vision a reality for our customers in the form of financial freedom, good health and a socially inclusive society where there are strong corporate role models.

We do this because we believe that pursuing all of these pillars of a happy retirement will lead to bigger pensions for our customers.

In achieving our vision, we also aspire to be a role model within corporate society and to lead by example. We seek to maintain a socially inclusive workplace that not only reflects the rich diversity of our global customer base, but that is also a welcoming place for historically underrepresented groups in the pensions and financial services sector.

This means in 2024 we seek to maintain gender parity across our business, our Executive Team and our Board. We’re proud that in the UK, our largest market where we have historically measured our diversity, 37% of our UK colleagues self-identify as coming from a minority ethnic group. We are also proud to have achieved a workplace in which 90% of UK colleagues tell us they feel aligned with PensionBee’s mission, vision and values.

As part of our vision for helping our customers achieve a happy retirement we take our responsibilities as an asset owner to heart. We recognise we have an important role to play in driving positive change through our customers’ ownership in some of the world’s largest companies.

Our approach in both the US and the UK is led by customers and reflective of the local regulations, sentiment and market approach.

Global investment philosophy

PensionBee believes that investments should be diversified, low-cost, and simple to understand. This philosophy is carried across all our investment plans, to the extent compatible with the desired financial outcomes.

PensionBee plans are predominantly passively managed index-based investments. This means that our plans generally don’t carry the risks associated with active management and returns will keep in line with the benchmark or index they track. As a result of our investment approach, our customers are the universal owners of thousands of companies around the world and collectively our financial futures depend on their long-term sustainability and success. At PensionBee we want all companies to be good corporate citizens and be part of a global investment system that rewards positive impact to the planet and society.

2. UK policy

In the UK we believe that effectively managing our ESG priorities will help preserve our resilience and drive long-term value for all our stakeholders. We pursue our ESG work transparently, disclosing our goals and relevant metrics, an approach which supports accountability and enables us to keep our stakeholders apprised of our progress.

In 2024 our UK ESG goals are:

Topic	Description	Goal
Excellent value plan range	To offer market-leading investment that generate returns for our customers	Excellent or good value for money score from our GAA (yearly goal)
Product innovation and inclusivity	A product that is simple, safe, and reactive to changing customer needs, designed with a range of needs and vulnerabilities in mind whilst enchanting access to financial products and knowledge	Maintain our 4.7/5 aggregated App Store (yearly goal)
Pensions with purpose and stewardship	A responsible plan range focused on creating a safer, fairer, kinder future whilst using voice and vote to drive positive change in companies	100% of eligible customers invited to share their voting views via survey or interview (yearly goal)
Cyber security	Cyber security practices in place to ensure the highest levels of protection	0 incidents that have a meaningful impact on confidentiality, integrity or availability in the production environment (yearly goal)
Diversity and inclusion	To recruit from all backgrounds, requiring no degree or prior experience, ensuring we reflect society at every level	Workforce composition to reflect the UK society (2021 Census) at every level by 2027 in line with the Parker Review recommendations
Fulfilling careers	A culture in which people can find meaning in their work and build a happy and fulfilling career	Employee engagement and satisfaction of a least 80% (yearly goal)
Climate leadership	A pension provider that is focused on a climate transition that is safe and fair for all	Reporting on progress against our science-based public net zero 2030 and 2050 targets that align with the 1.5C Paris Agreement Goals (yearly goal)

UK investment philosophy

PensionBee’s investment philosophy in the UK is that investments should be diversified, low-cost, simple to understand, but also screened and with 100% FSCS protection.

To unify our investment philosophy with our responsibility as an asset owner and position as a corporate role model, our approach to ESG integration in the UK is asset-based screening complemented by investment stewardship.

UK baseline screens

We seek to apply baseline ESG exclusionary screens where both the asset class and the plan’s investment objectives allow. First, screens can be applied to equities and corporate bonds, but cannot yet as easily be applied to gilts, government bonds, cash or alternative investments such as infrastructure, real estate or commodities. Second, other objectives, such as ‘religion-based’ investing or a target return will take precedence over screening.

Directed by our customers, we’ve screened out companies that cause catastrophic harm to the environment and society through their business activities. For example, manufacturers of controversial weapons and tobacco producers. We gather customers’ views via an annual survey. In addition to the baseline screens, we seek to reduce our overall exposure to other sectors, such as thermal coal and gambling over time.

Six of our plans have ESG baseline screens for equities and corporate bonds. Please see the table below for a full breakdown of screens by plan. Our asset managers use FTSE, MSCI and Dow Jones definitions in applying their exclusions.

Breakdown of exclusions by plan in 2024:

Plan	Controversial weapons	UNGC violators	Tobacco
Tailored	Excluded	Excluded	Excluded
Tracker	Excluded	Excluded	Excluded
Fossil Fuel Free	Excluded	Excluded	Excluded
Pre-Annuity	Excluded	Excluded	Excluded
Impact	Excluded	Excluded	Excluded
Shariah	Excluded	No Screen	Excluded
4Plus	See below	See below	See below
Preserve	Excluded	Excluded	No Screen

Continuation of exclusions by plan:

Plan	Thermal Coal	Nuclear weapons	Civilian firearms	Gambling
Tailored	Excluded	Excluded	Excluded	No Screen
Tracker	Excluded	No Screen	No Screen	No Screen
Fossil Fuel Free	Excluded	No Screen	No Screen	No Screen
Pre-Annuity	Excluded	No Screen	No Screen	No Screen
Impact	Excluded	Excluded	Excluded	Excluded
Shariah	No Screen	Excluded	Excluded	Excluded
4Plus	See below	See below	See below	See below
Preserve	Excluded	No Screen	No Screen	No Screen

Two of our plans have a specific objective which prevents ESG baseline screening. The objective of the Shariah Plan is to invest in line with Islamic values, so the plan is screened for sectors inconsistent with Shariah law, some of which are reflected in the table.

The objective of the 4Plus Plan is an annualised target return of c.4% above the cash rate over a minimum five-year period. Whilst the majority of the 4Plus Plan’s underlying State Street Global Advisors (SSGA) funds do contain baseline ESG screens for weapons, tobacco and thermal coal, the fund has an actively managed component and managers have discretion to use unscreened third party funds to meet the target return objective.

We continue to work with UK asset managers to further expand the scope of ESG integration into our plan range, where there is the availability of building blocks and transaction costs can be kept to a minimum. We do this in line with the views of our customer base, which we seek through surveys.

In 2023, SSGA announced a number of ESG changes to their UK funds. Exclusionary screens for tobacco and thermal coal were introduced to the Tracker and Pre-Annuity Plans. And as a result of environmental and social characteristics to the investment process for the Preserve Plan, the plan was reclassified from Article 6 to Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).

Gambling is considered a controversial sector due to the impact it can have on families, communities and mental health. Therefore, gambling has been actively excluded from some of our investments, including our Impact and Shariah Plans.

Fossil Fuel Free Plan definitions

Our Fossil Fuel Free Plan tracks the FTSE All-World Transition Pathway Initiative ‘TPI’ ex Fossil Fuels ex Tobacco ex Controversies Index (the “Index”). This plan excludes fossil fuels based on ownership of reserves and revenues, tobacco, makers of controversial weapons and UN Global Compact violators.

A summary of these exclusions is set out below.

Fossil fuels:

Non-renewable energy reserves - companies with 50% or more ownership in companies with proven or probable reserves in coal, oil or gas.
Industry classification benchmark (ICB) subsectors - companies within the following subsectors: Oil: Crude Producers, Oil Refining and Marketing, Oil Equipment & Services, Offshore Drilling and Other Services, Pipelines, Integrated Oil and Gas, Gas Distribution and Coal.
Product Involvement - companies generating revenue from fossil fuel activities including oil and gas, oil sands, arctic oil and gas exploration, shale energy and thermal coal. This includes generating revenue through ownership of related companies as below:
- i. those having any direct revenue or a controlling influence on a company (characterised as ownership of ≥50%);
- ii. those with indirect revenue and considered to have significant involvement (characterised as 10-50% ownership).

Please note that for all revenue screening within the above categories (a), (b) and (c), there is a 5% revenue threshold applied for companies involved in supporting services. This means that the revenue generated must be above 5% for that company to be excluded from the index.

Companies with less than 10% ownership may be included in the index, regardless of revenue generated from fossil fuel activities.

Tobacco: Companies deemed by the index provider as being involved in or having any revenue generated from the tobacco industry, including but not limited to, those classified under ICB subsectors as tobacco and cannabis producers.

Controversial weapons: Companies that are involved in or have any revenue generated from the manufacture of controversial weapons, as determined by the index provider.

UNGC violators: Companies deemed by the index provider as non-compliant with certain controversies related to one or more principles of the United Nations Global Compact (“UNGC”).

Working with others

Good Work Coalition

Since 2020, PensionBee has been an active member of ShareAction’s Good Work Coalition. We join other accredited Living Wage investors to collectively engage companies on good work standards, such as paying the Living Wage, providing secure work through Living Hours and taking action on diversity and inclusion through the Ethnicity Pay Gap Campaign. In 2023 we have continued to add our name to calls for publicly listed companies to prioritise support for their lowest-paid employees and meet the new real Living Wage rates during the cost of living crisis.

Long-term Investors in People’s Health

In 2024, PensionBee became an investor signatory of ShareAction’s Long-term Investors in People’s Health initiative, a global programme that supports investors to give greater priority to health within their work. In 2024, we publicly supported ShareAction as they were coordinating the shareholder resolution put forward to Nestlé, the world’s largest food manufacturer, asking to increase the ratio of healthy foods it offers consumers. PensionBee also supported the shareholder resolution asking McDonald’s, the largest beef purchaser in the world, to comply with the World Health Organisation (WHO) guidelines on the use of medically important antimicrobials in food-producing animals throughout its supply chains.

Workforce Disclosure Initiative

From 2021 we’ve been an investor signatory and disclosing participant under the Workforce Disclosure Initiative (WDI). The WDI aims to improve corporate transparency and accountability on workforce issues, provide companies and investors with comprehensive and comparable data and help increase the provision of good jobs worldwide. In 2023, our WDI disclosure score was 99%, as compared to a financial sector average of 64%. In 2023 we won two WDI Awards for our submission and efforts in collecting data; the WDI Award for the company with the most complete response and the Contingent Workforce Data Award.

3. US Policy

Our approach in the US is in line with local market expectations. This means we do not apply exclusionary screens as standard nor do we take an active approach to ESG implementation across our US business.

As our US business is relatively new, we will seek to expand this approach over time. This will be led by our customers, their investment views and ESG expectations. Similar to the UK, we will use annual surveying of customers to inform our approach.

US baseline screens

Breakdown of exclusions by plan in 2024:

Plan	Weapons manufacturers	Tobacco producers	Fossil fuels revenue
Target Date Portfolio	No screen	No screen	No screen
Maximum Growth Portfolio	No screen	No Screen	No Screen
Balanced Portfolio	No screen	No Screen	No Screen
Conservative Portfolio	No screen	No Screen	No Screen
Climate Portfolio	Excluded	Excluded	Excluded

4. Engagement and Active Ownership

Pensions have the collective power and potential to change the world for the better.

Globally our customers are invested in thousands of companies that can improve or harm the planet and society through their business activities. At PensionBee we believe that companies that focus on their contribution to society and the planet have a better long-term chance of being financially sustainable and will bring stronger returns for our customers.

Through indexing our customers are universal owners in the investment system. This means they own shares in most major global companies and our asset managers, BlackRock and SSGA, as index portfolio managers, do not have discretion to edit securities outside of the relevant index.

Through ownership in all these companies, we have the collective power to encourage good corporate behaviour, for the benefit of our customers. We believe in the engagement and active ownership approach.

We think our role at PensionBee is to be a responsible and vigilant asset owner, to help challenge bad corporate behaviour where it has a material impact on our customers’ pensions and to engage with management teams that do not propose timelines for appropriate change.

When it comes to active ownership, PensionBee uses surveys, interviews and focus groups in order to understand the areas of most importance to our customers. We then share these views with our managers, who use direct engagement before AGMs to advance material sustainability insights to enhance long-term risk adjusted return and then block vote across all the assets, where they do not make sufficient progress with the engagement. For some companies voting is the only way to signal dissatisfaction with the direction of travel.

As active owners we meet with the global investment stewardship teams of our managers on a regular basis to understand the rationale behind their engagement and voting policies and to provide robust challenge to their voting record on areas of key focus for our customers. We do this with the purpose of driving up levels of transparency and accountability around their direct engagement activities, applying scrutiny to their voting record and demonstrating our commitment to active ownership.

Voting - UK only

In the UK, BlackRock and SSGA granted us “Voting Choice” from the 2023 proxy voting season. This gives institutional clients, such as PensionBee, the ability to participate in voting decisions at the in-scope Annual General Meetings (AGM) of the major global companies where they are asset owners.

Voting Choice is currently available in three PensionBee plans; the Tailored Plan, the Tracker Plan and the 4Plus Plan, which together represent 85% of the asset base. Under Voting Choice we are offered the ability to vote using a standardised voting policy from Institutional Shareholder Services, a global proxy voting provider.

PensionBee has used ISS’s Socially Responsible Investment (SRI) voting policy in these plans from May 2023 onwards. We selected this voting policy as it best aligns with our customers’ vote preferences, which we collect annually via a survey which uses historic shareholder votes as a way to measure the changing views and expectations of our customer base.

The ISS SRI voting policy supports well framed environmental and social resolutions that seek to promote good corporate citizenship while enhancing long-term shareholder and stakeholder value. The SRI policy can also vote against the management of heavy carbon emitting companies where ISS determines they are not taking the minimum steps needed to be aligned with a net zero by 2050 trajectory.

UK voting priorities

Over the years we’ve refined our list of the environmental, social and governance (ESG) issues of most importance to our customers. Data from our 2020, 2021, 2022, 2023 surveys of UK customers in the Tailored Plan gives us insight into the areas of most importance to our customers as investors, but also participants in UK society, the labour force and on this planet.

In February 2024, we extended surveying to customers in the Tracker Plan, the 4Plus Plan and we asked them to share their views around voting topics, as well as our usual questions on climate and fossil fuel investments.

In 2024, the topics of most importance for our UK customers were:

Ending poverty wages, paying wages that represent the true cost of living (the Living Wage and the London Living Wage).
Tax avoidance, companies not paying proper tax in the markets in which they operate.
Climate change, ensuring we hold the world’s biggest polluters to account.
Respecting human rights, ensuring the fair treatment of direct and supply chain workers.
Tackling deforestation, habitat loss and protecting biodiversity.
Public health, food & beverage companies harming people’s health with their products.

As part of our work to ensure that our voting policy continues to align with our customers’ expectations, we capture customers’ voting intent from historic shareholder resolutions ahead of each proxy voting season.

What can be observed from this survey data is that the voting record of our SRI voting policy, which has supported shareholder resolutions and voted against the management recommendations in most cases, is aligned with the voting views of our customer base. Full results can be found in PensionBee Voting Choice Report 2024. We also publish vote records and voting reports for each proxy voting season on our ESG Document Hub.

Our Impact Plan and our Fossil Fuel Free Plan also use bespoke directed voting, to advance long term interests of the planet and society, and support environmental and social shareholder resolutions, in line with the objectives of the plans.

For our remaining plans, and in the US, our managers continue to use direct engagement before votes to advance material sustainability insights to enhance long-term risk-adjusted returns and then block vote across all the assets.

5. Climate commitment

Minimising our impact on the environment

In order to minimise our environmental impact, we use cloud-hosted web services which remove the need for servers. We offer fully remote working to employees in both the UK and US, which greatly reduces commuting emissions for those who wish to work permanently from home, as well as allowing us to recruit from further afield, in a more inclusive way. To achieve this, PensionBee will reduce Scope 1 and 2 GHG emissions by 90% by 2050 from a 2022 baseline. Our long-term target for Scope 1 and 2 absolute emissions by 2050 is 1.2 tCO2e.

PensionBee is a paperless pension provider. Our communications are digital, with annual statements available to download in the BeeHive. In the UK we estimate that the pensions industry still sends out approximately 40m paper packs each year by post and we have long campaigned for other providers to reduce their use of paper.

Net zero

In 2023 PensionBee made its net zero commitment to achieving a long-term reduction in greenhouse gas (GHG) emissions across all operations and investments by 2050. These targets are aligned with the Paris Agreement and are consistent with emissions reductions required to keep global warming within 1.5°C.

To achieve this, PensionBee will reduce Scope 1 and 2 GHG emissions by 90% by 2050 from a 2022 baseline. Our long-term target for Scope 1 and 2 absolute emissions by 2050 is 1.2 tCO2e.

The Company will also reduce Scope 3 (Category 15 GHG Protocol) emissions associated with the investment portfolio by 90% by 2050 from a baseline of 2019. The long term WACI emissions target is 17.8 tCO2e per $m Revenue by 2050.

We also committed to reviewing our target ambition and metrics as our global business evolves. We publish our progress annually to ensure that we remain aligned with the best understanding of the science required to achieve 1.5C limited warming by 2100.

Our global asset managers, BlackRock and SSGA, are members of the Net Zero Asset Managers Initiative. They regularly disclose their own net zero commitments and also support the companies in which they invest in developing credible transition plans of their own, including setting corporate emission reduction goals.

UK climate reporting

As required under the Companies (Directors Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 we disclose under the Streamlined Energy & Carbon Reporting (SECR) framework. We report on all of the emission sources and we also report on Scope 3 (Category 15 GHG Protocol) Emissions.

From 2022 we’ve reported under the recommendations of the Taskforce for Climate-related Financial Disclosures (‘TCFD’). All our disclosures are fully consistent with the TCFD Implementation Guidance (2021) and in line with the comply or explain guidance for listed UK companies under the Corporate Governance Code.

In the UK PensionBee is part of the Mayor’s Business Climate Challenge (‘BCC’), an energy efficiency programme which supports businesses to reduce their energy consumption, to accelerate building-decarbonisation efforts and contribute to London’s target of becoming a net zero city by 2030. In 2023, we received a special recognition from the Mayor of London for being a leading London business taking action to reduce energy consumption and carbon emissions by over 10%.

Our full net zero commitment, our Streamlined Energy & Carbon Reporting (‘SECR’) framework and full disclosure under the Task Force for Climate-related Financial Disclosures (‘TCFD’) can be found in the climate-related disclosures section of our Annual Reports.

US climate reporting

In March 2024 the SEC adopted final rules designed to enhance public company disclosures related to the risks and impacts of climate-related matters.

PensionBee Inc. will comply fully with these requirements when they come into force for us from 2026 onwards.

6. ESG benchmarking

PensionBee has received recognition across numerous ESG frameworks, rating agencies and indices.

We voluntarily submit our ESG data to global organisations such as the Sustainability Accounting Standards Board (SASB), the Workforce Disclosure Initiative (WDI), Global Reporting Initiative (GRI), S&P’s Corporate Sustainability Assessment (CSA) and Bloomberg’s Gender Equality Index (GEI).

We have also been independently assessed by UK and European ESG raters such as ISS ESG, London Stock Exchange Group (LSEG) and EthiFinance.

In 2023 we joined both the FTSE All Share and the FTSE4Good Index (which is owned by LSEG’s FTSE Russell).

Additionally, in 2023 we became an active participant in the UN Global Compact and made a commitment to conduct our business in alignment with universal sustainability principles.

You can find all our disclosures in our ESG Document Hub.

Your views

Everything we do at PensionBee is shaped by the views of our stakeholders, which includes our customers.

We welcome your thoughts and suggestions on this policy and on our evolving approach to ESG by emailing: [email protected].

Last edited: 16-08-2024