The PensionBee Fossil Fuel Free Plan is one of the first mainstream funds of its kind to completely exclude fossil fuel producers, tobacco companies, manufacturers of controversial weapons and persistent violators of the UN Global Compact.
It’s designed to invest more of savers’ money in companies that are aligned with the Paris agreement, by tracking an index called the FTSE All-World TPI Transition ex Fossil Fuel ex Tobacco ex Controversies Index. This is a completely new index created especially for the fund, and is part of a new Paris-aligned index series designed in collaboration with the Transition Pathway Initiative, FTSE Russell and the Church of England.
Today’s launch is the result of a year of campaigning by PensionBee, and follows a pledge of support from existing customers who committed to switch to the new Fossil Fuel Free Plan as soon as it became available (1). PensionBee needed to secure a commitment of £100 million from its customers in order to launch the plan at the desired annual fee of 0.75%, with a reduced fee of 0.38% on any savings over £100,000.
In less than a week PensionBee had reached a third of its target, securing £31 million in commitments, and was well on its way to reaching the target. PensionBee continued to build demand in the market following the campaign launch, and now another investor has emerged with sufficient investment to launch the fund.
As a result the fund launches today (17 December), and PensionBee’s Fossil Fuel Free Plan will be available to customers from 18 December. All of the pension providers’ existing customers who have already committed to invest in the plan will have their assets invested into the fund as soon as they can be processed.
The new plan is PensionBee’s third responsible investing option, from a total of nine plans currently on offer to consumers. It joins the Future World Plan, which invests money into companies that pledge to move to an environmentally-friendly economy, utilising an ‘engagement with consequences’ approach, and the Shariah Plan which only invests in Shariah-compliant companies.
In early 2020, PensionBee surveyed its Future World Plan customers and found that over a third (34%) thought that the time for engagement with oil companies was over (2). They asked to completely exclude oil from their pensions, even if that meant a potential reduction in the profitability of their pension, with many convinced that oil production is a dying and long-term unprofitable business.
Clare Reilly, Chief Engagement Officer at PensionBee, commented: “We’re delighted to be launching our new Fossil Fuel Free Plan with the help and support of our customers. It’s our customers who have made this possible every step of the way, first by telling us they wanted a product that completely excludes companies with oil, gas and coal reserves from their investments, and secondly, by pledging to invest in the fund ahead of its launch. We believe sustainable investing is the future of engagement with pensions and that everyone should have the option of using their investments for good. We hope this is just the start of all savers using their investment power to transform the world they live in - for the better of the planet, society and their retirement.”
Emma Douglas, Head of DC at LGIM commented: “We are excited to build on our existing partnership with PensionBee through the launch of this Fossil Fuel Free Fund. We believe that investing in companies who are positioned to capture the benefits from the transition to a low carbon economy will enhance investment returns for savers that will in turn help them reach their retirement goals. However, it’s not just investment returns that motivate savers but the opportunity to make a difference. Our research has shown that savers want to understand how their investments can align with their own principles with climate change being a key theme that engages members. At LGIM, we continue to hold companies to account on ESG issues including their progress towards net zero, through our Climate Impact Pledge.”
