Fossil fuel free pension saving is here!
Important: With investments, your capital is at risk. Pensions can go down in value as well as up, so you could get back less than you invest.
Exclude the oil, gas and coal industries
Your money won't be invested in fossil fuel companies that are contributing towards climate change.
Avoid UN Global Compact violators
Invest in businesses that continue to evidence positive action on human rights, labour, the environment and anti-corruption.
Support a greener, cleaner future
More of your money will be directed towards companies that are better prepared for the transition to a low-carbon economy.
Exclude the oil, gas and coal industries
Your money won't be invested in fossil fuel companies that are contributing towards climate change.
Avoid UN Global Compact violators
Invest in businesses that continue to evidence positive action on human rights, labour, the environment and anti-corruption.
Support a greener, cleaner future
More of your money will be directed towards companies that are better prepared for the transition to a low-carbon economy.
Become a Fossil Fuel Free Plan investor
What is fossil fuel free investing?
The Fossil Fuel Free Plan is one of the UK’s first mainstream private pensions to completely exclude companies with proven or probable reserves in oil, gas or coal, tobacco companies, manufacturers of controversial weapons and persistent violators of the UN Global Compact, whilst also investing more of your money in companies that are aligned with the Paris agreement. It does this by passively tracking the FTSE All-World TPI Transition ex Fossil Fuel ex Tobacco ex Controversies index.
In plain English, what this means is that your investments will passively follow the market performance of a group of fossil fuel and tobacco free companies within the index, instead of your money manager actively buying and selling stocks in these companies. Find out more about active and passive investing.
This is a completely new index created specifically for PensionBee’s Fossil Fuel Free Plan. The index is part of a new Paris-aligned index series designed in collaboration with the Transition Pathway Initiative, FTSE Russell and the Church of England.
This is a completely new index created specifically for PensionBee’s Fossil Fuel Free Plan. The index is part of a new Paris-aligned index series designed in collaboration with the Transition Pathway Initiative, FTSE Russell and the Church of England.
How does a Paris-aligned index work?
A Paris-aligned index is a way of investing more of your money in companies who have adjusted their businesses in preparation for climate transition, and moving your money away from those companies that still have high carbon emissions or display poor management when it comes to climate governance.
The index uses data on how well prepared a business is to capture the benefits from the transition to a low carbon economy, such as increased exposure to the global green economy, and invests more in those companies.
FAQs
About Fossil Fuel Free investing
Is this a new way to invest?
The Fossil Fuel Free Plan is the first mainstream personal pension of its type, that enables you to passively invest through indexing, but exclude the fossil fuel and tobacco sectors. As a private pension saver you would normally have to use an active manager to find a specialist responsible investment fund to remove oil in this way. That can often be expensive, complex to understand and come with additional risks.
If it’s a new approach, what are the risks?
All investing carries risk. This plan is invested in more than 1,000 companies around the world (company shares), which brings both risk and reward. All investments in the stock market are considered higher risk than say, bonds or gilts.
The plan tracks an index that’s part of the FTSE Climate Transition Index Series. The first index of this type was launched as part of a collaboration between the Transition Pathway Initiative (TPI) and The Church of England.
Pensions are a long-term investment and some savers take the view that in the future carbon-focused businesses may become stranded assets, as we transition to a low carbon economy. This means they believe that investing in oil or fossil fuels is a risk, since these businesses have no future in the green economy.
What does the plan invest in instead of fossil fuels companies?
The plan invests more in 1,400 major international companies with a proven track record of adjusting their business model and operations to prepare for climate transition. A snapshot of the top 20 holdings for the latest month is below.
| Name | Weight |
|---|---|
| Apple | 6% |
| Microsoft | 4.5% |
| Alphabet (Google) | 2.7% |
| Amazon | 2.3% |
| UnitedHealth Group | 1% |
| Nvidia Corp | 1% |
| JP Morgan Chase | 0.9% |
| Taiwan Semiconductor | 0.8% |
| Home Depot Inc | 0.7% |
| Toyota Motor | 0.7% |
| Merck & Co Inc | 0.7% |
| Nestle | 0.7% |
| AbbVie Inc | 0.6% |
| AliBaba Group Holding | 0.6% |
| Mastercard Inc | 0.6% |
| Novo Nordisk | 0.6% |
| McDonald’s Corp | 0.6% |
| Coca Cola Co | 0.6% |
| ASML Holding | 0.6% |
| Pepsico Inc | 0.6% |
View the full list of holdings in the Fossil Fuel Free Plan.
What are the specific exclusions?
FTSE Russell and TPI, who worked together on the index, set the index screening criteria for the exclusions. Read more about those criteria.
The specific exclusions for this index are: fossil fuel, tobacco, controversial weapons and UN controversies.
There’s more detail on the FTSE methodology and exclusions lists here. The exclusions lists are reviewed quarterly or bi-annually.
Fossil fuel
The plan excludes the following:
companies that own proved or probable reserves in coal, oil or gas
any company owning oil or gas reserves, and any company with primary business activity in exploration for drilling for, production, refining and supply of oil and gas products, the supply of equipment and services to oil fields and offshore platforms, the operations of pipelines carrying oil, gas or other forms of fuel and integrated oil and gas companies, providing a combination of the services above, including the refining and marketing of oil and gas products
any company owning coal reserves, and any company with primary business activity in the exploration for or mining of coal
companies in oil refining and marketing, oil equipment and services, pipelines and gas distribution
Tobacco companies
The plan excludes the following:
companies that produce tobacco products
companies providing inputs into tobacco products and manufacturing are also excluded, such as rolling papers, tobacco flavouring, and tobacco-specific packaging
Controversial weapons
The plan excludes the following:
companies that produce chemical or biological weapons, or that produce specific and critical parts or services for chemical or biological weapons
companies that produce cluster munitions as defined in the Convention on Cluster Munitions, or that produce specific and critical parts or services for cluster munitions
companies that produce anti-personnel mines as defined in the “1997 Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and on their Destruction”, or that produce specific and critical parts or services for anti-personnel mines
Violators of the United Nations Global Compact
The plan excludes the following:
- companies who are persistent violators of the United Nations Global Compact, an agreed set of business principles on anti-corruption, environment, human rights and labour.
Is this plan available anywhere else? What is the ISIN for this plan?
The Fossil Fuel Free Plan is an institutional fund, which means it’s not available on retail platforms. As an institutional fund it also doesn’t have an ISIN. Legal & General uses GPEH as their fund code.
Does your investment mix change based on age?
This is a 100% equity plan, which means that 100% of your investment is in global stock markets. This is different from our Tailored Plan, which changes your investment mix as you approach retirement.
Does the plan invest in banks that finance fossil fuel exploration?
Currently, the data is not available to effectively screen financiers of fossil fuels out of the index funds. This is because many banks have loans related to fossil fuels or financing fossil fuel companies, but for their energy-transition projects. When Scope 3 reporting on financed emissions generated from lending and investing in fossil fuels is available, at that point the approach towards financiers can be considered.
How can I share my views on the plan?
We regularly survey our customers in the Fossil Fuel Free Plan. This is to make sure that the plan’s exclusion criteria matches the changing needs and views of those invested in it.
You can see the our latest survey results below:
November 2021 and blog
If you would like to ask us any questions on this plan or share your views at any point in the year you can email us at [email protected]
We’d love to hear from you!