PensionBee has launched its new Climate Plan that helps customers invest in line with the Paris Agreement goals and sets a clear standard for climate-focused pensions.
The plan excludes fossil-fuel producers from pensions and also commits to continually reducing the total intensity of greenhouse gas emissions produced by companies in the plan by 10% annually.
The Climate Plan will screen out unsustainable palm oil use, weapons, gambling, alcohol, tobacco, for-profit prisons and companies embroiled in environmental controversies.
The Climate Plan offers the chance for customers to align their pensions with the 1.5°C goals of the Paris Agreement, “directly addressing customer demand for sustainable, impactful pension options”.
The Paris Agreement is an international treaty on climate change that was signed in 2016.
The plan seeks to invest in companies that will benefit from the transition to a low-carbon economy, “offering pension holders a pathway to sustainable financial growth while supporting climate action”.
PensionBee said customer input was “instrumental” in the Climate Plan’s creation.
PensionBee chief engagement officer Clare Reilly said: “All our investment solutions are designed for our customers, who play a crucial role in shaping our plan range. The Climate Plan continues our growing history of customer-led product innovation. The environmental challenges we face as a planet are fast moving, as are the solutions to address them.
“We remain committed to evolving and advancing our sustainable plan range, to respond to the changing expectations of customers and to reflect the newest approaches to climate-focused pension saving.
“By directly responding to customer sentiment, we are proud to deliver a pension plan that prioritises impactful climate action and meets today’s environmental challenges head-on.”
In February 2024, PensionBee invited customers with sustainable investing preferences to share their views, which showed 62% support reducing carbon exposure in their portfolios.
Additionally 98% back adding new exclusions like unsustainable palm oil, gambling, weapons and environmental controversies.
The Climate Plan’s annual management fee is 0.75%.
So this is State Street index fund – itself a sub of another SS fund – with the objective of tracking a MCSI ESG index fund that can be bought for a fraction of the cost of the 0.75%. Isn’t this the sort of thing consumer duty was supposed to inhibit? Repackaging of multiple layers to a product resulting in very high management fees. The end investor here is looking at the sharp end of 1.2% in total charges plus all the risks of funding sub-scale product overhead (only available to Pension Bee clients / max AUM potential 500m?) for what is essentially branding.
I would be impressed and more content on Consumer Duty compliance if PensionBee had an investment committee, control of the exclusion policies, active oversight, a value adding quant dimension, or anything that adds value. I see no evidence of that here. Just branded intermediation.
Let’s not be under any illusions. Climate focused investments just lose money. Just a few examples:
Harmony Energy Inc Trust – 2021 to Date – MINUS 40%
SDCL Energy Efficiency – 2022 to Oct-2024 – MINUS 49%
Global Clean Energy – 2022 to March 2024 – MINUS 38%
Plug Power Inc (Hydrogen fuel cells) 2020 to Oct-2023 – MINUS 34%
Critical Elements -Inc (Lithium Mining) 2017 to Oct-2023 – MINUS 44%
I can go on, but I think the above illustrates the point.
Compare this with:
RTX (US defence contractor) – Nov 2020 to date PLUS 82%
BaE Systems – Sept 2021 to Date – PLUS 117%
So as far as I’m concerned you know what you can do with your woke investments. Are you in the business of making money, or not?