PensionBee is launching a fund that cuts out fossil fuel investments

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The UK-based online pension provider has teamed up with Legal & General to launch a fossil fuel-free fund, per Finextra. The new plan will launch later this year and will completely exclude oil investments from pensions. Interested consumers can join a waitlist to sign up for the product.

Consumers are showing interest in alternative investment options that align with their growing awareness of environmental and social responsibility. Socially responsible investments focus on companies, organizations, and funds that intend to generate a measurable, positive social or environmental impact, in addition to a financial return.

Sixty-eight percent of UK consumers want their investments to be driven by environmental, social, and corporate governance (ESG) considerations, and the interest is even higher among millennials, women, and consumers with investments over £25,000 ($30,709), according to a survey from the Department for International Developments.

PensionBee's new fund itself was formed as a result of customer demand, with 34% of users of its Future World Plan, which focuses on environmentally friendly investments, saying that "the time for engagement with oil companies is over," according to the company.

PensionBee joins a number of fintechs in betting on ethical funds and investment options to lure millennials in particular, a demographic of increasing importance. Earlier this year, Wealthify launched fully digital personal pensions with ethical options, while savings and investments app MoneyBox also launched a socially responsible fund in 2019.

By offering these specialized products, fintechs are better positioned to stand out to those demographic groups, such as millennials, that care most about ethical offerings. That's an edge that will become increasingly important in the coming years: Millennials are set to become the richest generation by 2030, according to a report from Cerulli Associates.

Launching responsible investment options could be a key way for financial services firms to boost customer numbers and secure a sizable portion of millennials' wealth. Moving forward, PensionBee should focus on marketing its fossil fuel-free fund toward younger demographics first.

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