PensionBee has announced the launch of the UK’s "first mainstream" fossil fuel free fund, in partnership with Legal & General Investment Management (LGIM).

The plan is expected to launch later this year, after survey results revealed that that over a third (34 per cent) of customers in the firm's ‘Future World’ fund thought that the time for engagement with oil companies was over.

PensionBee stated that this showed a customer desire to completely exclude oil from their pensions, even where this means a potential reduction in the profitability of their pension.

The firm added that many perceive oil production as a “dying and long-term unprofitable business”, highlighting increasing oil rates of production, and describing proposed offsetting measures as “impossible to monitor”, as well as raising concerns that such stocks could become “stranded assets”.

Whilst PensionBee will continue to take an “engagement with consequences” approach through its existing 'Future World’ fund, it noted a “growing divide” amongst customers, with an “increasingly strong demand” for pension products that divest from oil entirely.

PensionBee head of corporate development, Clare Reilly, said: “Everyone should have control over where their money is invested.

“Our new fossil fuel free fund will finally offer consumers a practical way to completely exclude oil from their investments. We hope this is just the start of all savers using their investments to transform the world they live in - for the better of the planet, society and their retirement.

“We are proud to be the first provider to offer a fund of this type and look forward to its launch later this year”

The launch follows calls from London mayor, Sadiq Khan, and New York City mayor, Bill de Blasio, for pension schemes to divest from fossil fuel assets.

Furthermore, UK pensions minister, Guy Opperman, recently described climate change as the 'largest risk' to pension schemes, while Green Party MP for Brighton Pavilion, Caroline Lucas, stated that fossil fuel divestment was "long overdue".

However, a recent report from the Strathclyde Pension Fund stated that fossil fuel divestment was not an "effective or satisfactory solution".

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