On 12 November 2024, the Financial Reporting Council (FRC) launched a consultation on significant updates to the UK Stewardship Code.
The proposed updates focus on supporting economic growth and investment and delivering increased transparency for UK investors, savers and pensioners, as well as streamlining reporting requirements and reducing burdens for signatories and ensuring a clearer focus on the purpose of stewardship and the outcomes that it delivers.
The UK Stewardship Code operates as part of the broader regulatory framework, working alongside the Financial Conduct Authority’s oversight of financial markets, the Pensions Regulator’s protection of member interests, and the Government’s pension scheme regulations. Although the Code is voluntary, it is intended to complement these regulatory requirements by promoting transparency and good practice in stewardship, to contribute to the UK’s reputation as an attractive destination for global investment.
Key proposals set out in the consultation include:
- A revised and enhanced definition of stewardship that emphasises the need to create long-term sustainable value for clients and beneficiaries as a key outcome of good stewardship.
- A streamlined reporting process separating policy and activity disclosures to reduce reporting burdens.
- Targeted principles for different types of signatories and service providers, including for the first time, a dedicated Principle for proxy advisors.
- New guidance to support effective implementation and help signatories with the transition to the new reporting arrangements.
The consultation closes on 19 February 2025.