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Feedback statement - UK Stewardship Code 2026
The FRC does not accept any liability to any party for any loss, damage or costs howsoever arising, whether directly or indirectly, whether in contract, tort or otherwise from any action or decision taken (or not taken) as a result of any person relying on or otherwise using this document or arising from any omission from it.
The Financial Reporting Council Limited 2025 The Financial Reporting Council Limited is a company limited by guarantee. Registered in England number 2486368. Registered Office: 13th Floor, 1 Harbour Exchange Square, London, E14 9GE
Executive summary
IThis statement sets out the Financial Reporting Council (FRC)'s revisions to the UK Stewardship Code (the Code). The revisions are the result of our consultation on the proposal to revise the Code, which ran from 11 November 2024 to 19 February 2025, and an extensive programme of stakeholder engagement.
IIWe undertook an extensive listening phase ahead of formal consultation, which informed the proposals put forward in the consultation paper. The formal consultation was supported by an extensive programme of engagement events, which reached over 1,500 stakeholders. Feedback received at the events was taken into consideration in the development of our response to this consultation, alongside analysis of written responses.
IIIWe received 182 written responses to this consultation. The breakdown of respondents is shown in Table 1. We have reviewed all responses and are grateful for the time and consideration that many of our stakeholders have given to our proposals.
IVThe Code establishes the core Principles of effective stewardship and sets a high standard of transparency for asset owners and asset managers, and for the service providers that support them. The Code is designed to offer the flexibility for signatories to apply the Principles in ways that are best tailored to their approach and activities. Becoming a signatory to the Code is voluntary and it does not create additional regulation. The Code is extensively used by both UK and global signatories.
VOur aim in revising the Code is to ensure it continues to drive effective stewardship by supporting high-quality disclosures, appropriately reflects developing stewardship practice and maintains its global standing, in a way that does not place undue reporting burdens on signatories. Key to this are the measures we have proposed to streamline the Code and reporting, while maintaining high quality disclosures. The success of the flexible nature of the Code to date is evident in the wide range of organisations that have successfully become signatories.
VIOur stakeholders place great value on the Code and are aligned with our goal of ensuring that its position as a highly effective and internationally recognised driver of high-quality stewardship is safeguarded.
VIIWe were encouraged to see a high degree of support for the updated Code and the flexible approach it offers. Many respondents highlighted the value of this approach. The high-level Principles allow their application across a range of assets and investment styles, reflecting the different ways signatories carry out their stewardship, and respondents welcomed retaining this approach.
VIIISome respondents expressed concern that in streamlining the Code and reducing reporting burden, the high bar the Code sets for the quality of disclosures, and the reputation it has internationally, should not be lost. We have listened carefully to these concerns, and to the thoughtful suggestions we have received to improve our proposals.
IXWe have made amendments to our original proposals in response, which are explained in this Feedback statement. We also received a number of suggestions on drafting the Code, therefore some additional minor changes have been made to the version we consulted on. The UK Stewardship Code 2026 is published on the FRC website.
XThis Code will apply from 1 January 2026 for reporting thereafter. First applications to the updated Code will be accepted in Spring 2026. The year 2026 will serve as a 'transition year' for the FRC to support existing signatories as they take up reporting to the updated Code, which is explained in more detail later in this Feedback statement.
Table 1: Overview of responses received
| Category of respondent | Percentage of responses |
|---|---|
| Asset managers | 35% |
| Asset owners | 21% |
| Service providers | 10% |
| Membership bodies | 18% |
| Corporates (membership bodies and individual) | 5% |
| Others | 11% |
Table 2: Stakeholder engagement
| Event | Number |
|---|---|
| FRC-hosted roundtable discussions | 12 |
| FRC-hosted webinars | 2 |
| External events | 32 |
Summary of responses
Definition
Initial proposals
1We consulted on an amended definition, accompanied by supporting language, as follows:
'Stewardship is the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries.'
Effective stewardship drives investors to take account of long-term risks and opportunities. This helps them to make well-informed investment decisions to deliver returns that meet the objectives of their clients and beneficiaries today, without compromising the ability to do so in the future. Stewardship that supports sustainable, long-term returns may lead to wider benefits for the economy, the environment and society.
The stewardship activities investors undertake will depend on their role in the investment chain, as well as their investment approach and types of assets. The purpose of the Stewardship Code is to provide transparency around the different approaches and activities that investors and their service providers undertake to steward assets in their care.
2The definition we consulted on aimed to remove any misinterpretation of wording in the 2020 Code. The 2020 Code stated that 'Stewardship is the responsible... oversight of capital... leading to sustainable benefits for the economy, environment and society'. Some stakeholders interpreted this to imply these should be standalone objectives that all signatories must demonstrate they have delivered. As stated in our consultation paper, while some signatories may incorporate these wider benefits into their investment objectives, it is for each signatory to determine their specific investment objectives.
Feedback received
3Overall, stakeholders were supportive of our aim in making changes to the definition but called for some amendments to strengthen our proposal. There were wide-ranging responses, from those expressing full support for our proposed changes to those who preferred the 2020 definition.
4Some respondents raised concerns about the use of the term 'sustainable value creation' (emphasis added) with some mindful of ensuring the Code, and their reporting against it, is consistent with careful and accurate use of specific terminology as set out by the Financial Conduct Authority's (FCA) Sustainable Disclosure Requirements (SDR).
5Some respondents suggested that the language of the definition could echo Section 172 of the Companies Act 2006 to better express how investors consider their duties. Section 172 states that company directors must consider factors such as 'the impact of the company's operations on the community and the environment' as part of delivering their primary duty to the success of the company and its members. Similarly, investors take into consideration a range of factors, including economic, environmental and social issues, as part of their ability to deliver returns and several respondents suggested that echoing this language may be helpful.
FRC response
6In response to the comprehensive and helpful feedback received from stakeholders, we have changed some of the language proposed, including replacing this sentence from the consultation version: 'Stewardship that supports sustainable, long-term returns may lead to wider benefits for the economy, the environment and society.'
7We have taken on board the suggestion raised by a wide range of stakeholders that the definition uses some of the language of Section 172 of the Companies Act with respect to consideration of the economy, the environment and society. We have incorporated wording that investors '[have] regard to the economy, the environment and society, upon which beneficiaries' interests depend' to demonstrate this as key to paying pensions over decades.
8The idea of sustainable value creation is supported by wording which states that effective stewardship supports investment today 'without compromising the ability to do so in the future'. Both we and the FCA do not consider that the use of the term 'sustainable' in the Code definition, and signatories' support of it, is in any conflict with the requirements of the SDR regime.
9Therefore, the updated definition following consultation is:
Stewardship is the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries.
Effective stewardship supports investors to make well-informed investment decisions to deliver returns that meet the objectives of their clients and beneficiaries today, without compromising the ability to do so in the future. In doing so, investors take account of long-term risks and opportunities, having regard to the economy, the environment and society, upon which beneficiaries' interests depend.
The stewardship activities investors undertake will depend on their role in the investment chain, as well as their investment approach and assets. Stewardship Code reporting provides transparency around the different approaches and activities that investors and their service providers undertake to steward assets in their care.
Structure of reporting
Initial proposals
10To reduce the burden of preparing reports, we consulted on more clearly separating the Policy and Context Disclosure (P&C Disclosure), which contains information that may not change much each year, and the annual Activities and Outcomes Report (A&O Report) which is more dynamic.
11We consulted on a draft of the Code that contained concise ‘how to report' prompts to be supported by guidance giving additional, non-prescriptive suggestions for information signatories may wish to include to demonstrate their application of the Principles.
12We also asked for feedback on the extent to which signatories should be able to reference publicly available external information as part of their Stewardship Code reporting.
Feedback received
13Most respondents were supportive of greater distinction between the P&C Disclosure and A&O Report. They were also broadly supportive of less frequent submission of the P&C Disclosure. Some raised that any requirement to submit the P&C Disclosure each year, even with minimal or no changes, would require resources to check and sign off. Others noted that they would prefer to continue to report on the P&C Disclosure and the A&O Report together.
14On the 'how to report' prompts and accompanying guidance, respondents generally agreed that they would reduce generic 'tick-box' reporting. Almost all those who commented on the sample guidance provided in the consultation document, said it was helpful. However, many respondents asked for the opportunity to provide input to the guidance.
15On cross-referencing to disclosures made elsewhere as part of Code reporting, some respondents welcomed the suggestion but added the proviso that the FRC would need a comprehensive policy on appropriate use. For example, which disclosures could be used and how. Several respondents said that they valued the Stewardship Report as a 'one-stop-shop' for reporting and that extensive use of cross-referencing would impact the readability of reports.
FRC response
16We will move forward as proposed with a structure of reporting that makes the P&C Disclosure and A&O Report more distinct.
17However, in response to feedback, we have amended our proposal, which would have required signatories to submit the P&C Disclosure each year irrespective of any changes, to instead require signatories to submit the P&C Disclosure every four years only. Signatories may choose to submit the P&C Disclosure annually alongside their A&O Report if this suits them best, however the requirement is for applicants to submit P&C Disclosure in their first application to the updated Code, and every four years thereafter only. Further information will be provided in the FRC website.
18After careful consideration of the feedback received on cross-referencing, we have decided that signatories must include all information necessary for the P&C Disclosure, and to demonstrate their application of the Principles within their A&O Report. Where applicants choose to make their P&C Disclosure and A&O Report separately, applicants are welcome to point to information in the P&C Disclosure from their A&O Report and vice versa.
19The P&C Disclosure and A&O Report may link to more detailed information outside of that provided to the FRC, but this will not form part of the FRC's assessment. We believe this is a proportionate way to enable signatories to provide further information that supports their report, while ensuring the comprehensive nature of stewardship reporting, which is highly valued in the market, is retained.
20We will proceed with the more flexible ‘how to report' prompts for the Principles of the A&O Report, and separate reporting guidance. Since the P&C Disclosure provides the necessary contextual and factual information for the A&O Report, it is supported by 'disclosure requirements'.
21We have published the reporting guidance along with the Code, initially in draft form on the FRC website. We are inviting interested stakeholders to send comments and suggestions on the guidance working paper over the summer months. This is not a formal consultation but offers the opportunity to provide feedback for the FRC to consider as it is finalised. The guidance will be updated and finalised shortly thereafter.
Structure of the Code
Initial proposals
22We consulted on streamlining Principles 9, 10 and 11 of the 2020 Code, which deal with engagement, collaboration and escalation respectively, into one engagement Principle (Principle 3) on the basis that collaboration and escalation should not be seen as ends in, and of, themselves, but as part of a range of tools for signatories' effective stewardship. Accordingly, we integrated collaboration into the ‘how to report' prompts for Principle 3, (Signatories engage to maintain or enhance the value of assets) and escalation into the 'how to report' prompts for Principles 2, 3, 4 and 5 (Signatories identify and respond to market-wide and systemic risks to promote well-functioning financial markets, Signatories engage to maintain or enhance the value of assets, Signatories actively exercise their rights and responsibilities, and Signatories integrate stewardship considerations into their selection and oversight of external managers). This is also supported by new guidance for the Code.
23Recognising those managing assets directly and those investing through an external manager have different rights, responsibilities and influence within the investment chain, we consulted on whether the Principles should mirror this. We asked whether Principle 3, (Signatories engage to maintain or enhance the value of assets) and Principle 4 (Signatories actively exercise their rights and responsibilities) should apply primarily to those who manage assets directly. We also asked whether Principle 5 (Signatories integrate stewardship considerations into their selection and oversight of external managers) should apply primarily to those who use external managers.
Feedback received
24The majority of respondents were supportive of the proposal to streamline the aspects of engagement into one Principle and to include prompts on collaboration and escalation across the other Principles of the Code. Some respondents expressed concern that this move might be interpreted as reducing emphasis on collaboration and escalation and their importance as part of effective stewardship.
25There was strong support for restructuring the Principles to help signatories report more accurately on their stewardship approach, whether they manage assets directly or through an external manager. However, respondents expressed confusion about how this would work in practice. A number of asset owners questioned whether the proposal, as presented in the consultation document, implied that they should not undertake stewardship activities directly, or that they would be unable to report on these activities if they did. They also wanted to ensure that this would not limit their ability to request case studies from asset managers to use in their reporting.
FRC response
26We have combined Principles 9, 10 and 11 of the 2020 Code as proposed in our consultation. Collaboration and escalation remain important tools of stewardship and signatories should continue to report on these aspects of their stewardship, as reflected in the 'how to report' prompts and guidance. We know from our reviews of reporting that they are used by signatories as part of their overall approach to stewardship where appropriate.
27We are also aware that not every signatory will have the opportunity to play an active role in a collaborative engagement or escalate an ongoing engagement every year, and that successful stewardship outcomes may only be delivered after sustained engagement over several years. To reinforce the importance of both collaborative engagement and escalation, the guidance, which accompanies the A&O Report, refers to both tools throughout and includes suggestions of where signatories might employ and report on them.
28We will proceed with targeted Principles aimed at those managing assets directly and those who invest through external managers. However, in response to feedback from respondents, we have reviewed our messaging, both in the introduction to the Code and in the guidance, to emphasise that signatories report on the Principle(s) that correspond to their operations and the stewardship activities they undertake. Guidance for Principle 5 (Signatories integrate stewardship considerations into their selection and oversight of external managers) includes the suggestion that signatories include case studies of engagements undertaken on their behalf.
Initial proposals
29To produce more insightful reporting from service providers on their specific role in the investment chain, we proposed updating the Service Provider Code to introduce Principles applied specifically by proxy advisors and investment consultants. Service providers that have sought to become signatories to the Code to date generally fit into one of these categories.
Feedback received
30We received broad support for the new Service Provider Principles. However, several respondents felt that restricting the Principles to proxy advisors and investment consultants missed the important role also played by engagement service providers.
31Some respondents felt that Principle 4, (Investment consultants identify and respond to market-wide and systemic risks to support client's stewardship) should also apply to proxy advisors.
32Several respondents indicated that Principle 3 overlapped with Principle 1 (i.e. Investment consultants integrate stewardship considerations in their advice to clients and Signatories communicate with clients to understand their objectives and deliver services to support their stewardship).
FRC response
33We will proceed with the introduction of targeted Principles for proxy advisors and investment consultants. On proxy advisors in particular, some respondents suggested that more prescriptive requirements should be included regarding their operations. These go beyond the remit of the FRC and the Code, and we have maintained the specificity of the Principle dedicated to proxy advisors' activities as proposed, as the FRC is not the regulator of proxy advisors. We will also include an additional Principle specifically for engagement service providers (Engagement service providers engage on behalf of their clients to maintain or enhance the value of assets).
34Given the feedback on the overlap between Principles 1 and 3 for investment consultants, we have brought these together in the finalised Code. As a result, Principle 1 applies to all service providers, while Principle 2 applies to proxy advisors. Principle 3 applies to investment consultants and Principle 4 applies to engagement service providers.
35Having given due consideration to the feedback that called for Principle 4 (Investment consultants identify and respond to market-wide and systemic risks to support clients' stewardship) to also apply to proxy advisors, we have decided that it should continue to be solely for investment consultants. This is due to the differing approaches investment consultants and proxy advisors take when advising their clients on these risks. It would be difficult to capture the depth of reporting necessary from investment consultants while making the Principle applicable to all. Instead, the guidance to the Proxy Advisor Principle in the Service Provider Code suggests that proxy advisors discuss how they have taken market-wide risks into account in the research that supports their advisory service.
Timeline
Initial proposals
36We consulted on publishing the updated Code in the first half of 2025, with an effective date of 1 January 2026. The first reports to the updated Code would be submitted to the FRC the same year.
Feedback received
37Respondents were overwhelmingly supportive of the proposed timeline. However, in their comments, a number suggested that, given the commercial sensitivity of signatory status, they would appreciate the opportunity to have feedback on their initial applications to the updated Code, a longer period to submit their reports, or some form of transitional arrangement.
FRC response
38While we believe that the proposed updates to the Code are evolutionary and not revolutionary, we are keen to encourage signatories to move away from 'tick-box' reporting, experiment with the new format and use it as a platform to explain their individual approach to stewardship.
39We have therefore decided that 2026 will serve as a 'transition year' for existing signatories. These organisations will remain on the signatory list following their application in 2026. This will allow time for signatories to best determine how they will report under the revised Code.
40Existing signatories due to submit a renewal application in 2026, will need to submit both their P&C Disclosure and the A&O Report, whether separate or combined, to the FRC in their usual reporting window. More information on application deadlines is available on the FRC website.
41As an improvement regulator, we will focus our efforts in 2026 on upholding high-quality reporting and supporting signatories to meet the continued high standard of the Code. The FRC will use the transition year to give feedback on this reporting through different channels including publications, webinars, podcasts and individual engagement with signatories as appropriate.
42Organisations that did not have signatory status to the Code from a successful application in 2025, will be subject to an assessment process to determine whether they are granted signatory status to the 2026 Code.
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