UK Stewardship Code
The UK Stewardship Code 2020 is a substantial and ambitious revision to the 2012 edition of the Code which takes effect from 1 January 2020.
The new Code sets high expectations of those investing money on behalf of UK savers and pensioners. In particular, the new Code establishes a clear benchmark for stewardship as the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.
There is a strong focus on the activities and outcomes of stewardship, not just policy statements. There are new expectations about how investment and stewardship is integrated, including environmental, social and governance (ESG) issues. The Code asks investors to explain how they have exercised stewardship across asset classes. For example, for listed equity, fixed income, private equity, infrastructure investments, and in investments outside the UK.
The Code consists of 12 Principles for asset managers and asset owners, and six Principles for service providers. These are supported by reporting expectations which indicate the information that should be publicly reported in order to become a signatory.
Organisations wanting to become signatories to the Code will be required to produce an annual Stewardship Report explaining how they have applied the Code in the previous 12 months. The FRC will evaluate Reports against our assessment framework, and those that meet the reporting expectations will be listed as signatories to the Code. To be included in the first list of signatories, organisations must submit a final report to the FRC by 31 March 2021.
The Stewardship Code was revised following a consultation which closed on 29 March 2019. To find out more about the consultation and read the Feedback Statement, please click here.
In January 2019, jointly with the Financial Conduct Authority (FCA), we published a Discussion Paper, Building a regulatory framework for effective stewardship (DP 19/1)
. The FCA has published a Feedback Statement
in response to the feedback we received, and within the scope of the FCA’s regulatory responsibilities.
The FRC has coordinated closely with the FCA to consider the responses to the Discussion Paper and the appropriate interaction between the Code and regulatory requirements to encourage effective stewardship.
UK Stewardship Code 2012
The FRC will accept applications to the UK Stewardship Code 2012 until 31 December 2019. Organisations will remain signatories to the UK Stewardship Code until the first list of signatories to the 2020 Code is published. Existing signatories to the Code will need to submit a Stewardship Report that meets the FRC’s reporting expectations in the 2020 Code, in order to be listed as signatories to the UK Stewardship Code. At this point, the list of 2012 signatories will be archived. To find out more about the 2012 Code and see a list of current signatories, please click here.