Statement: FRC policy update - launch of the UK Stewardship Code 2020 review

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Published: 27 February 2024

As stated in the FRC’s Policy Statement on November 7, 2023, and now that the revised Corporate Governance Code has been published, the FRC is undertaking a fundamental review of the UK Stewardship Code 2020 (the Code) to ensure it supports growth and the UK’s competitiveness. As part of the review process, we are seeking views from all stakeholders on whether the Code, in its current format, is being used by asset managers, asset owners and other signatories to the Code in a manner that drives better stewardship outcomes from engagement with issuers across all asset classes.

The Code is an important part of the investment stewardship eco-system in the UK, safeguarding the interests of the public and pension holders by promoting transparency and accountability, and is also adopted by global investors. The principles are designed to encourage alignment of incentives through the investment chain for the benefit of the ultimate investment beneficiary and contributes to the UK’s well-deserved reputation as an attractive investment destination for global capital.

The Code was last revised in 2019 and a revision due to take place in 2024. Following feedback received during the 2023 consultation to the Corporate Governance Code, it’s clear that now is an opportune moment for a fundamental review process to ensure that that the principles of the Code are still driving the right stewardship outcomes for investors while not unduly contributing to reporting burdens.

The review will focus on, amongst other topics, the extent to which the Code:

  • supports long term value creation through appropriate investor-issuer engagement that drives issuers’ prospects and performance
  • creates reporting burdens on issuers as well as Code signatories and
  • has led to any unintended consequences, such as short-termism in targets and outlook for issuers.

The review will be undertaken in three phases:

  • The first phase will be a targeted outreach, focussed around the four main groups affected by the Code’s principles and application – issuers, asset managers, asset owners and service providers, on the topics outlined above. The FRC expects these outreach discussions to uncover a range of issues that will inform the second phase.
  • The second phase will be a public consultation, which is planned to launch after the 2024 AGM voting season during the summer months.
  • The revised Code will be most likely published in early 2025.

We recognise the need to engage closely with other regulators who also have an interest in the operation of this Code. The Financial Conduct Authority (FCA) sets the regulatory framework for stewardship by asset managers and asset owners through its rulebook, to support its objective of making capital markets work well. The Department for Work and Pensions (DWP) and The Pensions Regulator (TPR) set regulatory requirements on Pension Schemes and their Trustees and encourage good stewardship recognising that it is in the best interests of scheme members.

There are currently 273 signatories to the Code, representing £43.3 trillion assets under management. This includes 188 asset managers, 66 asset owners and 19 service providers. Current signatories span single-strategy boutique asset managers to large global asset managers with active and passive funds.

Approximately one third of the total assets under management of signatories are invested in both UK and global listed equity and two thirds in other asset classes. Other assets include fixed income, private equity, real estate and infrastructure and others. The significant international interest in the Code is reflected by the two fifths of signatories who are head-quartered outside of the UK.

The current Code will operate as usual throughout the review process, with existing signatories required to submit their renewal application to remain a signatory. Once the revised Code is updated, the FRC will set out a clear implementation pathway and ensure the effective date allows current signatories sufficient time to respond to any changes.

Richard Moriarty


Financial Reporting Council

Find out more
Name About the UK Stewardship Code 2020
Publication date 28 February 2024
Type Information sheet
Format PDF, 367.0 KB