FRC’s latest Stewardship Code guidance

The Financial Reporting Council (FRC) has updated the list of signatories to the UK Stewardship Code 2020, now totalling 273, with assets under management (AUM) reaching £43.3 trillion. This marks continued growth in the commitment to responsible investment and stewardship practices across the UK.

Best practices in responsible investment

The UK Stewardship Code 2020 offers a voluntary, best-practice framework for asset managers, owners, and their service providers. It aims to improve market transparency by requiring signatories to disclose detailed information about their stewardship actions, benefiting end beneficiaries and savers alike.

In anticipation of a review and consultation on the Code in 2024, the FRC has reiterated that the current guidelines and reporting expectations for signatories remain in effect. Signatories are expected to submit their annual stewardship reports as per their regular deadlines next year. This forthcoming review signifies the FRC’s commitment to continually refine and enhance the effectiveness of the Stewardship Code in promoting responsible investment practices.

Central to the Code’s ethos is its “apply and explain” approach, which allows organisations to demonstrate their adherence to the Code’s Principles in a manner that aligns with their unique business models and strategies. This flexible reporting framework encourages entities to not only describe their stewardship activities but also to provide insights into the outcomes and impact of their efforts.

Navigating stewardship reporting with new guidance

For organisations seeking to navigate the complexities of stewardship reporting, the FRC has recently offered valuable guidance. This includes emphasising the importance of distinguishing between monitoring and engagement, ensuring proportionality in reporting across asset classes and geographies, and highlighting representative case studies that showcase the depth and breadth of an organisation’s stewardship activities. The FRC encourages signatories to present a fair, balanced, and understandable report that reflects both the challenges and achievements experienced over the reporting period.

SI Engage: Supporting responsible stewardship reporting

SI Engage offers crucial support for asset managers and investment teams focused on overseeing their portfolio companies with excellence in stewardship reporting and practice. Leveraging a profound grasp of the UK Stewardship Code and effective stewardship principles, SI Engage delivers a comprehensive array of services tailored to assist these teams in formulating and executing strong stewardship strategies. This support extends to aiding in the creation of thorough and transparent stewardship reports that not only adhere to the FRC’s guidelines but also effectively articulate an investment team’s dedication to responsible investment.

Looking forward to the FRC’s planned refinements to the Stewardship Code in 2024, SI Engage is well-equipped to offer support to signatories (it already does so), and potential applicants. Through its strategic insights and customised solutions, SI Engage empowers asset managers and investment teams to showcase their commitment to stewardship, thereby fostering a financial ecosystem characterised by increased transparency, accountability, and sustainability.

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