05 Oct 2020
The UK Stewardship Code 2020 published by the Financial Reporting Council (FRC) in October last year represented a significant overhaul of the original 2012 Code as it seeks to reflect and address growing expectations in relation to the stewardship practices of the investment community (including asset owners, asset managers and service providers)[1]. Organisations applying the Code are required to submit an annual “Stewardship Report” which sets out how they have applied the Code in the preceding 12 months. This serves as the means by which the FRC assesses whether an organisation has met its expectations to become a signatory and thereafter to remain a signatory.
On 30 September 2020, the FRC published its Review of Early Reporting to the Stewardship Code. The Review analyses 21 reports which have been submitted early and looks at how well prospective signatories are addressing the standards set out in the Code. As stated on its website, the purpose of the Review is “to support prospective signatories” in meeting the new reporting requirements under the Stewardship Code.
On the whole, the FRC noted that the Review “revealed good examples and case studies evidencing stewardship activity, with some reports identifying outcomes well, particularly in relation to engagement”, although they also highlighted areas for improvement. Some points to note:
There was a reminder on timings as well. Asset managers who wish to be included in the initial list of signatories must report by 31 March 2021 (for those applying the Code for the year beginning 1 January 2020). Asset owners have until 30 April 2021. Organisations looking for feedback on their draft reports from the FRC should advise the FRC of this and submit them by no later than 30 November 2020.
[1] Further details of the Stewardship Code can be found in our client briefing: The UK Stewardship Code 2020: Some key points (October 2019)
This material is provided for general information only. It does not constitute legal or other professional advice.
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