The Financial Reporting Council will make five changes to the UK stewardship code application process.
The body said it would reduce the reporting burden on the signatories to the code, which aims to safeguard the interests of the public and pension holders by promoting transparency and accountability.
As of February there were 273 signatories to the code, representing £43.3tn in assets under management.
Today (July 22) the FRC announced revisions to application process and committed to five priority areas of review as it continues its revision of the code.
Coming into force on October 31, immediate changes will be:
- Remove the requirement to annually disclose all context reporting expectations, except for new reports or material changes.
- Remove the requirement to annually disclose against ’activity‘ and ’outcome' reporting expectations for some principles.
- Explicitly allow use of content from previous reporting and cross-referencing of such reports.
- Set clear expectations of what is considered an ‘outcome’ for stewardship purposes.
- Emphasise the ability to exercise reporting against principles 10, collaborative engagement, and 11 escalation ‘where necessary’.
It carried out engagement with more than 1,500 stakeholders during early 2024.
CEO Richard Moriarty said: "The UK Stewardship Code is an important driver of the UK investment stewardship eco-system, safeguarding the interests of all savers and pension holders by promoting the transparency and accountability of investors stewardship activities and decisions, as well as being adopted by global investors.
"However, it is right that we continue to challenge ourselves to ensure that the code is operating in a way that is proportionate and minimises reporting burdens on signatories and supports the growth and effectiveness of the UK capital markets."
The FRC will focus on five themes in a new phase of revision to the code.
This will look at the code's purpose, principles, proxy advises, process and positioning.
Moriarty added: "The next stages of the review announced today follow extensive engagement with our stakeholders and are designed to encourage the alignment of the code with the UK’s well-deserved reputation as an attractive investment destination for global capital.
"It is our ambition that pension holders and savers better understand contributing to their pensions and savings to how stewardship activity and decisions are undertaken to their benefit, by the asset managers and owners investing on their behalf.”
The FRC will launch a formal public consultation on the code later this year and is set to hold further engagement throughout August and September.
tara.o'connor@ft.com
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