The Financial Reporting Council (FRC) announced significant revisions Monday to the UK Stewardship Code application process. The changes, according to a news release, are intended to ensure that the Code is supporting UK capital markets, reducing reporting burdens, and driving better stewardship outcomes.
The changes, according to the news release, will:
- 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; and
- Emphasise the ability to exercise reporting against Principle 10, regarding signatories participating in collaborative engagement to influence issuers, and Principle 11, regarding signatories escalating stewardship activities to influence issuers, “where necessary”.
The reporting changes to the Code will apply for the next application window (31 October 2024), and the FRC will inform signatories how the changes affect them.
After engagement with more than 1,500 stakeholders earlier this year, the FRC named five themes for focus in the Code’s revision: purpose, principles, proxy advisers, process, and positioning.
The FRC also updated the list of Code signatories. There are now 289 signatories, representing £50.3 trillion in assets under management (AUM), an increase from the previous 273 signatories and £43.3 trillion AUM.
The FRC on Wednesday will offer a webinar delving into the changes and exploring why the new focus areas are important for supporting better stewardship outcomes and UK capital markets.
— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.
