In August 2023, the Financial Reporting Council (FRC) achieved a significant milestone in the world of stewardship, as they announced a record number of successful signatories to the UK Stewardship Code, signalling a shift towards responsible investment practices. There are now 277 signatories to the Code representing a mix of asset managers, asset owners, service providers, and organisations, with £44.6 trillion in assets under management (AUM).
Latest UK Stewardship Code 2020 signatory list here.
Introduction
In 2010, FRC introduced the UK Stewardship Code to promote transparency and improve the quality of communication between institutional investors and the companies they invest in. Over the years, FRC has made significant changes to the Code in response to market dynamics and expectations. These changes have emphasised the importance of reporting and disclosure, including the need for investors to report on their voting activities (revised in 2012). In 2019, a major overhaul was conducted on the Code to put more weight on environmental, social, and governance (ESG) factors. The Code introduced a set of ‘apply and explain’ principles for asset managers and owners, allowing them to meet the expectations that are more aligned with their business models.
The Influence
FRC’s Stewardship Code has become a cornerstone for responsible investment. It has had a significant impact on the investment industry in the UK, encouraging greater transparency, promoting responsible investing, fostering active engagement, and aligning the interests of institutional investors with the companies they invest in. The recent surge in commitments from asset managers reflects the growing awareness for responsible stewardship.
“Environmental, particularly climate change, and social factors, in addition to governance, have become material issues for investors to consider when making investment decisions and undertaking stewardship” – UK Stewardship Code 2020
Key features of the UK Stewardship Code 2020
1. Focus on Outcomes: The new Code emphasises the outcomes of stewardship activities rather than just policies and processes.
2. ESG Integration: ESG factors are now incorporated into the Code, making it important for investors to consider their impact on society and the environment.
3. Long-term View: The Code encourages a long-term investment view that aligns with the needs of clients and beneficiaries.
4. Expanded Scope: The Code applies not just to equity investments but to all asset classes including fixed income, private equity, and infrastructure investment.
5. Transparency: Asset managers are expected to disclose their stewardship activities and their outcomes, providing more transparency and accountability.
For asset managers, the UK Stewardship Code 2020 is more than just a box to tick. It provides a competitive edge by signaling a commitment to quality stewardship, crucial in a competitive market. Compliance also aligns with potential future regulatory requirements, especially those concerning responsible investment and ESG considerations. Moreover, effective stewardship contributes to ESG risk identification and management, ultimately improving long-term investment performance.
Maanch Engagement Tracker is revolutionising stewardship
At Maanch, we’ve long recognised the need for a comprehensive tool to aid asset managers in their stewardship endeavours. Our cutting-edge SaaS solution is designed to streamline and enhance these efforts, offering features that set us apart in the market.
1. Streamline data by bringing your engagement data (including controversies) and voting data together, reducing your time and effort.
2. Foster collaboration and communication with real-time feedback and reporting mechanisms enabling more product relationships with your investee companies.
3. Meet regulatory compliance by staying ahead of the curve with features that assist in documentation aligning with UK Stewardship Code 2020 principles.
4. Harness the momentum of FRC’s commitment towards responsible investment by integrating the Maanch Engagement Tracker with your internal tools to further excel in your stewardship responsibilities.
Maanch Engagement Tracker gives us a systematic and efficient way of recording and processing the data we collect from our bilateral engagement. It allows the industry to deliver much clearer engagement attributions to clients. – Nicollas Faller (Co–CEO Asset Management, UBP)
Why choose the Maanch Engagement Tracker?
In a financial landscape increasingly focused on responsible stewardship, asset managers must adapt and thrive. By embracing our innovative SaaS solution, asset managers can not only meet their stewardship responsibilities but also play a vital role in shaping a more responsible and sustainable future. With over £250 billion AUM already onboard, Maanch Engagement Tracker is set to bring this impactful change.
Book a demo to see our stewardship platform in action.
