As the UK Stewardship Code Reporting season is in full swing, we wanted to help you get ready to collect all relevant information and make sure you are ready to successfully submit your reports! We know how overwhelming it can be to gather all engagement, voting data and case studies to adequately showcase your Stewardship efforts. This can become a daunting task for Stewardship teams to demonstrate all their work and give the full picture of engagement timelines and outcomes. This is why at Maanch we have put together a guide with steps to make sure you are ready to submit your Stewardship Code reports! First of all, we can have a look at the key updates made to the UK Stewardship Code. Afterwards, we will put forward best practices and key guidance for UK Stewardship Code reporting. Lastly, we will give an overview of how our Engagement Tracker platform can assist you with all your reporting needs.
Key Updates to the UK Stewardship Code:
The UK Stewardship Code is a cornerstone of responsible investment practices. Recently, the FRC announced five immediate changes to the Code significantly aimed at reducing the reporting burden for signatories. While these changes were confirmed ahead of a formal consultation, they are intended to provide prompt relief to firms as they prepare for the new Code, expected to take effect in 2026.
One of the notable updates involves the emphasis on collaborative investor engagement and escalation. The FRC’s approach here sparked mixed reactions, particularly concerning the need for clarity to ensure that these critical aspects are not downplayed in the revised Code. As the FRC prepares to release a consultation paper later this year, followed by the publication of the new Code in early 2025, several key areas are under review:
- Purpose: The FRC defines what effective stewardship looks like in practice and how reporting against the Code can support this.
- Principles: Giving consideration to what reporting will be necessary to fulfil the renewed purpose of the Code.
- Proxy Advisors: The FRC explores how the Code can enhance transparency in the activities of proxy advisors.
- Process: Making efforts to reduce the reporting burden for Code signatories, ensuring that the information provided is both useful and accessible.
- Positioning: Collaboration with other regulators, such as the Department for Work and Pensions (DWP), The Pensions Regulator (TPR), and the Financial Conduct Authority (FCA), will be crucial to avoid confusion and duplication in the implementation of the revised Code.
An updated Code, once published, will introduce a clear path to implementation, ensuring all signatories have ample time to adapt to any new changes. This forthcoming period presents a unique opportunity for engaging with the broader market community to refine and enhance stewardship practices further.
Key Guidance for Stewardship Reporting:
- Showcase Your Approach: Use your stewardship report as a canvas to illustrate your unique approach and the specific actions taken throughout the year. Remember, the Code values diversity in stewardship practices, allowing for flexibility in how you apply its principles. Clearly explain your philosophy and actions while adhering to the “apply and explain” principle. Don’t just meet criteria, demonstrate your commitment.
- Quality over Quantity: Focus on insightful details that address the Code’s principles. Acknowledge both successes and challenges for a balanced perspective. Aim to thoroughly address the underlying principles.
- Transparency is Key: Clearly define any unique stewardship terms used within your organisation for better reader understanding. Explain specific engagement processes or metrics. High-quality reporting transcends mere compliance.
Best Practices for Stewardship Reporting:
- Proportionate Reporting: Tailor the level of detail to different asset classes within your AUM. For example, private equity may require a different approach than publicly traded companies.
- Case Studies as Proof: Illustrate your stewardship approach with concrete case studies that showcase outcomes. Include a variety of studies, including ongoing engagements and longer-term goals. Highlighting challenges demonstrates your proactive approach. Ensure these case studies reflect the diversity and scope of your asset management practices.
- Distinguish Engagement and Monitoring: Clearly differentiate these activities within your report to avoid confusion. Monitoring is ongoing tracking, while engagement involves a more proactive dialogue with the company.
- Reporting on Indirect Investments: If you invest through third-party managers, ensure your report reflects this approach proportionately. Outline how you hold these managers accountable for integrating stewardship practices.
- Year-on-Year Progress: Demonstrate how your stewardship efforts have evolved over time. Highlight next steps in ongoing engagements and showcase how your approach is maturing. Use your report to document both the journey and the advancements in your stewardship practices.
- Focus on Stakeholders: Your report should not only comply with the Code but also be informative for stakeholders like clients and beneficiaries. Avoid technical jargon and maintain a professional tone. Consider your audience and tailor the report accordingly.
- Clarity and Concision: Strive for a clear and concise report. Utilise cross-referencing to minimise repetition and maintain a reasonable length. Bullet points, tables, and charts can enhance clarity.
Leveraging Technology for Stewardship:
By leveraging award winning tools like the Maanch Engagement Tracker, you can streamline the stewardship data capture and reporting process. This can deliver operational efficiency, mitigate risks, create competitive advantage by leveraging enhanced insights from your organisations Stewardship Data. This allows you to craft a high-quality document with confidence and effectively communicate your organisation’s commitment to responsible investing.
Our platform empowers you to:
- Effortlessly track and analyse portfolio engagements
- Enhance organisation-wide collaboration and transparency
- Extract customisable report in real-time
- Stay on top of evolving industry regulations
Our clients have used the platform to their advantage, to streamline and strengthen their reporting. One of our clients recently said: “…Maanch permits investment teams … to better track, escalate, monitor and report on direct engagements…while also increasing transparency across the business.” – Impact Advisory Board, Swiss Asset Manager.
Conclusion:
As the landscape of stewardship reporting continues to evolve, staying ahead of key updates and best practices is essential for success. The recent changes to the UK Stewardship Code provide a timely opportunity for organisations to rethink their reporting strategies, balancing transparency with efficiency. By focusing on a clear approach, leveraging case studies, and ensuring stakeholder engagement, firms can not only meet regulatory expectations but also demonstrate their genuine commitment to responsible investing.
Leveraging technology like Maanch’s Engagement Tracker can be a game-changer, simplifying data collection and reporting while enhancing overall organisational collaboration. With the right tools and guidance, your organisation will be well-prepared to submit comprehensive, insightful Stewardship Code reports that showcase your efforts and align with best practices.
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