An updated UK Stewardship Code looks set to lessen the reporting burden on its signatories while encouraging best practice stewardship.
Launched in 2010, the Code was created to improve the quantity and quality of engagement between companies and investors. It was updated significantly in 2020 to shift its focus away from policies and procedures to driving quality stewardship outcomes.
The Code is voluntary. Asset owners, asset managers and service providers, such as investment consultants, can report against the Code. Asset owners and managers adhere to 12 principles, while service providers report against a separate six principles.
A consultation on updating the Code ran from November 11 2024 to February 19 2025. Its proposed amendments include changing the definition of stewardship “to support more transparent conversations between actors in the investment chain about their investment beliefs and objectives, while being sufficiently broad to be applicable to signatories across the investment chain and different asset classes”.
The FRC has also proposed streamlining the Code’s principles to focus reporting on its most useful areas. It will also help reduce the volume of reporting. It is also issuing guidance to help signatories show how they have implemented stewardship.
The Stewardship Code has encouraged the use of technology:
Technology has emerged as a central theme in stewardship. Its role was highlighted in a 2022 research study commissioned by the FRC into the influence of the Code on practice and reporting.
While asset managers and owners were positive about the Code, smaller asset managers and owners said that they were overwhelmed by the Code’s reporting burden. They warned that they were at risk of spending more time on reporting and documentation than actually conducting engagement.
Interviews also revealed that the Code has encouraged some signatories “to collect and manage data in a more centralised manner, to use new technologies and outputs, and to broaden the types of data being reported”.
Some interviewees, meanwhile, told the study that they use technology to streamline their reporting against multiple frameworks. For example: the Department for Work and Pensions-mandated Implementation Statements. Data quality problems, the time taken to produce reports and technology featured among the main barriers to stewardship reporting according to respondents.
Interim measures were introduced in July 2024 to lower signatories’ annual reporting requirements.
“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,” said FRC chief executive officer Richard Moriarty at the time.
The FRC’s recent consultation on the Code recognised that “resourcing and governance of stewardship is fundamental to an organisation’s ability to deliver on its stewardship priorities”. It asked consultation respondents to disclose any systems or technology that they use to conduct stewardship.
Moving away from box-ticking:
The updated Code is expected to be published later this year. With the first reporting cycle due to commence in 2026.
The Code signals a shift from box-ticking compliance to authentic, high-impact engagement. Investors who see stewardship solely as a reporting requirement will struggle with the updated Code. Those that build the Code into their investment decisions will gain a competitive edge.
Maanch views technology as an essential tool for signatories to the Code. Technology such as the Maanch Engagement Tracker helps asset managers to streamline their reporting, track the effectiveness of their engagements, and turn reporting obligations into opportunities.
Artificial intelligence and automation are already playing a significant role in gathering and organising critical stewardship data.
By leveraging digital tools, investors can move beyond simply trying to achieve minimum levels of compliance with the Code. Instead, they can focus on demonstrating leadership in stewardship.
If you would like a demonstration of the Maanch Engagement Tracker; please book an introduction with our founder and chief executive officer Darshita Gillies via this link.
