IIGCC has formally responded to the Financial Reporting Council's (FRC) consultation on its proposed revisions to the UK Stewardship Code.
Our full response, developed with consultation from members, was delivered earlier this week and is available to read below. In it we zoomed in on several key areas of importance for investors.
Firstly, with regard to the FRC's revised definition of stewardship, we do not support the proposed revisions without enhanced supporting language which makes explicit the links between sustainable long-term value and climate change, among other considerations. Without those additions, we recommend adopting an alternative definition.
We support proposals to streamline disclosure requirements, recommending ways to enhance the impact of these updates. Unduly extensive reporting requirements may divert resources from the impactful work of stewardship. For the Code to support the creation of an effective market for stewardship, reporting needs to be both streamlined for disclosure and for the reduction of a 'reading burden' to make reports digestible and decision useful.
We also recommend minor amendments to Principle 3 on stewardship integration, and Principle 4 on market-wide and systemic risk.
The UK Stewardship Code promotes improved transparency, disclosure and accountability in the stewardship eco-system. The Code allows investor reporting to be assessed by the FRC as an independent and impartial body to maintain standards. It has a strong reputation both domestically and internationally for supporting high-quality stewardship. - Financial Reporting Council
View the consultation document
Stewardship is at the heart of our drive to reduce real economy emissions. Stewardship and engagement across asset classes is fundamental to achieving real-economy emission reductions and mitigating the risks presented by climate change. It is a key feature of the Net Zero Investment Framework (NZIF), the most commonly used methodology for investors setting net zero targets. The FRC’s UK Stewardship Code has long been a world leading exemplar. We're pleased to have this consultation as an opportunity to continue to set a high benchmark for stewardship.
Thank you to all from the IIGCC Stewardship Code Working Group and beyond who contributed to this response.