UK Stewardship Code 2020 review
Background
In February 2024, the Financial Reporting Council (FRC) launched a review of the 2020 UK Stewardship Code (the Code) to ensure it supports growth and the UK's competitiveness.
The Code was last revised in 2019 and, following feedback received during the 2023 consultation on the UK Corporate Governance Code, it became apparent that now was the right time for a fundamental review of the Code.
The review will focus on, amongst other topics, the extent to which the Code:
- supports long term value creation through appropriate investor-issuer engagement that drives issuers’ prospects and performance;
- creates reporting burdens on issuers as well as Code signatories; and
- has led to any unintended consequences, such as short-termism in targets and outlook for issuers.
The review will be undertaken in three phases:
- Phase 1 - targeted outreach, focussed around the four main groups affected by the Code’s principles and application – issuers, asset managers, asset owners and service providers, on the topics outlined above.
- Phase 2 - public consultation which is planned to launch after the 2024 AGM voting season during the summer.
- Phase 3 - publication of the revised Code which is expected in early 2025.
The current Code will operate as usual throughout the review process, with existing signatories required to submit their renewal application to remain a signatory. Once the revised Code is updated, the FRC will set out a clear implementation pathway and ensure the effective date allows current signatories sufficient time to respond to any changes.
Status of the project
The FRC launched the review in February 2024.