The Financial Reporting Council (FRC) has launched a consultation on proposed revisions to the UK Stewardship Code, including changes to amend the definition of stewardship and reduce industry reporting requirements.

The FRC said that the draft revised code should continue to drive effective stewardship by supporting high quality disclosures and appropriately reflects developing stewardship practice.

It also reassured industry that proposed changes do not place onerous reporting burdens on signatories.

In particular, the FRC has proposed a change in the code's 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.

It also suggested streamlining the principles with more concise reporting prompts to help concentrate reporting on the most insightful areas of reporting, while reducing the volume.

In addition to this, the FRC proposed tailoring the service provider pricniples to include some that are dedicated to proxy advisors and investment consultants respectively.

It has also, for the first time, issued guidance to support signatories in demonstrating how they have implemented stewardship throughout the year.

The FRC is also looking at testing whether the updated code could better enable signatories to use cross-referencing to disclosures they make to meet other requirements or frameworks to support their reporting against the code.

TPT Investment Management (TPTIM) responsible investment manager, Inês Cunha Pereira, welcomed the the streamlining of reporting requirements, suggesting that this will reduce the administrative burden for signatories while maintaining transparency.

However, she warned that the omission of explicit references to broader societal benefits in the economy, environment, and society from the new definition narrows its scope, potentially reducing the code’s relevance to systemic challenges such as climate change, biodiversity loss, and societal inequality.

"These are issues that may directly impact long-term financial outcomes," Cunha Pereira added, suggesting that the 2020 code’s broader framing acknowledged the interconnected nature of financial, environmental, and social sustainability, encouraging a holistic approach.

"Many investors, including TPTIM, recognise that long-term financial value cannot be disentangled from systemic risks," she said. "As such, we would suggest retaining language that acknowledges the interconnected nature of financial and broader sustainability outcomes.”

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