FRC publishes list of Stewardship Code signatories

The Financial Reporting Council (FRC) has published a list of successful signatories to the UK Stewardship Code, with a third of applicants missing out.

The code is designed to improve stewardship on behalf of UK savers and pensioners by setting a ‘high bar’ for investors to meet.

The FRC stated that the successful applicants had demonstrated their commitment to stewardship, which is “very important” as the UK emerges from the Covid-19 pandemic and in addressing environmental and social challenges.

It received 189 applications, comprising 147 asset managers, 28 asset owners and 14 service providers, with 125 making the list.

Therefore, around a third (64) of applicants were unsuccessful.

The FRC stated that it was pleased to see investors better integrating stewardship and environmental, social and governance (ESG) factors into their investment decision making, reporting on asset classes other than listed equity, showing strong reporting on underpinning governance activities and identifying the outcomes of their efforts.

However, some organisations that were unsuccessful in their applications were criticised for relying too heavily on policy statements instead of addressing all the code principles or sufficiently evidencing their approaches.

Other areas of weakness that were identified were reporting on the approaches to review and assurance, monitoring service providers, and a lack of focus on identifying areas for improvement.

The FRC urged unsuccessful applicants to consider the individual feedback it has provided along with the upcoming annual review of reporting, which will be published in November.

Those that were unsuccessful can reapply in future publication windows on 31 October 2021 and 30 April 2022.

Commenting on the announcement, FRC CEO, Sir Jon Thompson, said: “Congratulations to all those who have become signatories to the UK Stewardship Code, which is recognised globally as a best-practice benchmark in investment stewardship.

“The publication of this list delivers on the recommendations of The Kingman Review in respect of stewardship and demonstrates our continued commitment to serve the public interest as we transform to becoming a new regulator.

“We are proud of our robust approach to assessment and encourage those who have been unsuccessful to reflect on our feedback and apply again in future.”

Successful pension scheme applicants include the BT Pension Scheme, Nest and the Universities Superannuation Scheme, alongside a host of Local Government Pension Schemes, pension providers and consultancies.

Nest head of responsible investment, Diandra Soobiah, commented: “We’re delighted to be recognised as signatories to the FRC’s new UK Stewardship Code. At Nest, we have been integrating ESG factors into our investment approach and undertaking stewardship right from the beginning, from manager selection to engaging directly with the companies we invest in.

“Stewardship is key to Nest’s responsible investment approach and we’re pleased to see our engagement strategy achieving good outcomes, encouraging a global bank and an oil and gas company to set net zero and Paris Agreement-aligned emissions targets.

“We’re committed to sharing information on our approach and showing the outcomes achieved, to help drive best practice and engaged stewardship across the pensions industry.”

Scottish Widows head of pension investments, Maria Nazarova-Doyle, added: “The new UK Stewardship Code has raised the bar in terms of what is expected from asset owners and our inclusion as one of the first signatories recognises the great strides we’ve made over the last year in developing our active stewardship strategy.

“Whilst we’re incredibly pleased to have met the challenging stewardship standards of the 2020 code, we recognise this is just the beginning and there’s still work to be done as we look to continue to evolve our focus on stewardship over the long term.”

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