On the go: More than 60 applicants to the revamped UK Stewardship Code did not make the final list of companies complying with high standards of stewardship for those investing money on behalf of UK savers and pensioners.
The Financial Reporting Council published on Monday a list of successful signatories to the UK Stewardship Code, following a revamp that imposed tougher reporting requirements on investors.
From 189 applications received by the FRC — which included 147 asset managers, 28 asset owners including pension funds and insurers, and 14 service providers including data and information providers and investment consultants — two-thirds (125 organisation) made the final list.
According to the regulator, the unsuccessful applicants commonly did not address all of the principles or sufficiently evidence their approach, instead relying too heavily on policy statements.
Other areas of weakness included reporting on the approaches to review and assurance, and monitoring service providers, the FRC said, adding that it would also like to see more focus on identifying areas for improvement.
The FRC is encouraging unsuccessful applicants to consider the individual feedback provided along with the upcoming annual review of reporting to be published in November, and to reapply in the next windows, which will occur in October 2021 April 2022.
The list of signatories includes schemes such as the BT Pension Scheme, Universities Superannuation Scheme, and several Local Government Pension Scheme funds.
The FRC stated that investors have improved the integration of stewardship, and environmental, social and governance factors into their investment decision-making, reporting on asset classes other than listed equity and identifying the outcomes of their efforts.
Published in late 2019, the new Stewardship Code comprises “apply and explain” principles for asset managers and asset owners, and a separate set of principles for service providers that are higher than the minimum UK regulatory requirements.
Sir Jon Thompson, chief executive at the FRC, said the code “is recognised globally as a best-practice benchmark in investment stewardship”.
He added: “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.”
Nest, one of the signatories of the code, stated that the FRC has provided useful feedback that will be used to further improve future reporting in this area
Diandra Soobiah, head of responsible investment at the master trust, said: “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.”
She added: “Our members expect us to invest their money responsibly and that’s what we’ll continue to do. Whether that’s by voting at annual meetings or engaging directly with executives, we’ll continue to make our members’ voices heard in the boardroom.”
