The Financial Reporting Council (FRC) has reviewed the UK Stewardship Code. The new code took effect from 1 January 2020. The new Code sets high expectations of those investing money on behalf of UK savers and pensioners.
In particular, the new Code establishes a clear benchmark for stewardship. Organisations wanting to become signatories to the Code will be required to produce an annual Stewardship Report explaining how they have applied the Code.
The updated code has a new definition of stewardship:
Stewardship is the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.
The Fund had previously benchmarked its practices against the previous Stewardship Code in June 2017. At that time The Statement of Compliance with the UK Stewardship Code was assessed by the FRC as Tier 1 which is the highest level of compliance, "providing a good quality and transparent description of the approach to stewardship and explanations of alternative approaches where necessary".
The Fund has now prepared its first Stewardship Code Report under the new Code for 2022/23 which has been submitted to the FRC to assess its compliance with the new Code. The report draws out our Investment Beliefs and key policy documents to demonstrate how we incorporate responsible investment into investment decisions and the overall investment strategy.
Much of the Stewardship Report explains how the Fund exercises oversight of its investment managers and other service providers, to ensure its policies and expectations around responsible investment are being monitored and delivered.