New “streamlined” UK Stewardship Code issued

The Financial Reporting Council has now finalised its updates to the UK Stewardship Code and published the final version. The Stewardship Code 2026, a voluntary code for asset managers/owners and service providers, will replace the Stewardship Code 2020 and begin to take effect next year – it aims to maintain high standards of effectiveness and transparency while also reducing unnecessary reporting by investors, and their asset managers and other service providers. 

When the previous version was introduced, the FCA and the FRC were working together on a number of proposals to enhance stewardship activities and investor oversight of companies. The current policy approach, however, is to encourage UK competitiveness and growth by rolling back overly burdensome obligations. 

Relevance of the Stewardship Code
With close to 300 signatories, notwithstanding that it is a voluntary code, this update will be of relevance to a number of firms (and furthermore, UK regulated firms, may in certain circumstances need to disclose the nature of their commitment to the Code (e.g. under the COBS rules)) – signatories to the Code will need to assess their current approach to reporting, and adapt this to support the amendments.

The first part of the Code is directed at asset owners, such as pension funds and insurers, and asset managers. A second section, also referred to as the Service Providers Code, sets out best practice Principles and disclosure expectations for those providing services which support stewardship. Such activities, carried out by proxy advisors, investment consultants and engagement service providers, may include engagement, voting recommendations and execution, data and research, advice and the provision of reporting frameworks and standards.

As stewardship approaches will affect the businesses invested in, the Code's revised recommendations are also relevant to a wide range of companies and asset classes, including issuers of listed shares and privately-held portfolio companies. 

Purpose of the Code and the definition of stewardship
The FRC states that the aim of the Code is to promote long-term value for savers and pensioners through the effective management of investments on their behalf. There is no single approach to exercising effective stewardship and the Code's role is to encourage transparency about policies and practices, not to dictate how signatories should deal with their assets. 

In line with this statement of the Code’s purpose, the FRC has updated the 2026 Code’s introductory wording to state that: “‘Stewardship is the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries.” This amendment is intended to address the concerns raised about the definition of stewardship in the 2020 Code, which raised confusion as to whether signatories were required to actively demonstrate the delivery of wider “benefits for the economy, environment and society”.  The new language, and accompanying FRC clarification highlights, that whilst these factors will fall to be considered when taking account of risks and opportunities, it is for each signatory to determine their specific investment objectives.

Reporting processes
The changes significantly streamline existing disclosure expectations, with the FRC separating out:

• the Policy and Context Disclosure:
  • To be reported every four years
  • Broadly setting out contextual information, such as about stewardship policies and governance structures ; and
• the Activities and Outcomes report:
  • To be reported every year
  • Specifically focussing on stewardship activities conducted during the year and their outcomes. 

In the years when both reports are due to be published, Applicants may choose to present the P&C Disclosure and the A&O Report either as separate documents or combined in a single comprehensive submission, as they prefer.

New non-prescriptive prompts and guidance also set out short form and more detailed advice for signatories to the Code to help them to produce meaningful reporting. The intention is to reduce “tick-box” reporting.  The FRC has initially published its guidance in draft (with stakeholders invited to comment before 31 August 2025), prior to its finalisation in the autumn.  

Having previously consulted on the extent to which signatories should be able to reference publicly available external information as part of their Stewardship Code reporting, the final Code seeks to find a sensible halfway house.  The expectation is that all necessary information will be in the P&C Disclosure and the A&O Reports as applicable.  Firms are able to link to more detailed information outside their reports, but this will not form part of the FRC's assessment.  This, says the FRC, will enable signatories to provide further information that supports their report, whilst ensuring that the comprehensive nature of stewardship reporting (according to the feedback received, highly valued in the market) is retained.

Structure of the Code
A number of changes have been made to the content and structure of the new 2026 Code.  These include the following:

• The combination (into one principle – Principle 3) of Principles 9, 10 and 11 of the 2020 Code, which deal with engagement, collaboration, and escalation respectively. This is on the basis that collaboration and escalation should not be seen as ends in, and of, themselves, but as part of a range of tools for effective stewardship.  Collaboration and escalation have accordingly been integrated into the “how to report” prompts, and into the guidance - including suggestions of where signatories might employ and report on them.  
• Targeted principles have been introduced aimed at those managing assets directly and those who invest through external managers.
• Targeted principles have also been introduced for proxy advisors, investment consultants and engagement service providers with the aim of producing more insightful reporting on their specific role in the investment chain.

Timing
The updated Stewardship Code was published on 3 June 2025 and will take effect on 1 January 2026.  As noted above, draft new guidance is also available and is open for comment until 31 August 2025. The guidance will be finalised this autumn.

Current signatories to the 2020 Code should plan to report as usual in 2025 to maintain their status as acknowledged signatories. First reports against the new Code can then be submitted to the FRC in 2026. The FRC will treat 2026 as a transition year for existing signatories.

More information
The Stewardship Code 2026 is available here, the Code guidance here, and the press release here. 

The FRC has also released a Feedback Statement on its Stewardship Code consultation, and a short “at a glance” guide. For a chance to hear more from the FRC directly, you can register for a webinar to be held on Wednesday 18 June.

Get in touch if you’d like our help with getting to grips with reporting in line with the updated 2026 Code.