UK publishes revised stewardship code for 2026
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The U.K. Financial Reporting Council (FRC) has published an overhauled version of the U.K. Stewardship Code, which will come into effect on 1 January 2026 in the biggest upheaval since 2020.
Richard Moriarty, the FRC CEO, said in a statement the updated Code provides "a flexible principles-based framework that provides greater transparency on stewardship in the face of unprecedented uncertainty."
"The updated Code focuses on long-term sustainable value creation while cutting unnecessary reporting and improving engagement quality," he continued. "New dedicated principles for proxy advisers increase transparency in the investment chain."
The 2026 Code removes explicit references to environmental and social issues found in the 2020 version’s definition of stewardship, providing signatories greater discretion in how ESG-related issues are treated, depending on materiality and client mandates. That shift follows Canada's securities regulator, which paused the progress of mandatory ESG reporting rules over competitiveness concerns, after the new U.S. Securities and Exchange Commission (SEC) chose not to defend its climate reporting rule in court.
The FRC began a consultation on changes to the 2020 Code in November, after reviewing its operations in practice over several years. The process received a shot in the arm in November 2023 when Business Secretary Kemi Badenoch wrote to Moriaty to say that "the FRC should contribute to promoting the competitiveness and growth of the U.K. economy, embedding its growth duty across its work."
As such, reporting requirements under the new Code are streamlined so that signatories may reduce their reporting volume by 20–30% without compromising quality, according to the FRC. Reporting is now divided into two core components; policy and context disclosures, and activities and outcomes reports. Signatories can submit the reports separately or together but the policy section is only required once every four years.
Sacha Sadan, director of sustainable finance at the Financial Conduct Authority (FCA), welcomed the update: “The FRC’s new Stewardship Code represents a strong, industry-wide commitment to improving transparency in stewardship practices. It enables owners to access high-quality information about how their assets are being managed.”
He added: “This is vital not only for building trust in U.K. markets but also for supporting long-term growth and competitiveness of the U.K. economy.”
The revised Code introduces specific principles for different categories of signatories, including asset managers, asset owners, investment consultants, and engagement service providers. Proxy advisors, in particular, are now expected to adhere to dedicated principles that require them to engage with clients and issuers, disclose how their advice supports stewardship outcomes, how they ensure methodological robustness, and how they manage conflicts of interest.
The FRC has designated 2026 as a transition year, during which no existing signatory will be removed from the signatory list. This is intended to provide organisations with time to adapt to the new structure and clarify their stewardship approach under the revised framework.
The 2026 iteration follows an extensive consultation process involving over 1,500 stakeholders across the investment chain. Building on the global reputation of the 2020 Code, which had nearly 300 signatories representing around GBP50 trillion in assets under management, the new version is designed to support high-quality stewardship practices in a more proportionate and practical manner.
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