Submitted by Acre
The FRC published the UK Stewardship Code 20202 in October 2019. It includes a revised 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.
This is an expansive definition. The previous definition talked about risk-adjusted returns and ensuring benefit to clients and beneficiaries. This new definition recognises the role that sustainable and responsible investment plays in our economy and society. To a certain extent, this is a mirror of the Corporate Governance Code’s references to environmental and social as well as governance matters (section 172 of the Companies Act 2006) which benefit wider society.
IT BRINGS INTO PLAY SOME CHANGES THAT HAVE TAKEN PLACE:
This is an all-encompassing definition of stewardship, which reflects how that should be reported. Not just talking about the twelve principles of stewardship, but the activities and outcomes surrounding it.
Through its regulation and working alongside the FRC, the FCA aims to ensure that firms are delivering good outcomes for their customers. For many firms, stewardship will be integral to this.
Stewardship is also central to the design and effectiveness of capital markets, helping to improve market quality and integrity. This is how stewardship plays a role in ensuring the creation of sustainable long-term value for clients and beneficiaries.
Effective stewardship therefore supports the FCA’s objective to make relevant markets function well. There is increasing appreciation for the role that stewardship can play in creating a long-term perspective, and through constructive oversight, helping to advance sustainability goals.
1.1 - QUESTION:
Who is responsible for stewardship and how does that fit into the investment chain? Do we conceptualise this as a shared responsibility?
Regulatory View Point
1.2 - QUESTION:
If the investment chain can be aligned to have individual and collective responsibility, who is account- able for stewardship being sufficient and effective? Who polices that, and who is accountable for that?
Investment Consultancy Viewpoint
Asset Manager Viewpoint
Asset Owner Viewpoint
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