The Financial Reporting Council (FRC) has implemented significant changes to the UK Stewardship Code, aimed at simplifying the reporting process for signatories.
According to Environmental Finance, this revision of the Code is designed to alleviate the burdens previously expressed by signatories regarding the reporting framework.
The main adjustments include eliminating the need for annual updates of contextual information unless there are new reports or significant changes, and also removing the obligation to disclose annually against ‘Activity’ and ‘Outcome’ for certain Principles.
However, specific details about which Principles have had these requirements removed were not disclosed, and the FRC has not provided further clarification as of the publication of this press release.
The FRC’s updates are effective immediately and will be applicable for the next application period ending on 31 October. Signatories now have the option to submit their reports either in the spring or autumn, covering the previous 12 months.
This change is part of a broader effort by the FRC, which also regulates auditors, accountants, and actuaries in addition to setting the UK Corporate Governance Code, to reduce the overall reporting burden on Code signatories.
The FRC is continuing to refine its approach, with a commitment to five areas of priority review aimed at further reducing the reporting obligations associated with the Code. This revision process will continue into the next year following consultations conducted this year. These consultations are expected to help the FRC define what effective stewardship should look like in practice.
Morningstar Sustainalytics director of investment stewardship research and policy, Lindsey Stewart said, “While sentiment toward the FRC’s Stewardship Code remains positive overall, a number of preparers of Stewardship Code reports have often mentioned that the current reporting format appears to require a considerable amount of repetition of information provided in other reports, or annual updates on policies and activities that may have changed little since the last report.
“It looks like the FRC has listened to that feedback… Anything that enables stewardship professionals to devote more time to engaging with companies and other issuers instead of preparing reports has to be a good thing.”
Keep up with all the latest FinTech news here.
Copyright © 2024 FinTech Global
