New stewardship code sets the right path but falls short on several key areas

Thursday 4th April 2019

The Investment Association have published the executive summary of their response to the FRC consultation on the proposed new stewardship code, which welcomes the broad direction of travel but highlights several key areas where the proposed code falls short of creating the better market for stewardship that shareholders want. The executive summary is available here.

Responding to the FRC consultation on the proposed new stewardship code Andrew Ninian, Director of Stewardship and Corporate Governance at the Investment Association, said:

“The UK is a world leader when it comes to corporate governance, but there is more that can be done to create a better market for stewardship. Effective stewardship not only provides long-term, sustainable returns for savers and investors but done effectively can also provide wider benefits to society and the economy.

“The proposed code sets out a generally positive direction of travel, outlining important changes on the expectations of stewardship, such as a focus on the role of asset owners and managers and the integration of environmental, social and governance factors into the investment process. Unfortunately, the implementation of the new Code falls short on several key areas that are crucial to building a better stewardship market. If these concerns are not addressed, then they will hamper the development of a stewardship market that delivers for savers and investors as well as for the wider economy.

“While we support the proposal for an ‘Activities and Outcomes’ report, we believe that it is too focussed on stewardship policies and does not place enough emphasis on stewardship outcomes. We are very supportive of a ‘show, don’t tell’ model, with a much stronger focus on the impact of stewardship, rather than the processes that sit behind it."

For further information, please contact:

Ben Rathe, Senior Communications Manager: [email protected]

T +44 (0)20 7831 0898

IA press office: [email protected]

About the Investment Association (IA)

• The IA champions UK asset management, supporting British savers, investors and businesses. Our 250 members manage £7.7 trillion of assets and the asset management industry supports 100,000 jobs across the UK.
• Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so everyone prospers.
• Our purpose is to ensure investment managers are in the best possible position to:
  • Build people’s resilience to financial adversity
  • Help people achieve their financial aspirations
  • Enable people to maintain a decent standard of living as they grow older
  • Contribute to economic growth through the efficient allocation of capital.
• The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.
• The UK is the second largest investment management centre in the world, after the US and manages 35% of all assets managed in Europe.