The UK Stewardship Code
It’s our aim to become signatories of the UK Stewardship Code by the end of 2020.
The code aims to improve the way investors and companies communicate and work together, setting out principles of good practice that the Financial Reporting Council (FRC) believes investors should aim for when engaging with companies.
There are 12 principles in place for asset managers and owners, which are:
- Purpose, strategy and culture - Signatories’ purpose, investment beliefs, strategy, and culture enable stewardship that creates long term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.
- Governance, resources and incentives - Signatories’ governance, resources and incentives support stewardship.
- Conflicts of interest - Signatories manage conflicts of interest to put the best interests of clients and beneficiaries first.
- Promoting well-functioning markets - Signatories identify and respond to market-wide and systemic risks to promote a well-functioning financial system.
- Review and assurance Investment approach - Signatories review their policies, assure their processes and assess the effectiveness of their activities.
- Client and beneficiary needs - Signatories take account of client and beneficiary needs and communicate the activities and outcomes of their stewardship and investment to them.
- Stewardship, investment and ESG integration - Signatories systematically integrate stewardship and investment, including material environmental, social and governance issues, and climate change, to fulfil their responsibilities.
- Monitoring managers and service providers Engagement - Signatories monitor and hold to account managers and/or service providers.
- Engagement - Signatories engage with issuers to maintain or enhance the value of assets.
- Collaboration - Signatories, where necessary, participate in collaborative engagement to influence issuers.
- Escalation - Signatories, where necessary, escalate stewardship activities to influence issuers.
- Exercising rights and responsibilities - Signatories actively exercise their rights and responsibilities.
The International Corporate Governance Network
The ICGN is an investor-led worldwide organisation aimed at promoting investor stewardship, and long-term benefits of good corporate governance. Members are drawn from over 50 global markets with assets under management in excess of $54trn, and they’re made up of asset owners such as pension funds, insurance companies, and asset managers.
The ICGN has seven key stewardship principles, which are:
- Internal governance - the foundation of effective stewardship - Investors should keep under review their own governance practices to ensure consistency with the aims of national requirements and the ICGN Global Stewardship Principles and their ability to serve as fiduciary agents for their beneficiaries and clients.
- Developing and implementing stewardship policies - Investors should commit to developing and implementing stewardship policies which outlines the scope of their responsible investment practices.
- Monitoring and assessing investee companies - Investors should exercise diligence in monitoring companies held in investment portfolios and in assessing new companies for investment.
- Engaging companies and investor collaboration - Investors should engage with investee companies with the aim of preserving or enhancing value on behalf of beneficiaries or clients and should be prepared to collaborate with other investors to communicate areas of concern.
- Exercising voting rights - Investors with voting rights should seek to vote shares held and make informed and independent voting decisions, applying due care, diligence and judgement across their entire portfolio in the interests of beneficiaries or clients.
- Promoting long-term value creation and integration of environmental, social and governance (ESG) factors - Investors should promote the long-term performance and sustainable success of companies and should integrate material environmental, social and governance (ESG) factors in stewardship activities.
- Enhancing transparency, disclosure and reporting - Investors should publicly disclose their stewardship policies and activities and report to beneficiaries or clients on how they have been implemented so as to be fully accountable for the effective delivery of their duties.