On 3 June 2025, the Financial Reporting Council (“FRC”) published its new UK Stewardship Code 2026 (the “2026 Code”). The UK Stewardship Code is a voluntary code of asset managers, asset owners and service providers, with the aim of encouraging effective stewardship of assets.
The 2026 Code builds on the prior update of the code – the UK Stewardship Code 2020 (the “2020 Code”) – and follows on from a 2024-2025 consultation process. The 2026 Code was published alongside a feedback statement setting out the outcomes of the FRC’s revisions to the 2020 Code in light of that consultation.
Whilst a voluntary code, certain UK regulated firms are required to disclose their compliance with the UK Stewardship Code, such as under the COBS and ESG sourcebooks of the Financial Conduct Authority Handbook. Whether firms are signatories to the UK Stewardship Code is also significant from a commercial perspective. It is widely adopted in the UK asset management industry, with nearly 300 signatories representing around £50 trillion of assets under management, and hence is of broad relevance to many firms.
Executive summary
The key updates made to the 2026 Code from the 2020 Code include:
- enhancing the definition of stewardship within the Stewardship Code;
- reducing the overall reporting burden through fewer principles and shorter reporting prompts to avoid a “box ticking” approach;
- introducing a flexible reporting structure where signatories can submit separate Policy and Context Disclosures and Activities and Outcomes Reports, or combine them into a single document – the Policy and Context Disclosures only need to be submitted every 4 years;
- including dedicated principles for different types of signatories, and including new specific principles for proxy advisors, investment consultants and engagement service providers; and
- new optional guidance – particularly for those managing non-equity asset classes.
Signatories will need to adapt their reporting approach to support these changes. More detail on the changes is set out below.
Change to stewardship definition
The 2026 Code addresses concerns raised regarding the definition of stewardship in the 2020 Code. The 2020 Code included the statement that “Stewardship is the responsible… oversight of capital… leading to sustainable benefits for the economy, environment and society”. This led to concerns it could be interpreted as requiring signatories to demonstrate they deliver such benefits. In line with the FRC’s consultation, the definition has been revised to avoid such implications, instead stating that “Stewardship is the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries”. The accompanying explanation generally emphasises that long term risks and opportunities may require a consideration of the economy, environment and society, rather than there being a suggestion that it should be a focus of a firm’s stewardship approach.
Reporting approach
To reduce the burden of reporting, the FRC has effectively sought to separate the Policy and Context Disclosure (which is unlikely to change much year-to-year since it contains information regarding a signatory’s overall approach) and the Activities and Outcomes Report – which is more of a dynamic annual report.
In a change from its consultation, the FRC has allowed signatories to submit their Policy and Context Disclosure every four years (rather than every year irrespective of any changes). Annual submission is still permitted for applicants if that is their preference.
Reporting burden
The FRC has also sought to reduce the reporting burden with the inclusion of concise “how to report” prompts, supported by guidance giving additional non-prescriptive suggestions. Overall, this has resulted in a less prescriptive approach than the 2020 Code’s “reporting expectations”, intended to reduce “box ticking”. The FRC’s draft guidance is available on their website, with stakeholders invited to send comments and suggestions over the course of the summer.
Whilst the FRC did consult on allowing the cross-referencing of external public materials in their Stewardship Code reporting, it has rowed back on this somewhat. Whilst firm’s may link to more detailed information outside of their report this will not form part of the FRC’s assessment, and signatories should include all information necessary within their reports.
Structure and content of the UK Stewardship Code
A significant number of changes have been made to specific aspects of how the UK Stewardship Code is structured and its content. Changes include:
- The FRC has combined Principles 9, 10 and 11 (dealing with engagement, collaboration and escalation) of the 2020 Code on the basis that collaboration and escalation should be seen as part of a range of tools for effective stewardship rather than an end in themselves. Collaboration and escalation are now included more in the “how to report” prompts and guidance;
- The FRC has introduced targeted principles aimed at those managing assets directly and those investing through external managers given differing approaches; and
- Targeted principles have been introduced for proxy advisors, investment consultants and engagement service providers given their unique role.
Next steps
The 2026 Code takes effect from 1 January 2026, with the first reports under the 2026 Code being submitted to the FRC in the course of 2026. However, 2026 will serve as a “transition year” as during this period no existing signatories will be removed from the signatory list following their 2026 application, to allow current signatories to familiarise themselves with the new code. Signatories and potential signatories will therefore need to familiarise themselves with the 2026 Code and adapt their reporting approach, but for existing signatories there will be some leeway in this adaptation in the first year of reporting.
Signatories should also stay up to date with the FRC’s draft reporting guidance, which is intended to be finalised following the invitation for stakeholders to send feedback over the course of the summer.
Reach out to the key contacts listed or your usual CMS contacts if you need any assistance in complying with the updated 2026 Code.
