The Financial Reporting Council (FRC) has published its UK Stewardship Code 2026, which will come into effect from January 1, 2026. See the FRC’s press release here.
The focus of the updated Code is to support long-term sustainable value creation and reduce the reporting burden for signatories. Key changes include a reduced number of Principles, targeted Principles for different types of signatories and new guidance. The Code is a flexible, principles-based framework that aims to provide transparency and help investors to deliver clear outcomes of value creation for clients and beneficiaries.
Key features of the UK Stewardship Code 2026:
- Enhanced definition of stewardship: The updated definition focuses on the principle of stewardship as the creation of long-term sustainable value for clients and beneficiaries.
- Reduced reporting burden: The Code features fewer Principles and shorter 'how to report' prompts instead of detailed reporting expectations, helping to eliminate 'box-ticking' approaches to reporting against the principles. Early evidence suggests signatories may be able to reduce reporting volume by 20-30% while maintaining quality.
- Flexible reporting structure: Signatories can submit separate Policy and Context Disclosures and Activities and Outcomes Reports or combine them into a single document. The Policy and Context Disclosure will only need to be submitted once every four years.
- Targeted Principles: The Code now includes dedicated Principles for different types of signatories, including asset owners, asset managers, and for the first time, specific Principles for proxy advisors, investment consultants, and engagement service providers.
- New guidance: Optional guidance will provide useful tips and examples to support effective implementation, particularly for those managing non-equity asset classes.
The FRC hopes the new Code will allow for up to a 30% reduction in reporting volume while maintaining quality. To support signatories in adapting to the new Code, 2026 will serve as a transition year. During this period, no existing signatories will be removed from the signatory list following their 2026 application. This will allow current signatories to familiarise themselves with the new format and use it as a platform to explain their individual approach to stewardship. The FRC will engage with signatories through publications, webinars, and bilateral discussions to support the transition.
Richard Moriarty, the CEO of the FRC, spoke on the BBC’s Today Programme about the updated code. With explicit references to sustainability in the context of ESG removed from the Code, it was stressed that the role of the FRC is not to tell investors in what to invest; instead, the updated code aims to support investors with responsible risk-taking and economic growth.
The UK Stewardship Code operates as part of a comprehensive regulatory framework alongside the FCA's oversight of financial markets, the Pensions Regulator's protection of member interests, and the DWP's pension scheme regulations. It has established itself as a global benchmark for best practice in stewardship, driving transparency and accountability in the investment chain. It currently has nearly 300 signatories who represent around £50 trillion in assets under management (AUM). The 2026 Code builds on this success while responding to feedback from signatories and the wider investment and corporate issuer community.