CGIUKI welcomes new Stewardship Code after influencing key changes to definition and scope

The Chartered Governance Institute UK & Ireland (the Institute) has welcomed publication today of the UK Stewardship Code 2026 by the Financial Reporting Council, noting that several of its key recommendations have been reflected in the final text.

The new Code takes effect from 1 January 2026 and aims to support long-term sustainable value creation while significantly reducing the reporting burden for signatories, of whom there are currently nearly 300 who represent around £50 trillion in assets under management.

Publication follows an extensive stakeholder consultation process earlier this year, during which the FRC reports engagement with more than 1,500 stakeholders. The Institute was among the organisations submitting a formal response, in which we agreed with many of the proposed changes but questioned the definition of ‘stewardship’ that was being proposed and the lack of ‘teeth’ to support enforcement of the Stewardship Code, which is perhaps beyond the scope of the FRC’s current powers.

The Code as published goes some way to addressing our concerns about the definition, which we felt focussed too much on one element of stewardship, that of the fiduciary stewardship of client monies, but lacked focus on the other element – the stewardship responsibilities to wider society as owner of a company.

The definition of ‘stewardship’ as “the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries” carries an important addition to the effect that investors do this by “[taking] account of long-term risks and opportunities, having regard to the economy, the environment and society, upon which beneficiaries’ interests depend.” This reflects our concern and aligns the duties of investors with those of the directors of a company under the Companies Act.

As to enforcement, the FRC makes it clear that “the Code does not prescribe a single approach to effective stewardship. Instead, it allows organisations to set out how they meet the expectations in a manner that is aligned with their own business model and strategy. Being a signatory to the Code demonstrates an investor’s commitment to stewardship and provides transparent reporting on the stewardship they undertake on behalf of their clients and beneficiaries.” Further enforcement is beyond the scope of the FRC’s powers, but the Institute hopes that this will be a consideration when the government creates its successor body, the Audit, Reporting and Governance Authority. We will continue to advocate for a more robust and enforceable stewardship framework as part of our ongoing engagement with ARGA’s development.

Peter Swabey, Policy & Research Director, The Chartered Governance Institute UK & Ireland, said:

“We are pleased to see that the Financial Reporting Council has listened to stakeholder feedback in revising the Stewardship Code. In particular, we welcome the more balanced definition of stewardship, which now better reflects the responsibilities that investors have not only to their clients and beneficiaries, but also to wider society.

At the Chartered Governance Institute, we’ve long argued that stewardship should not be viewed narrowly as a matter of financial duty but must incorporate accountability for environmental, social and governance outcomes. The new Code is a step in the right direction, and we look forward to working with policymakers as the UK transitions to ARGA to ensure that good stewardship is matched by clear expectations and oversight.”