FRC publishes revised UK Stewardship Code 2026

On 3 June 2025, the Financial Reporting Council (FRC) published the revised UK Stewardship Code 2026 (2026 Code). This follows a consultation earlier this year as reported in our previous article. The 2026 Code will take effect from 1 January 2026 and aims, according to the FRC, to "support long-term sustainable value creation while significantly reducing the reporting burden for signatories".

What is the UK Stewardship Code?

The UK Stewardship Code is a voluntary principles based framework for asset managers, asset owners and service providers to report on their stewardship activities over a 12 month period. The current version of the UK Stewardship Code was published in 2019, coming into effect in 2020 (2020 Code). The 2020 Code has a strong reputation, evidence by the number of signatories increasing year on year, with the latest signatory list released in February 2025  including 297 signatories (199 asset managers, 77 asset owners and 21 service providers), representing £52.3 trillion assets under management.

Changes to definition of Stewardship

The overarching definition of Stewardship has been amended in the 2026 Code in line with the proposal set out in the consultation:

"Stewardship is the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries."

In response to feedback received in the consultation, the FRC have tweaked the explanatory language to the definition to more closely align to the wording used in Section 172 of the Companies Act 2006 with respect to the consideration of the economy, the environment and society. The additional language used in relation to effective stewardship is "... investors take account of long term risks and opportunities, having regard to the economy, the environment and society, upon which beneficiaries' interests depend."

Whilst many support this change as it gives greater flexibility to signatories to determine what they want to achieve from stewardship, there has been criticism from certain industry groups, including, for example, PIRC (Pensions and Investment Research Consultants), who see the removal of reference to the environment and society from the definition itself as a "step in the wrong direction".

Structure of reporting and frequency

One of the main drivers behind the reforms to the 2020 Code is to reduce the reporting burden on signatories. In the 2026 Code, the FRC is proceeding with the proposed changes to the structure of reporting so that reporting will be split into two parts:

• Policy and Context Disclosure (P&C Disclosure) - containing information about a signatory's organisation, its governance and resourcing and linking to relevant policies.

• Activities and Outcome Report (A&O Report) - signatories will be required to submit a report describing how they have exercised stewardship throughout the year and how they have applied the Principles through their activities and the resulting outcomes.

In a change to the proposals in the consultation, signatories will only need to submit the P&C Disclosure every four years (rather than every year). If signatories prefer they can continue to submit the P&C Disclosure every year and also may continue to produce a combined single report.

The consultation had also proposed that signatories may cross refer to other publicly available information in their reports. Following feedback on this point, the FRC have decided that the P&C disclosure must provide all necessary background to the information in the A&O Report and that the A&O Report should provide enough information to give readers a good understanding of the application of the 2026 Code without having to refer to information elsewhere. Signatories may include links to other policies and disclosures but the FRC will not consider this information as part of their assessment.

Disclosures and Principles

The 12 Principles that form part of the 2020 Code will be replaced, broadly as set out in the consultation with:

• five disclosures (Disclosures A to E) that form part of the P&C Disclosure; and

• six principles (Principles 1 to 6) that form part of the A&O Report (for asset managers and asset owners)

The five Disclosures that should be included in the P&C Disclosure are:

A. Describe your organisation, your investment beliefs, your clients or beneficiaries and how that informs your approach to stewardship.

B. Describe how your resources enable effective stewardship.

C. Describe your stewardship policies and processes and how you review them.

D. Describe how you manage stewardship related conflicts of interest to put the best interests of clients and beneficiaries first.

E. Describe how you maintain a dialogue with clients and or beneficiaries.

The six Principles that asset managers and asset owners should report on as part of their A&O Report are:

1. Signatories integrate stewardship and investment to deliver long-term sustainable value for their clients and beneficiaries.

2. Signatories identify and respond to market-wide and systemic risks to promote well-functioning financial markets.

3. Signatories engage to maintain or enhance the value of assets.

4. Signatories actively exercise their rights and responsibilities.

5. Signatories integrate stewardship considerations into their selection and oversight of external managers.

6. Signatories monitor and hold to account stewardship service providers.

The 2026 Code also introduces four targeted principles for proxy advisors and investment consultants.

As proposed in the consultation, the 2026 Code combines the current Principles 9, 10 and 11 (engagement, collaboration and escalation) into a single engagement Principle (Principle 3). The FRC had received feedback that this may be seen as reducing the importance of collaboration and escalation, but the FRC is keen to emphasise that these aspects should still be reported on in line with the guidance (see below).

Guidance

The FRC is introducing guidance to assist applicants with reporting under the 2026 Code. It is not intended to be prescriptive but instead to provide suggestions of information which applicants could include in their report and also suggestions for those managing asset classes other than listed equity.

The guidance has been published in draft form so that stakeholders can comment. Any comments on the guidance should be sent to stewardshipcode@frc.org.uk before 31 August 2025. The FRC will publish the final guidance in the autumn.

Timing

The 2026 Code will be effective from 1 January 2026. For existing signatories, 2026 will serve as a 'transition year' and provided that existing signatories submit a P&C Disclosure and A&O Report in their usual reporting window, they will not be removed as a signatory. The FRC will use the transition year to give feedback on reporting both collectively though e.g. webinars and also through individual engagement with signatories.

New applicants will still be subject to an assessment process to determine whether they are granted signatory status 2026.

The approach chosen by the FRC is to respond to concerns expressed about the importance of existing signatories maintaining signatory status. These concerns are likely driven by the number of high profile applications that were rejected following significant changes introduced by the 2020 Code.

Next steps

If you are a signatory to the 2020 Code and are due to report in the autumn cycle you should submit your stewardship report to the FRC by 31 October 2025, in accordance with the principles and reporting expectations of the 2020 Code. Note that signatories will still be able to make use of the interim reporting changes announced by the FRC in July 2024, as summarised here. Please refer to the FRC's FAQs for more information on this.

Dates for submissions in respect of the 2026 Code are as follows (there will continue to be two submission windows):

• Spring 2026: applications from asset managers and service providers will be due by 30 April 2026. Applications from asset owners will be due by 31 May 2026.
• Autumn 2026: all applications will be due by 31 October 2026.

Further information

You can access the 2026 Code here along with the draft guidance and the FRC's feedback statement on the consultation.

The FRC are also hosting a webinar on the 2026 Code on 18 June at 3pm.

Please reach out to us if you need our help with understanding the reporting requirements for the 2026 Code.