The Financial Reporting Council (FRC) has issued its updated Investor Stewardship Code following its stakeholder consultation on the Code’s effectiveness. The move is part of the FRC’s strategy to review regulations in support of the government’s drive for growth, with a renewed focus on “value creation”.

The new Code includes an updated definition of stewardship as “responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries”.

The number of principles included in the Code has been reduced, with shorter prompts for reporting. Some principles only apply to certain types of signatories, for example asset owners. This includes proxy advisers, investment consultants and engagement service providers for the first time. 

The aim, according to the FRC, is to reduce the likelihood of box-ticking approaches to reporting against the Code: “The Code recognises signatories differ by size, type, business model and investment approach, and do not exercise stewardship in an identical way.” 

Signatories have the option to submit separate Policy and Context Disclosures, and Activities and Outcomes Reports, or supply them as a single document. Policy and Content Disclosures will only need to be submitted once every four years.

The FRC has issued new guidance to help signatories adapt to the new Code, which will come into force from January 2026. A transition year will follow, during which no existing signatories will be removed from the signatory list following their 2026 application, giving them time to familiarise themselves with the new format of the Code.

“The UK Stewardship Code 2026 provides signatories with a flexible principles-based framework that provides greater transparency on their stewardship in the face of unprecedented uncertainty,” Richard Moriarty, FRC CEO, says. “Extensive consultation confirmed strong investor backing for the Code’s importance and has directly informed the changes we have made to ensure it remains fit for the future.”

The Code is not prescriptive and does not direct how any signatory should choose to invest, he adds. “It takes a principles-based approach that is focused on delivering a clear outcome of value creation for clients and beneficiaries.”