On 22 July 2024, the Financial Reporting Council (“FRC”) announced interim changes to the reporting requirements for existing signatories to the UK Stewardship Code. These updates precede any updates arising from a wider wholesale consultation on a new UK Stewardship Code set to be launched in 2024, with implementation of any updates arising from that consultation in 2026.

Key changes effective from 31 October 2024, include:

  • Removing the need for existing signatories to update disclosures against “Context” unless there are material changes.
  • Eliminating the requirement for asset owners and managers (excluding service providers) to report on “Activity” and “Outcome” for Principle 1 (purpose, strategy and culture), Principle 2 (governance, resources and incentives), Principle 5 (review and assurance), and Principle 6 (client and beneficiary needs), unless there are significant updates.
  • Allowing cross-referencing to previous reports if no material changes have occurred.

Additionally, the FRC clarified expectations on reporting outcomes and the application of Principles regarding collaborative engagement and escalation of stewardship activities. The council emphasized that ongoing engagements can be reported with progress reflections and that collaborative engagement or escalation is not mandatory unless it aligns with stewardship objectives, which is likely to be a very useful update for signatories.

The ongoing review of the UK Stewardship Code as part of the wider consultation process will focus on defining effective stewardship, streamlining reporting for different asset managers and owners, improving clarity in service provider reporting, reducing reporting burdens, and positioning the UK Stewardship Code within the broader regulatory framework.

Further stakeholder engagement through roundtable events will occur in August and September, with the formal consultation on revised UK Stewardship Code proposals planned for later in 2024. For further information on the UK Stewardship Code, please reach out to the Proskauer UK Regulatory team.

Posted in UK/EU Financial Regulation
Tags: ESG, Financial Regulation
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Photo of John Verwey John Verwey

John Verwey is a Regulatory partner and a member of the Firm’s Private Capital industry group.

John advises on financial services regulatory matters at a national UK and European level. He specializes in advising investment firms, including venture, private equity, credit, and hedge…

John Verwey is a Regulatory partner and a member of the Firm’s Private Capital industry group.

John advises on financial services regulatory matters at a national UK and European level. He specializes in advising investment firms, including venture, private equity, credit, and hedge fund managers as well as institutional managers and advisers, on all aspects of the UK and EU regulatory regimes.

Another key area of focus is advising clients in the financial services sector on mergers and acquisitions, re-organisations and associated regulatory approvals.

John represents a variety of clients that range from small start-up fund managers to established global fund advisers and managers. In The Legal 500, John is noted as “an all-rounder who gets into the details and manages client expectations on navigating tricky regulatory requirements”.

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Photo of Rachel Lowe Rachel Lowe

Rachel E. Lowe is a special regulatory counsel in the Corporate Department and a member of the Private Investment Funds Group.

Rachel advises on financial services regulation specializing in sustainable finance and ESG regulation. She has particular expertise in drafting and advising on…

Rachel E. Lowe is a special regulatory counsel in the Corporate Department and a member of the Private Investment Funds Group.

Rachel advises on financial services regulation specializing in sustainable finance and ESG regulation. She has particular expertise in drafting and advising on the Sustainable Finance Disclosure Regulation (SFDR) and the Taxonomy Regulation. Rachel has also supported with EU MiFID and AIFMD sustainability updates for clients, including from a governance and organizational perspective, as well as providing drafting and training support. She also advises on the Corporate Sustainability Reporting Directive (CSRD), including analysis of its applicability for large international group structures.

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More broadly, Rachel has worked with litigation colleagues to assist clients with understanding and mitigating greenwashing-related legal and regulatory risk.

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Photo of Sulaiman Malik Sulaiman Malik

Sulaiman Malik is an associate in the Corporate Department and a member of the Private Funds Group.

Sulaiman advises clients on a range of UK and international financial regulation. He advises private equity funds, hedge funds, sovereign wealth funds and other asset managers…

Sulaiman Malik is an associate in the Corporate Department and a member of the Private Funds Group.

Sulaiman advises clients on a range of UK and international financial regulation. He advises private equity funds, hedge funds, sovereign wealth funds and other asset managers, as well as banks, FinTechs, broker-dealers and governments.

Prior to joining Proskauer, Sulaiman trained at Simmons & Simmons in London, where he was seconded to Brevan Howard. He has also spent time at the UK’s Ministry of Justice and as an adviser to the Mayor of Brisbane, in Australia.

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Photo of Michael Singh Michael Singh

Michael is an associate in the Private Funds Group in the Corporate Department.

Michael advises clients on a variety of regulatory issues both from a UK and European perspective. He also helps clients on fund related transactions. His clients include private equity firms…

Michael is an associate in the Private Funds Group in the Corporate Department.

Michael advises clients on a variety of regulatory issues both from a UK and European perspective. He also helps clients on fund related transactions. His clients include private equity firms, investment managers, FinTech companies and wealth management businesses.

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