On June 3, 2025, the Financial Reporting Council (FRC) published the UK Stewardship Code 2026 (the “Code”), following the conclusion of its consultation on the proposed amendments to the UK Stewardship Code 2020. The revised Code will take effect from January 1, 2026, with reporting under the new framework commencing thereafter.
See our last bulletin for a comprehensive overview on the FRC’s consultation on the UK Stewardship Code 2020, including our assessment of the FRC’s proposals. This bulletin analyses the changes introduced to the Code since the publication of the consultation draft.
The Code represents a significant evolution in the UK’s stewardship framework, reflecting stakeholder input and regulatory developments. The changes introduced by the FRC are designed to promote clarity, accountability, and effective stewardship across the investment chain, while ensuring that reporting requirements remain proportionate and accessible. The FRC’s approach underscores its commitment to fostering high standards of corporate governance and responsible investment in the UK market. A&O Shearman maintains the view that the revised Code embodies a logical, balanced, and pragmatic approach to stewardship reporting, which will underpin and facilitate constructive engagement between companies and their shareholders.
What changes have been made to the consultation draft?
Definition of stewardship
The FRC has revised the definition of stewardship to ensure greater alignment with the terminology and intent of section 172 of the Companies Act 2006. This change reflects stakeholder feedback emphasising the importance of consistency with the Financial Conduct Authority’s Sustainable Disclosure Requirements and the need for language that accurately captures the duties of investors. The new definition moves away from the previous reference to stewardship as supporting sustainable, long-term returns with possible wider benefits, and instead adopts language that more closely mirrors the statutory obligations of directors and investors under UK company law.
Flexible reporting structure
The revised Code introduces a clear distinction between Policy and Context Disclosure (“P&C Disclosure”) and the annual Activities and Outcomes Report (“A&O Report”). Under the revised framework, signatories are required to submit P&C Disclosures every four years, rather than annually as initially proposed. This approach is intended to reduce the administrative burden on signatories while maintaining the integrity and comprehensiveness of stewardship reporting.
Signatories must ensure that all necessary information for the P&C Disclosure is included within the submission, and must demonstrate their application of the Code’s Principles within the A&O Report. The FRC has determined that cross-referencing to publicly available external information, as was previously contemplated, will not form part of the FRC’s assessment. However, signatories may provide links to more detailed information outside the core report, enabling them to supplement their disclosures without detracting from the report’s readability or completeness.
Restructured principles
The Code reduces the number of Principles for asset owners and asset managers from 12 to 6, streamlining the framework to promote greater clarity and focus on stewardship reporting. For service providers, the Principles have been reduced from 6 to 4, with the introduction of new, targeted Principles specifically addressing the roles of proxy advisors and investment consultants. These changes underscore the FRC’s recognition of the distinct responsibilities of these service providers and their significance within the stewardship ecosystem.
Guidance
Alongside the revised Code, the FRC has published the draft UK Stewardship Code 2026 Guidance offering non-prescriptive, optional recommendations on the types of information organisations may include in their stewardship reporting. The guidance is designed to be user-friendly and pragmatic, similar to the FRC’s approach to the UK Corporate Governance Code Guidance which we discuss in our bulletin. Stakeholders are invited to submit comments on the draft guidance by August 31, 2025 and the FRC expects the guidance to be finalised in autumn 2025.
Next steps
The revised Code will take effect from January 1, 2026, with two designated application windows for the submission of reports.
For the spring 2026 window, asset managers and service providers are required to submit their applications by April 30, 2026, while asset owners must do so by May 31, 2026. The autumn 2026 window will require all applicants to submit their reports by October 31, 2026.
The year 2026 will operate as a transition period, during which the FRC will provide support to existing signatories as they adapt to the updated reporting requirements under the revised Code.
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