Corporate governance – FRC publishes updated Stewardship Code

The Financial Reporting Council (FRC) has published an updated version of the Stewardship Code, completing the fundamental review of the Code it launched in 2024 (for more on the review, see our blog post here).

The Code, which was last updated in 2020, seeks to enhance the quality and quantity of engagement between investors and companies. The FRC says that the changes in the updated version are intended to ensure that the Code continues to drive effective stewardship through high-quality disclosures, in a way that does not place onerous reporting burdens on signatories.

To become a signatory under the Code, all organisations need to submit:

• a Policy and Context Disclosure (P&C Disclosure) containing information about the organisation such as its investment beliefs, clients, policies and processes. This is required to be submitted every four years (unless there has been a change such as a merger that has resulted in a change in business model); and
• an Activities and Outcomes Report (A&O Report), which explains how the organisation has applied the principles of the Code and must be submitted annually.

The Code is split into two sections – one section is for asset owners and asset managers and the other is for service providers (proxy advisory firms, investment consultants and engagement service providers).

Each section sets out the details to be included in the P&C Disclosure and which principles in the Code an organisation should report on in their A&O Report. The Code notes that the extent to which each principle may apply varies and so it allows for flexibility. In relation to each principle, the Code includes prompts on how to report on the application of the principle by an organisation.

The FRC has also published draft guidance to help organisations when reporting on the Code. The FRC has invited stakeholders to submit feedback on the guidance by 31 August 2025 and aims to finalise the guidance in autumn 2025.

The revised Code applies from 1 January 2026 for reporting after that date. Organisations can apply to be accepted as signatories under the new Code in spring 2026 and so, to support organisations as they move to the new Code, 2026 will be a transition year.