FRC: We will take an axe to City stewardship code, says boss
The Financial Reporting Council (FRC) plans to take the axe to a key City code that governs how shareholders should hold companies to account.
The UK Stewardship Code was created following the 2008 financial crisis to address fears that shareholders had failed to adequately police risk-taking. Signatories are required to publicly report on their stewardship activities and outcomes every year.
It has faced backlash for adding to a growing regulatory burden in the UK and creating friction between listed companies and their backers.
Richard Moriarty, chief executive of the FRC, said its most recent iteration should reduce the volume of reports that signatories are expected to publish by up to 30 per cent.
“We think we can take a bit of an axe to it,” he said, in comments reported by the Sunday Times.
The changes will see reference to environmental, social and governance (ESG) issues stripped from the definition of “stewardship,” having first been included in 2020. CityAM first reported the FRC was consulting on changes to ESG references in November.
There will also be, for the first time, a specific reference to proxy voting agencies, according to the Sunday Times.
Moriarity said the code would outline expectations on proxy agencies “to publish their methodologies and publish their approach to dealing with and engaging with corporates”.
He added: “I think it’s right that we recognise their legitimacy and importance in the ecosystem and draw them out as separate entities in the code.”
Changes to the City code come amid a wider government push to tackle financial regulation and red tape deemed to be hindering economic growth.
Marcus Bokkerink, the former chairman of the Competition and Markets Authority (CMA), was sacked by ministers in January in what was described as the “most overtly political” regulatory intervention in recent years.