Navigating the FRC Interim Reporting Changes
Robert Black and Dr. Rory Sullivan
The UK Stewardship Code is changing and investors drafting stewardship reports before next month’s deadline must get their head around ‘interim changes’ - even before the main reforms to the Code are announced. Here’s a Chronos quick-guide to what to watch for:
The deadline for annual UK Stewardship Code submissions is rapidly approaching, 30 April 2025 for Asset Managers and Service Providers, and 31 May 2025 for Asset Owners. This year, as we await the outcome of the FRC consultation on a fundamental review of the Code, preparers are faced with ‘interim changes to reporting’ designed to ease the burden of reporting.
Signatories can continue reporting as they currently do, however, in an effort to streamline the process FRC has introduced three measures signatories can use to adapt reporting.
1. We will no longer require existing signatories to update disclosures against “Context” reporting expectations, except where there are material changes to previous disclosures.
What to watch out for - the interim changes provide significant opportunities to reuse previous disclosures, however, this is only when no material changes have occurred. Prepares should engage with their organisation to discuss what has changed and how that might have impacted stewardship.
2. We will no longer require existing Asset Owner and Asset Manager signatories to disclose against “Activity” and “Outcome” reporting expectations for Principles 1, 2, 5 and 6, except where there are material updates.
What to watch out for – signatories have to cover actions over the 12-month period. This measure provides more flexibility in reporting for ‘Activity’ and ‘Outcome’ expectations that are more long-term and may not have seen new actions over the 12 months. Drafters should ensure that when using previous ‘Activity’ and ‘Outcome’ disclosure it is clear this is still the current status as part of an ongoing process.
3. Existing signatories may cross-reference to specific disclosures made in their most recent Stewardship Report where there have been no material changes.
What to watch out for – use of cross referencing should only refer to the most recent accepted report by the FRC and should clearly show the reader the specific information being cross-referenced. This could be through hyperlinking to specific sections or detailing page numbers and section headings.
These measures all come though the FRC clearly hearing the need for reduction of the reporting burden. Whether these measures remain is not known but the topic is a key consideration of the review.
Reporting against the UK Stewardship Code is a way of communicating a robust approach to stewardship and is also an opportunity to highlight achievements of the year’s activities. The interim measures should simplify the reporting process and enable signatories to give more consideration and significance to the outcomes of stewardship which is ultimately the purpose of the work.
