The Financial Reporting Council (FRC) has argued there is still room for improvement in the way stewardship reporting is explained.
It follows the release of the ‘Effective Stewardship Reporting: Examples from 2021 and expectations for 2022’ which analyses reports from the first signatories to the revised Code published in September 2021.
Whilst the report showed a continued “high quality” of disclosures in the areas of governance, resourcing, and the integration of stewardship and ESG factors with investment, it highlighted areas for growth.
This included improving the way firm’s explain how they manage stewardship-related conflicts of interest, how managers review and assure their stewardship activities, and how they monitor and hold to account service providers operating on their behalf.
It also outlined areas of focus for applicants to report on in the future, such as how market-wide and systemic risks are being managed, stewardship in asset classes other than listed equity.
Mark Babington, executive director regulatory standards, said: “Stewardship plays a crucial role in ensuring that investments are responsibly managed to create long-term value for savers and pensioners, and wider benefits for the economy, the environment and society.
“In this report the FRC outlines how quality stewardship reporting results in better transparency for pensioners, savers and investors about how their hard-earned money is being managed for better long-term outcomes.”