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FEATURE: Under the microscope
04 May 2011
Many hope the Financial Reporting Council’s Stewardship Code will translate into real improvements in corporate governance in the UK – they may be disappointed
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FRC
Stewardship Code
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It is coming up to a year since the Financial Reporting Council published its UK Stewardship Code, putting greater responsibility on asset managers and investors to promote corporate governance. In theory, is simply reinforced their motivation to take action that was anyway in their interest. In reality, it foisted a potentially expensive additional burden on the industry – leaving doubts that it would translate into worthwhile action.The code, published in June 2010, means that institutional investors should: publicly disclose how they discharge their stewardship responsibilities; have a robust conflicts of interest policy; monitor their investee companies; establish guidelines of how and when they escalate action to protect value; be willing to act collectively; have a clear voting policy; and periodically report activity.The National Association of Pension Funds says that pension funds have an important role in encouraging its adoption by the asset management industry. Some of the biggest schemes including...
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