FRC ranks Stewardship Code signatories to promote better reporting

The Financial Reporting Council has announced that it has categorised signatories to the Stewardship Code into tiers based on the quality of their Code statements. There are nearly 300 signatories to the Code of which more than 120 are in Tier 1. Since the start of this exercise in December 2015 the number of Tier 1 signatories has increased significantly from approximately 40.

The FRC reported that it was pleased with the response from signatories and that over 200 signatories had approached the FRC to discuss improving their reporting against the Code.

The FRC will remove asset managers who have not achieved at least Tier 2 status after six months from the list of signatories on the basis that their reporting does not demonstrate commitment to the objectives of the Code. The FRC also welcomes further contact from signatories, particularly those in Tier 3, to discuss improvements to reporting.

The FRC had originally announced that there would be two tiers to distinguish between signatories which meet or do not meet reporting expectations. Asset managers have now been categorised into three tiers and asset owner and service provider signatories into two tiers. The assessment of the FRC represented by each tier is as follows:

Tier 1: Signatories provide a good quality and transparent description of their approach to stewardship and explanations of an alternative approach where necessary.

Tier 2: Signatories meet many of the reporting expectations but report less transparently on their approach to stewardship or do not provide explanations where they depart from provisions of the Code.

Tier 3: Significant reporting improvements need to be made to ensure the approach is more transparent. Signatories have not engaged with the process of improving their statements and their statements continue to be generic and provide no, or poor, explanations where they depart from provisions of the Code.

Click here for the FRC's announcement.