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The Stewardship Code

What is the Stewardship Code?

The UK Stewardship Code is a set of principles and guidance for companies like us who are responsible for the funds our customers invest in. The Code represents current best practice on how we should perform our stewardship duties.

The purpose of the Code is to improve the quality of engagement between large investors, such as fund managers, to help improve long-term returns and the efficient exercise of governance responsibilities.

At its simplest, stewardship is the responsibility to take care of something in one’s keeping. In this case, it involves the effort and activities undertaken by the fund managers we appoint to manage our customers’ money to monitor, engage and intervene on matters that may affect the long term value of companies and the capital invested in them. This can include corporate strategy, performance, corporate governance, environmental and social issues that may materially affect the future sustainability of companies.

What are 7 principles under the Stewardship Code?

Principle 1

Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities.

Principle 2

Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.

Principle 3

Institutional investors should monitor their investee companies.

Principle 4

Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value.

Principle 5

Institutional investors should be willing to act collectively with other investors where appropriate.

Principle 6

Institutional investors should have a clear policy on voting and disclosure of voting activity.

Principle 7

Institutional investors should report periodically on their stewardship and voting activities.