On the go: Pension schemes and asset managers should embed stewardship “in every aspect of their relationship”, the Investment Association and the Pensions and Lifetime Savings Association have said.
In a joint report, the two bodies — which set up a joint steering group in 2021 — recommended that schemes and their managers agree stewardship frameworks “focused on long-term sustainable value”, involving both qualitative and quantitative reporting.
The call to arms was issued with the UK’s stewardship framework looking likely to be toughened up. In June, the Pensions Regulator said that it would work with the government and fellow watchdogs to review the Financial Reporting Council’s revised UK Stewardship Code.
The updated document, which came into effect at the start of 2020, responded to FRC recommendations that changes would have to be made to ensure the code differentiated “excellence in stewardship” and to promote transparency around the subject.
The next review will assess “whether the code is creating a market for effective stewardship and the need for any further regulation in this area”, according to a government response to a consultation on strengthening audit, reporting and governance published on May 31. It will take place in 2023.
Along with universally embedding stewardship, the IA and the PLSA endorsed “collaborative long-term relationships that can evolve in response to a changing external environment and emerging best practice”.
They also said that asset owners and managers should make use of “best practice” behaviours from the Stewardship Code.
“The steering group call on the IA and the PLSA to monitor the ongoing development and implementation of their recommendations, and to work with their members to ensure that these recommendations are implemented, and as a result a significant change in market dynamics is achieved,” the report stated.
“The IA and the PLSA should conduct a formal review of developments after 18 months and report publicly on their implementation progress.”
In March, it was announced that 18 pension companies had signed up to the UK Stewardship Code, including the Pension Protection Fund, the Wales Pension Partnership and Barnett Waddingham.
The government has also set out the regime for a replacement for the FRC with a “stronger” and “tougher” regulator.
