RegulationSep 7 2021

Schroders 'frustrated' at failure to make stewardship code

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Schroders 'frustrated' at failure to make stewardship code

Schroders has failed to make the list of signatories to the revamped UK Stewardship Code but said this was down to the way in which it completed the submission rather than its substance or content.

The Financial Reporting Council yesterday (September 6) published a list of signatories to the UK Stewardship Code, following a revamp that imposed tougher reporting requirements on investors.

From the 189 applications received by the FRC — which included 147 asset managers, 28 asset owners including pension funds and insurers, and 14 service providers — two-thirds (125 organisation) made the final list.

But more than 60 applicants did not make the list, including Schroders, JPMorgan Asset Management and State Street Global Advisors.

Published in late 2019, the new Stewardship Code comprises “apply and explain” principles for asset managers and asset owners, and a separate set of principles for service providers that are higher than the minimum UK regulatory requirements.

According to the regulator, the unsuccessful applicants commonly did not address all of the principles or sufficiently evidence their approach, instead relying too heavily on policy statements.

Other areas of weakness included reporting on the approaches to review and assurance, and monitoring service providers.

A spokesperson for Schroders said: “We are frustrated not to be a signatory. According to feedback from the FRC, this is due to the format rather than the substance of our submission.

"We have been a signatory of the Code for over a decade and recently praised by the FRC as an example of best practice in their Review of Early Reporting.

"We believe strongly in the power of stewardship and constructive engagement with business. We are confident we will be a signatory again soon.” 

The FRC is encouraging unsuccessful applicants to consider the individual feedback provided along with the upcoming annual review of reporting to be published in November, and to reapply in the next windows, which will occur in October 2021 and April 2022.

The list of signatories includes schemes such as the BT Pension Scheme, Universities Superannuation Scheme, and several Local Government Pension Scheme funds.

The FRC stated investors had improved the integration of stewardship, and environmental, social and governance factors into their investment decision-making, reporting on asset classes other than listed equity and identifying the outcomes of their efforts.

Sir Jon Thompson, chief executive at the FRC, said the code “is recognised globally as a best-practice benchmark in investment stewardship”.

He added: “We are proud of our robust approach to assessment and encourage those who have been unsuccessful to reflect on our feedback and apply again in future.”

JPMorgan has been contacted for comment, State Street Global Advisors said it will not be commenting at this time., additional reporting by