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Laith Cahill, Senior Net Zero Stewardship Specialist at the IIGCC, says the UK’s streamlined StewardshipCode must preserve its ambition. Since its last update in 2019, the landscape for stewardship and reporting has evolved drastically. Investor needs have changed, as have regulatory obligations.
The European Union’s Sustainable Finance Disclosure Regulation (SFDR) was introduced in 2019 to impose tougher disclosure requirements, with the aim of giving investors greater insight into the sustainability-related impact of their investments. Has your asset manager published a UK StewardshipCode statement?
This was followed in 2010 by high level reporting for the Financial Reporting Council’s (FRC) original StewardshipCode. Despite both being voluntary, they quickly became industry norms, along with a minority of asset owners starting to do voluntary Task Force on Climate-related Financial Disclosures (TCFD ) reporting in 2019/20.
According to Manning, the FCA is keen to identify regulatory constraints on collaborative engagement, which has been used increasingly by asset owners and managers in recent years, particularly to address systemic environmental risks, such as climatechange and accelerating biodiversity loss.
The concept of assessing what effective stewardship should look like was first introduced by the FCA in 2019 in a joint effort with the Financial Reporting Council (FRC), setting the groundwork which helped define what the minimum expectations should be for financial services firms investing on behalf of clients and beneficiaries.
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