Proposed changes to the UK Stewardship Code risk weakening investor accountability and downplaying the role of responsible investment in shaping a fairer economy
The High Pay Centre (HPC) has responded to the Financial Reporting Council’s (FRC) consultation on the UK Stewardship Code, warning that the proposed changes risk weakening investor accountability and oversight of major companies.
The Stewardship Code is intended to ensure that the investment industry acts in the interests of wider society. However, the FRC’s proposed revisions remove references to the economic, environmental, and social benefits of stewardship, implying that responsible investment practices are optional rather than essential.
HPC argues that this shift sends the wrong message. As a regulator with a public service function, the FRC should be strengthening accountability, not watering it down. Investors overseeing trillions of pounds in assets have a huge impact on workers, consumers, and communities. Their responsibilities must extend beyond generating financial returns.
The consultation response also highlights concerns about the role of asset owners in representing the interests of beneficiaries, such as pension savers. HPC research shows that people want their pensions to be invested in ways that support fair pay, environmental sustainability, and ethical business practices—not just to maximise short-term returns.
Similarly, proposed changes to the Code’s principles dilute references to environmental, social, and governance (ESG) factors. While ESG has become politically contentious in some circles, the basic principle that investments should support long-term economic and social stability remains as important as ever.
HPC is calling on the FRC to rethink its approach. A strong Stewardship Code should ensure that investors are actively working towards a fairer, more responsible economy—one that benefits not just shareholders, but society as a whole.