Industry experts have raised concerns over the updated definition of stewardship in the Financial Reporting Council's UK Stewardship Code 2026, expressing particular disappointment around the removal of direct reference to the environment and society.

The Financial Reporting Council (FRC) yesterday (3 June 2025) shared the UK Stewardship Code 2026, which included a number of updates designed to support long-term sustainable value creation while "significantly" reducing the reporting burden for signatories.

In particular, the new code includes an updated definition of stewardship, which focuses on the principle of stewardship as the creation of long-term sustainable value for clients and beneficiaries.

In the new code, stewardship is defined as the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries.  

However, the UK Sustainable Investment and Finance Association (UKSIF) argued that it was "disappointing" to see that the new code definition excludes direct references to ‘environment’ and ‘society’.

"We believe this risks sending the wrong signal to investors concerning their role and engagement with material sustainability and governance issues in pursuit of long-term value creation," UKSIF head of policy and regulatory affairs, Oscar Warwick Thompson, said.

“The definition effectively sets the overall tone of the code and the interpretation of its principles.

"We have concerns over how the revised language may be interpreted by financial market participants. We do, however, note the definition’s references to ‘wider systems’ in the supporting statement. This appears to highlight that investors should still have ‘regard to the economy, the environment and society, upon which beneficiaries’ interests depend."

This sentiment was echoed by Pensions for Purpose, with director, Laasya Shekaran, said: “We are deeply disappointed by the removal of any reference to ‘sustainable benefits for the economy, the environment and society’ in the revised UK Stewardship Code.

"This marks a retreat from the public purpose of stewardship - just when stronger stewardship around environmental and societal impact is more urgently needed than ever.”

The group also raised broader concerns around the update, as Pensions for Purpose CEO, Charlotte O’Leary, argued that "in seeking to create a code that accommodates a broad mix of legal frameworks, business models and market actors, the FRC has produced what looks like a lowest-common-denominator standard, not a leading framework".

"For those seeking to align capital with long-term impact, this version of the code no longer provides a meaningful framework to do so," she argued.

However, the code has received support in other areas, as Warwick Thompson said it was positive to see new tailored principles confirmed for proxy advisers and investment consultants, which recognises their growing importance in the stewardship ecosystem.

"Going forward, there remains more work for policymakers and industry to help maintain the UK’s leadership position on stewardship practice," he continued. "This should build on the positive role it can play in supporting the transition to a more sustainable future.”

Broader industry support for the update has also been seen, with The Pensions Regulator interim executive director, Julian Lyne, stating: “Pension schemes with investment horizons long into the future are uniquely placed to deliver long-term value for savers.

“It is vital that trustees consider using resources such as the Stewardship Code to manage systemic risk, including climate risk, and improve their investment governance. We would encourage all workplace pension schemes to sign up.”

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