Effective from 1 January 2020, the Financial Reporting Council’s (“FRC”) UK Stewardship Code (the “Code”) has been substantially updated to be applicable to a broader range of investment strategies, other than purely listed equity, such as fixed income bonds, real estate and infrastructure. It also reflects the growth of environmental factors, particularly climate change, as well as social and governance factors (together, “ESG”) as material issues for asset managers to consider when making investment decisions and undertaking stewardship.
In the 2020 version, the Code defines stewardship as “the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society”.
There are twelve Principles of the Code that apply to asset owners and asset managers. These are grouped under four headings:
Purpose and governance
Exercising rights and responsibilities
The FRC requires that firms aiming to be signatories to the Code must produce an annual Stewardship Report explaining how they have applied the Code in the previous 12 months. The FRC will evaluate Reports against an assessment framework and those meeting the reporting expectations will be listed as signatories to the Code.
Rule 2.2.3R of the Financial Conduct Authority (“FCA”) Conduct of Business Sourcebook (“COBS”) requires an FCA authorised firm to disclose the nature of its commitment to the FRC’s UK Stewardship Code or, where it does not commit to the code, its alternative investment strategy.
The FRC recognises that not all parts of the Code will be relevant to all institutional investors and that smaller institutions may judge some of the principles and guidance to be disproportionate. It is of course legitimate for some asset managers not to engage with companies, depending on their investment strategy, and in such cases firms are required to explain why it is not appropriate to comply with a particular principle.
Adherence to the Code is voluntary. MIML is a privately owned investment management firm focused on real estate and real estate related investment opportunities. While MIML supports the objectives that underlie the Code, the provisions of the Code are not considered to be wholly relevant to the activities currently undertaken by the Firm. Therefore, MIML has chosen an alternative approach to stewardship consistent with its overall approach to Responsible Investment/ESG/Sustainable Finance/.
MIML does not currently comply with the Code for the following reasons:
If MIML’s activities changes in such a manner that the provisions of the Code become relevant, the Firm will amend this disclosure accordingly.
For further details on any of the above information, please contact Steve Hall.