What’s the context?

Stewardship activities include:

  • monitoring assets and service providers
  • engaging issuers and holding them to account on material issues
  • publicly reporting on the outcomes of those activities.

The Financial Reporting Council (FRC) published its original stewardship code in July 2010. First revised in 2012, a significantly amended version was issued in October 2019 and took effect from January 2020 (the 2020 Stewardship Code). The updated UK Stewardship Code 2026 was published in June 2025, along with guidance. The new code took effect from 1 January 2026.

Stewardship in pension schemes means actively overseeing investments to promote long-term value and responsible practices. ESG considerations are central to this. Trustees are expected to set clear policies, monitor engagement by asset managers, and report on outcomes to demonstrate accountability and transparency.

The Principles for Responsible Investment define stewardship as “the use of influence by institutional investors to maximise overall long-term value including the value of common economic, social and environmental assets, on which returns and clients’ and beneficiaries’ interests depend”.

Trustees have clearly defined obligations to articulate their policies on stewardship. All schemes are also being increasingly encouraged, and required, to improve their stewardship activities as part of a global response to climate change and other sustainability issues.

The Pensions Regulator (TPR) considers that “it is up to the trustees to exercise stewardship and ensure, as far as they are able, that this is done through the whole length of the investment chain” and that this “is particularly relevant for the management of macroeconomic, systemic risks such as climate change, which cannot be sufficiently hedged through portfolio construction and asset allocation alone”.

What are my compliance obligations?

Signatories to the code are required to make public disclosures about their stewardship activities and to assess how effectively they have achieved their objectives.

They are also:

  • expected to take ESG factors – including climate change – into account and, in the case of investment managers, to ensure investment decisions are aligned with the needs of their clients
  • expected to explain how they have exercised stewardship across asset classes beyond listed equity, and in investments outside the UK, and
  • required to explain their organisation’s purpose, investment beliefs, strategy and culture and how these enable them to practise stewardship.

To be a signatory to the code, organisations must submit a stewardship report to the FRC demonstrating how they have applied the code’s principles in the previous 12 months. Once listed, organisations must report annually to remain signatories.

The FRC has noted that “To support a smooth transition to the updated UK Stewardship Code, 2026 will be treated as a transition year. All existing signatories submitting a renewal application will remain on the signatory list throughout this period.” For frequently asked questions on the new Code see the FRC guidance.

The FRC maintains a list of signatories to the UK Stewardship Code.

Resources on stewardship

Pensions UK has collated best practice, templates and toolkits offering members guidance on how best to engage with investee companies, including what information to request about the workforce and corporate culture, and how to hold companies accountable to shareholders.

This guidance, along with other resources, including the latest Stewardship and Voting Guidelines 2025, can be found in the Pensions UK’s stewardship hub.

On 1 July 2020, Pensions UK and Investor Forum published a guide that aims to provide “a practical and accessible toolkit to help pension schemes assess the effectiveness of their asset managers’ delivery of stewardship”.

The guidance includes the two organisations’ views on:

  • definitions of stewardship and engagement, and their application across different asset classes
  • an outline of how to frame an overall pension scheme stewardship strategy
  • a framework for understanding and distinguishing between different forms of engagement
  • an overview of what effective engagement looks like and the key factors for successful delivery, and
  • the key questions schemes need to ask of their asset managers.

What are the latest developments?

In July 2021, the Occupational Pensions Stewardship Council was launched as a dedicated council of UK pensions schemes. The council aims to promote and facilitate high standards of stewardship of pension assets and support schemes to learn about, act collaboratively and improve reporting of stewardship activities.

On 20 September 2021, the Taskforce on Pension Scheme Voting Implementation published a report. It set out recommendations for giving pension savers a voice in how their savings are invested and strengthening the role of those who manage those savings. The Taskforce had been launched in December 2020 to address problems in the voting of equity shares by pension schemes. The report included a recommendation that all asset managers should offer asset owners the opportunity to set an “expression of wish” as to how votes are exercised on their behalf, regardless of how they invest. This is now supported by provisions in the Department for Work & Pensions guidance on the statement of investment principles and implementation statement.

In June 2022, a steering group of investment managers, pension funds, investment consultants and lawyers, established jointly by the Investment Association and Pensions UK, published a report – Investment relationships for sustainable value creation: alignment between asset owners and investment managers. The report aims to embed stewardship in the relationship between investment managers and pension funds. It sets out several recommendations for each stage of that relationship from the appointment process to the ongoing monitoring of established relationships.

In July 2022, the Government published a long-awaited call for evidence (launched in March 2021) on the consideration of social factors by pension schemes. The call for evidence sought to encourage a more proactive approach to embedding social factors within pension schemes’ investment decisions – separating out the S in ESG and stewardship policies – and suggests themes that trustees might look at. For example, specific policies on human rights within the context of business practices, including modern slavery, and a more focused approach to workforce conditions, supply chains, community engagement and consumer protection.

On 28 February 2023 the Taskforce on Social Factors was launched with the support of the DWP. The Government had announced a new minister-led taskforce to support pension scheme trustees and the wider pensions industry with some of the challenges around managing social factors, such as the identification of reliable data and metrics. The aim was for the taskforce to deliver guidance and recommendations to the pensions and investment industry.

In June 2025 The FRC published the UK Stewardship Code 2026, along with guidance. The new code took effect from 1 January 2026 and “aims to support long-term sustainable value creation while significantly reducing the reporting burden for signatories”. The FRC will accept first applications in Spring 2026, with 2026 acting as a transition year for the FRC to support existing signatories as they move to reporting under the new code (see above).

Key features include:

  • an “enhanced” definition of stewardship as “the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries” 
  • a reduced reporting burden
  • flexible reporting, and
  • “targeted principles” for different types of signatories.

Specific references to the environment and society have also been replaced by the concept of “sustainable value” within the new code.