Stewardship Code's Key is Sustainable Value, Not Box-Ticking, Expert Says

In Seoul, the conversation around corporate governance is intensifying, particularly with the KOSPI nearing 6,000 points and a surge in retail investors. The Hankyoreh recognizes that while legislative efforts, such as amendments to the Commercial Act, are underway, they represent only one piece of the puzzle. True modernization of Korea's capital markets and enhancement of company valuations require more than just hard law; they necessitate the cultivation of 'soft norms'—market conventions, internal rules, external evaluations, and crucially, investor pressure.

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Key to stewardship code is sustainable value, not box-ticking.

Our discussion with Maureen Beresford of the UK Financial Reporting Council offers a valuable perspective. The UK's Stewardship Code, adopted in 2010 following the global financial crisis, has become a global model. Beresford's insights underscore that the code's effectiveness lies not in mere 'box-ticking' but in fostering genuine stewardship. This means institutional investors must act as true fiduciaries, actively monitoring and engaging with companies, exercising voting rights, and managing assets with a profound sense of responsibility.

Korea introduced its Stewardship Code in 2016, and while there have been increases in signatories, voting against management, and shareholder engagement, the implementation remains a concern. The Hankyoreh notes the lack of robust review mechanisms and the widespread criticism that disclosures are often pro forma. The code itself has not been amended since its inception, failing to keep pace with the evolving market environment. This contrasts sharply with the UK's dynamic approach, where the code is overseen and applied by a dedicated body like the FRC.

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Hard law is effective only when accompanied by softer norms — market conventions, internal rules, external evaluations and investor pressure.

From our perspective at the Hankyoreh, the Korean market's focus on strengthening the Stewardship Code is a positive step. However, as Beresford's comments suggest, the emphasis must shift from procedural compliance to substantive engagement. The challenge for Korea is to move beyond a superficial adoption of the code and embed its principles into the fabric of corporate practice, ensuring that sustainable value creation, rather than mere compliance, becomes the ultimate goal. This is crucial for building investor confidence and unlocking the true potential of our capital markets.

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Most institutions do not report their stewardship activities in a systematic way, and disclosures on voting and engagement are widely criticized as pro forma.