UK Official: Stewardship Code Success Hinges on Quality of Execution, Not Checklists

In an interview with The Hankyoreh, Maureen Beresford, Director of Corporate Governance and Stewardship at the UK's Financial Reporting Council (FRC), stressed the importance of substantive action over mere compliance in South Korea's adoption of the stewardship code. As South Korea's stock market grows and corporate governance becomes a focal point, the nation is seeking to enhance its institutional investor oversight. However, Beresford highlighted that the effectiveness of such codes hinges not just on legal amendments but on the practical application and quality of engagement by investors.

“

The starting point in stewardship is the code itself. This code is a fairly flexible framework based on principles, and we attach great importance to this flexibility.

The FRC, which pioneered the stewardship code in 2010 following the global financial crisis, operates a rigorous system of supervision. Institutions that sign the code must submit annual reports detailing their stewardship activities, which are then assessed by the FRC. This process is not a simple tick-box exercise; it demands qualitative evaluation, requiring investors to provide concrete examples and case studies of their engagement with investee companies. Failure to demonstrate meaningful progress can result in an institution losing its signatory status, creating a market-driven incentive for genuine commitment.

“

In terms of implementation, we emphasize creating a 'proportionate and appropriate' system and ensuring that all stakeholders fully understand the purpose of the code.

Beresford explained that the FRC's approach is supportive rather than purely punitive. While there is a clear consequence for failing to meet standards, the council also provides feedback and guidance to both successful and unsuccessful applicants. This 'supportive regulation' includes pre-application consultations, written and face-to-face feedback, and annual reviews. The goal is to foster a culture where stewardship is integrated into the core of institutional investment strategy, focusing on long-term value creation and aligning with the interests of beneficiaries. The FRC's revised code in 2025, for instance, reframes ESG factors as 'means' to achieve long-term value, allowing institutions flexibility in their strategies while maintaining a focus on responsible investment.

“

The most crucial mechanism is the review of applicants. When institutions apply to become signatories, we evaluate their reports based on the code.