A leading global accountancy body has challenged the UK’s financial regulator not to row back on UK investor governance commitments on sustainability.
In a response to the Financial Reporting Council’s (FRC) consultation on its stewardship code, ACCA questioned whether the proposed revised definition of ‘stewardship’ could be interpreted as a scaling back of intent on sustainability.
With the FRC proposing the removal of ‘environment’ from the proposed stewardship definition, Mike Suffield, Director, Policy and Insights, ACCA, said: ‘Climate-related disclosures continue to mature globally, shifting from tick-box statements to demonstrable action. This is reflected in recent regulatory developments, such as the International Sustainability Standards Board (ISSB) IFRS S1 and S2.
‘In the light of these trends, we are concerned about the message that this proposed change would send to the market.’
ACCA is however supportive of the overall proposed updating and supports FRC’s efforts to bring about a more streamlined approach to reporting. A tailored framework can equip signatories with a better understanding of stewardship and its purpose.
A flexible, proportionate reporting framework is key to inspiring better practice and meaningful engagement.
Rachael Johnson, ACCA's Head of Risk Management and Corporate Governance for Policy & Insights, said: ‘We want to emphasise the importance of understanding rising expectations of different investors to push company boards about risk oversight and continuous monitoring of it given today's polycrisis norm.
‘We support enhanced transparency on the outcomes of different stewardship relationships, rather than the events themselves. It also is crucial to ensure that both cultural and conduct risks are included given today’s rapid digital transformations.’
Read the full ACCA response here.
Read the FRC consultation on updates to the UK Stewardship Code
