The Financial Reporting Council is making significant revisions to the City stewardship code that governs how shareholders engage with companies, part of a broader initiative to bolster the government’s economic growth strategy.

Richard Moriarty, the chief executive of the accounting regulator, announced that the revised UK Stewardship Code, expected to be unveiled this week, aims to decrease the reporting obligations for signatories by up to 30 percent.

Schroders, a prominent fund manager listed in the FTSE 100, highlighted concerns that its recent stewardship code report exceeded 122 pages, largely going unread by web visitors.

Initially established following the 2008 financial crisis, the code was implemented to tackle issues arising from inadequate shareholder oversight of corporate risk-taking. While it is not mandatory, the code is frequently utilized by fund managers to demonstrate their engagement with companies on critical issues, and currently boasts nearly 300 signatories, including major proxy advisory firms.

“We believe there is room for simplification,” Moriarty remarked.

The revised definition of “stewardship” will eliminate references to environmental, social, and governance (ESG) factors, which were included in 2020, in favor of a focus on generating “long-term sustainable value for clients and beneficiaries.”

Additionally, the updated code will explicitly reference proxy voting agencies for the first time, aiming to address concerns regarding their influence on executive pay decisions, particularly highlighting discrepancies between companies listed in New York and those in London. The London Stock Exchange has pointed out that such disparities hinder its ability to attract initial public offerings (IPOs).

Moriarty indicated that the updated code would clarify expectations for proxy agencies “to disclose their methodologies and their strategies for engaging with corporations.”

He further stated, “It is important that we acknowledge their legitimacy and role in the ecosystem, hence their distinct recognition within the code.”

Proxy agencies provide guidance to large institutional investors on voting during annual meetings, often playing a critical role in shaping outcomes. Recently, Jamie Dimon, the chairman and CEO of JP Morgan, referred to these agencies as a “cancer” affecting corporate governance.

The Financial Reporting Council’s updated stewardship code reflects the government’s ongoing push for regulators to pursue strategies that stimulate economic growth by alleviating regulatory burdens.