Approach to stewardship

Stewardship aims to promote the long term success of companies in such a way that the ultimate providers of capital also prosper.

Stewardship, as defined by the UK Stewardship Code, is “the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.”

Effective stewardship benefits companies, investors and the economy as a whole. In publicly listed companies, responsibility for stewardship is shared. The primary responsibility rests with the board of the company, which oversees the actions of its management; but investors in the company also play an important role in holding the board to account for the fulfilment of its responsibilities.

The UK Corporate Governance Code identifies the principles that underlie an effective board; while the UK Stewardship Code sets out the principles of effective stewardship by investors. As well as voting, activities can include monitoring and engaging with companies on matters such as strategy, performance, risk, capital structure, and corporate governance, including culture and remuneration. Engagement is a purposeful dialogue with companies on these matters, as well as on issues that are the immediate subject of votes at general meetings.

In July 2010, the Financial Reporting Council (FRC) published the first version of the UK Stewardship Code (the ‘Code’). In response, in September 2010, NILGOSC published its first UK Stewardship Code Statement of Adherence, which laid out how the Fund applied the Principles of the Code. Following the publication of a revision to the Code in September 2012, NILGOSC updated its Statement of Adherence and continued as a signatory until the 2012 Code was discontinued. When the FRC began to assess signatories’ Statements of Adherence in 2016, classifying signatories as ‘Tier 1’ or ‘Tier 2’, NILGOSC was assessed as a Tier 1 signatory. The tiering distinguished between signatories who reported well and demonstrated their commitment to stewardship (Tier 1), and those to whom reporting improvements were needed. As well as striving for overarching adherence at a Fund level, NILGOSC also required its appointed Investment Managers share copies of their Statements of Adherence to the Code.

The UK Stewardship Code was substantially revised in 2019 and the new UK Stewardship Code 2020 took effect from January 2020.  The new Code focuses on the activities and outcomes of stewardship, rather than only policy statements. To become a signatory, organisations are required to produce an annual Stewardship Report explaining how they have applied the Code in the previous 12 months.  The FRC will assess each report and if it meets the FRC’s reporting expectations, the organisation will be listed as a signatory to the Code. Once listed, organisations must continue to report annually in order to remain signatories. 

More information about the UK Stewardship Code is available at:

NILGOSC supports the principles set out in the Stewardship Code and seeks to promote these principles both directly and indirectly through the mandates given to its investment managers. NILGOSC has prepared its first annual Stewardship Report, covering the 12 month-period ending 30 June 2021, and submitted it to the FRC in April 2022.  The FRC have six months to issue final decisions.

NILGOSC’s report is available to review: Stewardship Report 30 June 2021