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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.

In the UK, 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, both of which are the responsibility of the Financial Reporting Council (FRC). 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 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 FRC 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: www.frc.org.uk/investors/uk-stewardship-code.

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.  Following submission of its first Stewardship Report, NILGOSC was successful in being listed as a signatory to the UK Stewardship Code in September 2022. NILGOSC submitted its second annual Stewardship Report, (covering the 12-month period ending 30 June 2022) to the FRC for review in May 2023, and was pleased to be informed that it continued to meet the FRC’s expected standard of reporting. NILGOSC has prepared its annual Stewardship Report, covering the 12 month-period ending 30 June 2023, to support its renewal application to remain a Stewardship Code signatory. The report was submitted to the FRC in May 2024 and will be assessed to ensure that NILGOSC continues to meet the Code requirements. The FRC will update the list of signatories for the assessment period later in the year.

NILGOSC’s Stewardship report is available in the downloads box below.

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