Category: Governance risk · Reviewed by Chrissie Anderson, Client Executive · Last reviewed 2026-06-10
The UK Stewardship Code 2020 is the FRC’s set of principles for asset owners, asset managers and service providers, requiring signatories to demonstrate, by annual public reporting, how they integrate stewardship and ESG factors into the responsible allocation, management and oversight of capital.
Category: Governance risk Also known as: UK Stewardship Code 2020, FRC Stewardship Code, investor stewardship principles Typical UK market form: reflected in D&O and asset manager professional indemnity underwriting; no standalone stewardship policy Related concepts: UK Corporate Governance Code, Corporate governance insurance, Professional indemnity insurance
The UK Stewardship Code 2020 was published by the Financial Reporting Council on 24 October 2019 and took effect on 1 January 2020. It defines stewardship as “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.” It applies to asset owners (such as pension funds and insurance companies), asset managers and service providers (proxy advisers, investment consultants and data providers).
The Code is built around twelve Principles for asset owners and asset managers and six Principles for service providers, supported by guidance and a requirement for an annual Stewardship Report. Signatories that meet the reporting expectations are listed on the FRC’s signatory list; those that do not are removed.
The Stewardship Code is voluntary in the sense that there is no statute compelling sign-up. However, several regulatory and market levers create de facto pressure. FCA Conduct of Business Sourcebook rule COBS 2.2B (implementing the Shareholder Rights Directive II) requires UK asset managers and life insurers to publish an engagement policy or explain why they have not. The Pensions Regulator expects trustees of occupational pension schemes to address stewardship in their Statement of Investment Principles, and the Department for Work and Pensions Regulations 2018 require disclosure of how voting rights have been exercised.
Asset managers also operate within the framework of FSMA 2000, the Senior Managers and Certification Regime (extended to all FSMA-authorised firms 9 December 2019) and the FCA Handbook Conduct of Business rules. Failure to deliver stewardship promised to clients can crystallise as a breach of contract, mis-selling or breach of fiduciary duty. Trustees of pension schemes owe parallel duties under trust law and the Pensions Act 1995 and 2004.
The 2020 Code is currently under FRC review, with consultation on a revised edition issued in 2024 and publication expected in 2025/26. Insurance underwriters monitor this revision closely because it is expected to recalibrate the role of stewardship in transition planning and net-zero alignment.
There is no standalone “Stewardship Code insurance”. Risks associated with stewardship are absorbed across two principal product lines.
For asset management and asset owner entities, professional indemnity (PI) and asset management professional liability policies respond to client claims alleging that stewardship and ESG promises in client agreements, fund documentation or marketing materials were breached. Wordings increasingly carry specific definitions covering ESG mis-statement and “greenwashing” allegations — sometimes excluded, sometimes covered subject to a sub-limit. The FCA’s anti-greenwashing rule (ESG 4.3.1R) came into force on 31 May 2024 and is reflected in market underwriting.
For the directors and senior managers of asset managers, asset owners and trustee boards, D&O liability cover responds to claims of breach of fiduciary duty or regulatory investigation arising from stewardship failings. Side A protection is particularly important for pension scheme trustees, who often serve in a personal capacity without the benefit of company indemnification. Service providers (proxy advisers, investment consultants) typically place PI cover that responds to claims of negligent advice or methodology.
The UK PI and D&O markets serving the asset management industry are deep, with Lloyd’s syndicates and London company market insurers including Beazley, Chubb, AIG, Travelers, CFC, QBE and Markel writing specialist financial institutions wordings. Capacity for asset managers tightened during 2020 to 2022 in the wake of ESG scrutiny and high-profile fund suspensions but has eased through 2024 and 2025. Underwriters request a copy of the firm’s Stewardship Report and engagement policy when assessing renewal.
Asset managers and asset owners should treat the Stewardship Code as a disclosure framework that creates contractual and regulatory expectations. Marketing claims about voting, engagement or net-zero alignment that go beyond what the firm actually delivers create insurance and litigation risk. The strongest defensive posture is documented internal evidence — voting records, engagement logs, escalation decisions — that supports each statement in the annual Stewardship Report.
A UK pension scheme trustee board, signatories to the Stewardship Code, were criticised by members in a complaint to the Pensions Ombudsman after the scheme’s listed equity manager voted against several climate-related shareholder resolutions despite the scheme’s published commitment to support such resolutions. Although the Ombudsman ultimately did not uphold the complaint, the trustees incurred substantial legal costs in responding. Their D&O policy, written on a Side A basis for trustees in their personal capacity, funded the defence costs above the trust’s own indemnity, and the asset manager’s PI cover responded to the trustees’ contractual claim against it.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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