Watchdogs have pushed ahead with a new code for investment managers and asset owners that aims to cut disclosures dramatically and removes explicit mention of the environment from the definition of stewardship.

A revamped UK Stewardship Code was launched this week, aimed at cutting the burden of compliance and including targeted principles for asset owners, managers and proxy advisers, and investment and engagement advisers.

Richard Moriarty, chief executive of the Financial Reporting Council, says a consultation on the code found that it retained investor support.

“The updated code focuses on long-term sustainable value creation while cutting unnecessary reporting and improving engagement quality.

“New dedicated principles for proxy advisers increase transparency in the investment chain.”

The new definition of stewardship says: “Stewardship is the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries.”

From 2020, the code said stewardship leads to “sustainable benefits for the economy, the environment and society”.

‘Set to lower the bar’

But the launch was met with both criticism and praise.

Investment consultancy Pirc declared the code was a “step in the wrong direction”.

Pirc argues the new code “downgrades” the importance of social and environmental issues in the definition of stewardship.

A Pirc statement says: “Taken together, the revisions look set to lower the bar on stewardship. Meeting the stewardship code expectations was not straightforward. Not all investors passed and the risks of not meeting the grade were considerable.

“This meant the code was not just a kite mark to be obtained by investors. It’s also a way to actively drive up governance standards at companies. A weakening of the code is therefore to be regretted.”

The Investment Association, however, says: “The new code provides a clear focus on stewardship delivering long-term sustainable value for clients whilst meeting any specific objectives and has been broadly supported by the investment industry.”

A new stewardship code has been in the works since last year when a consultation was launched. The issue of the definition immediately became apparent.

At the time, the streamlined definition received support from the Capital Markets Industry Task Force, a lobby group chaired by the chief executive of the London Stock Exchange, and from the International Corporate Governance Network.

However, there has been consistent opposition. Now, the code has been settled and is set to be implemented.

Observers will wait to see if stewardship retains its standards.