On 14 November 2016, the FRC published its assessment of signatories' reporting against the Stewardship Code ("Code"), which categorises signatories into tiers based on the quality of the reporting in their statements based on the seven principles of the Code and the supporting guidance. The tiering exercise was undertaken with the aim of improving the quality of reporting against, and maintaining the credibility of, the Stewardship Code, and encouraging greater transparency in the market.
The FRC has categorised asset managers in three tiers and other signatories to the Code in two tiers. The additional tier for asset managers reflects the greater relevance of the Code's provisions to asset managers, their role as agents and the wide range of reporting quality. The FRC has also indicated that asset managers who have not achieved at least Tier 2 status after six months will be removed from the list of signatories to the Code. The FRC invites contact from signatories, particularly those in Tier 3, to discuss improvements to their reporting.
- Tier 1: Signatories provide a good quality and transparent description of their approach to stewardship and explanations of an alternative approach where necessary.
- Tier 2: Signatories meet many of the reporting expectations but report less transparently on their approach to stewardship or do not provide explanations where they depart from provisions of the Code.
- Tier 3: Significant reporting improvements need to be made to ensure the approach is more transparent. Signatories have not engaged with the process of improving their statements and their statements continue to be generic and provide no, or poor, explanations where they depart from provisions of the Code.
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