Under the Financial Conduct Authority’s (“FCA”) Conduct of Business Rules 2.2.3R, Half Sky is required to make a public disclosure on its website in relation to the nature of its commitment to the Financial Reporting Council’s (“FRC”) Stewardship Code.
The Code was first published by the FRC in July 2010 and was updated in September 2012. Subsequently, the FRC published the new UK Stewardship Code 2020 (“2020 Code”), which took effect from 1 January 2020, and consists of 12 Principles for asset managers and asset owners, and six Principles for service providers.
The Code applies on a ‘comply or explain’ basis and is voluntary, aiming at enhancing the quality of engagement between institutional investors and companies, to help improve long-term returns to shareholders and provide for the efficient exercise of governance responsibilities by setting out good practice on engagement with investee companies that institutional investors should aspire to.
The FRC 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.’
The 2020 Code Principles are:
1. Signatories’ purpose, investment beliefs, strategy, and culture enable stewardship that creates long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.
2. Signatories’ governance, resources and incentives support stewardship.
3. Signatories manage conflicts of interest to put the best interests of clients and beneficiaries first
4. Signatories identify and respond to market-wide and systemic risks to promote a well-functioning financial system.
5. Signatories review their policies, assure their processes and assess the effectiveness of their activities.
6. Signatories take account of client and beneficiary needs and communicate the activities and outcomes of their stewardship and investment to them.
7. Signatories systematically integrate stewardship and investment, including material environmental, social and governance issues, and climate change, to fulfil their responsibilities.
8. Signatories monitor and hold to account managers and/or service providers.
9. Signatories engage with issuers to maintain or enhance the value of assets.
10. Signatories, where necessary, participate in collaborative engagement to influence issuers.
11. Signatories, where necessary, escalate stewardship activities to influence issuers.
12. Signatories actively exercise their rights and responsibilities.
The Firm provides investment management services to a single fund that pursues an investment strategy that involves investing in a range of securities and instruments without limitation in various jurisdictions. If the Fund were to invest directly in UK listed equities, these would represent only a small part of the fund’s overall portfolio. Hence, while the Firm generally supports the objectives that underlie the 2020 Code, the Firm has chosen not to become a signatory at this time. The Firm takes a consistent approach to engagement with issuers and their management globally and, consequently, does not consider it appropriate to commit to any particular voluntary code of practice relating to any individual jurisdiction.
If the Firm’s approach should change in the future, Half Sky will review its commitment to the 2020 Code and update this disclosure accordingly. For any questions regarding this disclosure, please contact Firm’s Compliance Officer at [email protected].