Asset managers and proxy advisers should hold some responsibility for pension funds’ stewardship, the UK pension fund association has said in its response to the Financial Reporting Council’s (FRC) draft strategy for 2016-17.

The Pensions and Lifetime Savings Association’s (PLSA) submission addressed corporate governance and reporting, and investor stewardship, among other aspects on which the FRC sought feedback.

The consultation was on the FRC’s plans for the first year of its new three-year strategy.

It closed on Friday.

On the topic of investor stewardship, the PLSA said it supported the FRC’s focus on three key constituencies of the investment sector – asset owners, asset managers and proxy advisers – but that “differences in stewardship capacity” across these groups should be acknowledged.

This is because many pension funds do not have the resources to dedicate significant time to stewardship issues, “part of the reason why asset managers and proxy advisers are contracted in the first place”.

“These industries should hold some responsibility to highlight the importance of stewardship to their clients, even if the pension funds do not raise it themselves,” said the PLSA.

The association welcomed the FRC’s work on corporate culture and board effectiveness, and specifically on succession planning.

However, it called on the regulator to do more to improve corporate reporting on “human capital” and environmental, social and governance (ESG) performance.

“We would like to highlight the importance of ‘human capital’ to culture and advise the FRC to monitor practices and reporting in relation to companies and the people who work for them,” said the association.

Human capital represents an asset estimated to be worth “billions”, but it is also a source of major strategic risks in the form of industrial disputes, employee misconduct or poor customer experience, it said. 

The FRC is the body responsible for the UK Corporate Governance and Stewardship Codes, which set out best practice for companies and institutional investors, respectively.

In December, it announced plans to publicly rate pension funds and asset managers on their level of engagement with the Stewardship Code