The National Association of Pension Funds (NAPF) is being urged to sign up and support a stewardship code.

The NAPF stewardship policy gives pension funds a clear roadmap of how they can address their stewardship responsibilities and sets out six best practice principles to follow.

These include setting mandates for their asset managers which explicitly cover stewardship responsibilities and reporting to the members of the pension schemes on how their policy has been implemented.

The policy was launched at the NAPF Corporate Governance Conference, where business secretary, Vince Cable delivered a keynote address on responsible capitalism. It explains why and how pension funds should back the Code, and also takes forward recommendations set out by the Kay Review on short-termism.

The stewardship code was launched by the Financial Reporting Council (FRC) in 2010 to improve engagement between institutional investors and companies. It has already been signed by 57 asset owners, including many of the UK's larger pension funds, and 189 asset managers.

Joanne Segars, NAPF chief executive, said: 'Governments and regulators, both in the UK and Europe, want institutional investors to be at the forefront of the movement towards a new 'responsible capitalism'. In the UK pension funds are already playing their part by encouraging more effective corporate governance at the companies in which they invest.

'The Stewardship Code is important, and a significant number of pension funds have signed up to it. But more need to do so, especially in light of the recent revisions to the Code, which put greater emphasis on the role of asset owners.

'The NAPF has prepared a policy that will help pension funds understand and fulfil their responsibilities as investors and to become signatories to the Code.

'Having a larger number of pension fund signatories to the Code will strengthen the links between owners, asset managers and companies, leading to better stewardship. Ultimately, it is in the interest of all pension funds that the companies in which they invest are well governed. We are confident that more will back the Code in the coming year.'

The original version of the code was primarily directed at asset managers, but was revised in October this year to stress the role played by asset owners such as pension funds.