rezonanz Releases "Voting for the Future" Report

Pension funds’ long-term investment horizons and broad diversification across markets and asset classes positions them as critical players in driving sustainable change in corporate behavior. By leveraging proxy voting as a cost-effective form of stewardship, pension funds can use their ownership rights to push companies toward improved Environmental and Social (E&S) practices. Our research aims to provide a holistic view of pension funds’ proxy voting activities with concrete recommendations for both these institutions and industry practitioners to enhance stewardship practices and drive long-term sustainable outcomes in the global economy.

In recent years, stewardship activities have gained momentum as the most promising avenue for investor impact in public markets. Stewardship encompasses proxy voting and direct engagement with company management aimed to steer existing portfolio companies toward more sustainable and responsible practices from within. Amid cost pressures and a shift to passive strategies, pension funds increasingly use proxy voting as a cost-effective way to influence corporate behavior and advocate for environmental, social, and governance reforms across their typically broadly-invested portfolios. Although the lion’s share of proxy votes address governance issues, environmental and social proposals have steadily gained traction in recent years.

Yet amidst a strong focus on asset managers’ votes, existing research has often overlooked how pension funds in particular vote on sustainability-relevant proposals. This gap is especially pressing as several prominent asset managers backtrack on their ESG commitments, while pension funds have signaled sustained interest in E&S issues (Financial Times, 2025). Recognizing the centrality of proxy voting, we investigate key dimensions of pension funds' voting activities – focusing on disclosure patterns, voting choices on E&S-relevant proposals, best practices with respect to sustainability-aligned voting policies, and the role of external regulatory frameworks in shaping these outcomes.

We focus on six European countries—the United Kingdom, Switzerland, the Netherlands, Denmark, Sweden, and Germany—that represent large and influential pension fund sectors and that have mature and diverse pension systems coupled with distinct regulatory and cultural environments.  

Part 1A: Disclosure Patterns & Voting Behavior on E&S Proposals

Transparency in pension fund practices is essential to foster accountability. Stakeholders increasingly demand clarity on the votes at company meetings impacting E&S outcomes and on the formal voting policies that guide pension funds’ voting choices.

Current Disclosure Patterns

The observed disclosure patterns based on an analysis of 122 pension funds (appr. 20 per country) across the six countries vary significantly. Among the sampled pension funds, the Netherlands emerges as a clear leader in disclosing formal voting policies (14 out of 20 funds assessed share their voting policies). This is nearly double the absolute number observed in markets like the UK and Denmark. Switzerland and Sweden trail behind. Germany stands out starkly, as none of the sampled pension funds disclose their voting policies. This points to a potential transparency gap, raising questions not only about the lack of disclosures, but the practice of voting overall.

When it comes to disclosing company-level voting records, a different pattern emerges. Denmark, the Netherlands, and Switzerland show high levels of transparency, publishing detailed voting data while Sweden demonstrates moderate voting records transparency. The UK lags, and Germany fares the worst with only one pension fund disclosing granular voting data.

This highlights that strong disclosure practices in voting policies do not uniformly translate into company-level voting transparency. For example, the Netherlands leads in both policy and voting records disclosure, reinforcing its reputation for transparency. In contrast, Switzerland, while having a relatively low policy disclosure rate, achieves high transparency in voting records. Conversely, Germany's complete absence of policy disclosure coupled with minimal voting record transparency underscores country-level challenges in transparency practices.

Potential Disclosure Drivers

To better understand the variations in disclosure practices across the focus markets, we examine the potential drivers behind these observed patterns:

-       Size: Larger funds typically maintain direct control over their proxy voting, while smaller funds often delegate voting responsibilities to external managers, which can result in less direct oversight and diminished transparency.

-       Fund type: The type of fund plays a role as well. Public pension funds face more pressure for transparency, while private funds, with fewer external checks and potential conflicts, may be less inclined to challenge investee companies.

-       Industry: Pension funds often reflect the values and priorities of the industries or professions they serve, which can influence how actively they pursue both their overall stewardship approach and how they apply it with individual responsible investment topics.

-       Path dependency: This is the idea that past decisions, norms, and institutional structures shape a pension fund system’s long-term trajectory. Over time, these values become self-reinforcing, making certain markets more inclined to prioritize an active investor role in company governance.

Part 1B: Voting behavior on E&S proposals

Next, we analyze the voting behavior of the 42 pension funds that disclosed company-level voting records in Part 1A. Employing an innovative methodology based on Bayesian modelling, we evaluate how these funds voted on 428 environmental and social proposals (both shareholder and management proposals) during the 2024 proxy voting season. To ensure a rigorous and consistent definition of sustainability, proposals flagged by nine leading responsible investment organizations were included in our analysis.

Figure 1 below presents the overall sustainability scores, revealing both the diversity of pension fund approaches to sustainability-aligned voting and the presence of clear leaders and laggards within each country. Swedish funds generally score highest, followed by the Netherlands, displaying a somewhat wider range. Swiss pension funds mostly cluster in the mid-range, though there are two outliers. By contrast, Danish funds span a broad spectrum. The UK funds appear in a narrower band, consistently landing on the lower end of the scale, while German funds are absent entirely due to insufficient disclosure. Beyond the overall scores, we offer detailed thematic scores in four key areas—Climate Change; Politics & Lobbying; Diversity, Workers’ & Human Rights; and Other E&S issues—uncovering rich insights into how E&S voting alignment varies both within and across countries.

Figure 1: Pension Funds’ Overall Scores by Country

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Best Practices from Voting Policies

Based on the results from Part 1B, we focus on the leaders in E&S aligned proxy voting and qualitatively investigate their voting policies to understand better what underpins their strong voting performance and to derive best practices from their voting policies. A close examination of recurring themes, explicit commitments, and the concrete language in each disclosed voting policy establishes a set of practical recommendations for pension funds to bolster their own E&S voting approach. The results from the voting policies analysis are divided into four E&S subtopics: Climate Change, Politics & Lobbying, Diversity, Workers’, and Human Rights and Other E&S issues.

A focus on Climate Change
The voting policies of the twelve top quartile pension funds in the voting patterns analysis reveal a fundamentally similar vision: stewarding a smooth transition to a low-carbon economy and mitigating climate-related investment risks. These funds recognize that proxy voting is a direct avenue for driving corporate climate performance. Some describe voting at general meetings as their most important tool for engaging with companies in their portfolio and for driving their position on sustainability issues.  Many funds explicitly press companies to align with net-zero pathways, for example by signing the Net Zero Asset Owner Commitment or by committing to meet the goals of the 2015 Paris Agreement. Plus, funds increasingly hold board members responsible for overseeing climate risk, and they insist on thorough and transparent emissions reporting, often tied to established frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD).  

Politics and Lobbying: A call for greater transparency
A prevailing theme is the call for greater transparency around corporate engagement with policymakers and industry groups. This provides investors with insight into a company’s policy positions and helps ensure that a firm’s behind-the-scenes political advocacy is congruent with its publicly stated sustainability goals.

There is a growing sentiment that companies should not contradict their declared net-zero or broader ESG targets through anti-climate lobbying. If such contradictions arise, shareholders will consider them in their voting decisions.

Other Environmental & Social: Safeguard biodiversity

A recurring focus of the thirteen top-performing pension funds is the safeguard of biodiversity and responsible land use. These positions highlight a shared expectation for corporate policies that protect habitats, avoid deforestation risks in the supply-chain, and ensure that suppliers meet biodiversity safeguards.

Many funds underline recognized environmental doctrines to guide their voting activities including the Precautionary Principle and the Polluter Pays Principle. Several funds advocate for direct measures to curb pollution, resource depletion, and waste.

Leading investors increasingly expect companies to address animal welfare and adopt recognized sustainability standards for commodities such as timber, palm oil, and fish. They tend to vote for shareholder proposals that consider specific certifications for commodities such as MSC, FSC, RSPO, RTRS or Five freedoms of animals.

Diversity, Workers’, and Human Rights woven into the strategy

Across the top-performing pension funds in the Diversity, Workers’ Rights, and Human Rights category, a consistent theme is the insistence that representation, fair labor practices, and respect for global human rights standards are woven into the core of corporate strategy. Voting policies directly address issues like board diversity thresholds, human rights due diligence, and the prevention of forced labor, with funds often referencing international frameworks such as ILO conventions and the UN Guiding Principles on Business and Human Rights.  

Stewardship Codes as a Framework for Voting Requirements

Stewardship codes are voluntary or mandated frameworks designed to shape how institutional investors cast their proxy votes and engage with their investee companies. They often aim to foster transparency, accountability, and a long-term focus. Can these codes serve as an effective vehicle for anchoring voting disclosure requirements at scale?

Definition and historical evolution of Stewardship Codes

While early investor stewardship traces back to the 1990s, formal codes emerged after the 2008 crisis, with the UK Stewardship Code (2010) setting a regulatory precedent. By 2024, nineteen countries had adopted or updated such codes, in the wake of the EU Shareholder Rights Directive II. Though voluntary, they can become important industry norms.

Overview of Stewardship codes across the six European markets

Stewardship frameworks in Europe vary, from stricter enforcement of codes with reporting obligations to voluntary guidelines. Some countries enforce investor-focused codes for transparency in voting, while others defer to local corporate governance codes. These differences shape stewardship practices, influencing how voting requirements and responsible ownership are integrated into investment strategies.

Relationship between Stewardship Code presence and E&S voting alignment

Going beyond disclosure to examine voting records’ sustainability performance: the table below captures the relationship between the presence of stewardship codes and stronger E&S voting practices.

Table 1: Relationship between Stewardship Code presence and E&S voting alignment

The analysis shows that neither the presence nor the absence of a stewardship code alone can predict strong alignment with E&S principles among pension funds. Also, other contextual factors (such as regulatory traditions, investor culture, and market size) significantly influence voting practices. Amidst a dearth of research in this area, these interpretations serve as a starting point while suggesting avenues for further research and policy refinement.

Conclusion

Recognizing the pivotal role of proxy voting in catalyzing sustainable change in public markets, this report presents a comprehensive analysis of how pension funds in six European countries disclose and harness their proxy voting power. By examining internal transparency, voting behavior on environmental and social proposals, the derivation of best practices in voting policies, and the influence of external regulatory frameworks, our study creates a first-of-its-kind bridge between theory and practice. The insights provided offer actionable recommendations for pension funds to drive long-term corporate change while effectively managing systemic risks.

Please visit https://www.rezonanz.io/voting-for-the-future-report for more information, references and the full report.