Pension funds in Germany are facing a significant shortfall in transparency and voting practices, according to a new report by Rezonanz.

As pension funds across Europe strive to improve their proxy voting disclosures, the firm said that Germany lags conspicuously behind, revealing a critical gap in policy transparency and voting record granularity.

The report, Voting for the Future: Pension Policies and Practices across Six European Countries, looked at 122 pension funds across the UK, Germany, Switzerland, the Netherlands, Denmark, and Sweden, assessing them on how they disclose and leverage their proxy voting power.

Rezonanz said that the study focused on internal transparency, voting behaviour on ESG proposals, the derivation of best practices in voting policies, and the influence of external regulatory frameworks.

For Germany, the results were stark. Writing in the report, Rezonanz said: “Germany stands out starkly, as none of the 20 sampled German pension funds disclose their voting policies. This lack of disclosure in Germany points to a transparency gap.”

It added: “Our German expert interviewee Ingo Speich spoke to those particular challenges as follows ‘it takes a lot of effort for the comparatively small pension funds in Germany to do such [disclosure] efforts. They either don’t vote or they mandate a third party like a proxy voting agency or an asset manager’.”

Ranked against the other nations in terms of providing ‘granular voting records’, Germany placed last with just one fund out of 20 doing so. In comparison, 13 out of 17 Danish companies provided this information, along with 15 out of 20 Dutch funds and 16 out of 22 Swiss funds.

All of this, said Rezonanz, has led to a disturbing lack of transparency.

It wrote: “Germany’s complete absence of policy disclosure coupled with minimal voting record transparency underscores country-level challenges in transparency practices.”

Voting for the Future: Pension Policies and Practices across Six European Countries also pointed to a lack of a distinct stewardship code, despite a rise in shareholder engagement and the EU Shareholder Rights Directive II (SRD II).

The authors wrote: “In addition, Germany’s stance reflects traditional patterns of domestic corporate governance and law, where investor engagement has not historically taken the shape of a unified, code-based approach. In spite of this, in 2020, after SRD II’s implementation, the DVFA, the German professional association of investment professionals, established a set of Stewardship Guidelines, most recently updated in late 2023.”

They concluded: “While our expert interviewee mentioned a small number of asset managers have reported their alignment with the guidelines’ principles, no mention of pension funds’ uptake was made.”

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