rezonanz: Proxy voting best practices: how Dutch pension funds lead by example
Our latest study reveals exactly how Dutch pension funds translate their sustainability commitments into real-world impact through their approach to proxy voting.
By Siyana Gurova and Eleanor Willi, Co-Founders of rezonanz
With sustainability moving from a niche concern to a mainstream expectation, pension funds face increasing pressure to demonstrate that their stewardship genuinely makes a difference. Beneficiaries, regulators, and stakeholders demand more than lofty promises – they expect clear evidence of action. Proxy voting is one of the most powerful tools available to institutional investors, yet true best practices in this area have been difficult to define – until now.
In our comprehensive analysis, we examined proxy voting practices across six major European pension markets: Germany, Denmark, Sweden, Switzerland, the United Kingdom, and the Netherlands. While Swedish pension funds emerged with the highest overall sustainability alignment scores, Dutch pension funds stood out strongly in several key thematic areas, systematically embedding sustainability into actionable and enforceable voting guidelines. Here’s how they are setting an industry benchmark.
Behind our analysis: a threestep approach
We approached our research through a structured, rigor ous three-step methodology:
1. Assessing transparency
We first evaluated the transparency of 122 European pension funds by reviewing their publicly disclosed formal voting policies, and detailed, company-level voting records. Dutch pension funds led the pack, with 70% publicly sharing formal voting policies and 75% providing granular, company-level voting disclosures – significantly higher than the European average (48%).
2. Analyzing voting behavior quantitatively
Next, we assessed whether transparency translates into actual sustainability-aligned voting choices. Using our ‘voting for sustainability’ methodology, we scored pension funds’ votes across a carefully selected set of 428 key environmental and social proposals from the 2024 proxy season. This set of management and shareholder proposals, flagged by leading responsible investment organizations like Climate Action 100+ and ShareAction, offered a robust benchmark defining the set of sustainability-relevant votes. Dutch pension funds consistently scored well, especially on issues related to diversity and human rights, lobbying transparency, and non-climate environmental and social proposals (on topics such as biodiversity).
3. Identifying best practices qualitatively
Building on this analysis, we closely reviewed the voting policies of the top-performing pension funds identified by our quantitative analysis. This deep dive allowed us to pinpoint the key elements in voting policies contributing to specific funds’ sustainability outperformance. Dutch pension funds stood out by explicitly embedding clear, enforceable guidelines into their voting practices, turning policy into action.
Best practices from leading Dutch pension funds
Several Dutch pension funds exemplify best-in-class voting practices, including Pensioenfonds Horeca & Catering (PH&C), Pensioenfonds Vervoer, Pensioenfonds Metaal en Techniek (PMT), Pensioenfonds Zorg en Welzijn (PFZW), Pensioenfonds Medewerkers Apotheken (PMA), and Pensioenfonds van de Metalektro (PME). Here’s what sets their voting apart:
1. Gender diversity with teeth
For Dutch funds, gender diversity isn’t just nice to have – it’s mandatory. PH&C’s policy explicitly states: ‘We vote against the reappointment of nomination committee chairs when there are no female board members.’ PME similarly uses explicit voting thresholds to enforce gender diversity. Such clear criteria remove ambiguity, compelling companies toward meaningful boardroom diversity.
2. Rigorous human rights standards
Human rights voting policies among Dutch funds align directly with global standards. Pensioenfonds Vervoer consistently supports shareholder proposals demanding detailed human rights disclosures aligned with the UN Guiding Principles on Business and Human Rights. PMT explicitly commits to voting against companies where forced or child labor risks are inadequately managed, directly embedding international norms into corporate accountability.
3. Lobbying transparency and accountability
Dutch pension funds recognize opaque lobbying as a major sustainability risk. On behalf of PFZW, PGGM systematically votes in favor of full transparency regarding corporate lobbying activities, political contributions, and membership in industry associations. PH&C reinforces this with clear voting criteria: ‘We vote in favor of all proposals to disclose political donations.’ These explicit voting stances reinforce consistency between corporate actions and public sustainability claims.
4. Concrete environmental action beyond climate
Dutch pension funds explicitly embed broader environmental concerns – such as biodiversity protection and sustainable resource use – into their voting practices. PH&C consistently votes to demand corporations eliminate deforestation risks in their supply chains. PMA actively supports initiatives such as the Business Coalition for a UN Plastic Treaty, advocating for robust action on plastic pollution. By explicitly integrating these environmental criteria into voting guidelines, pension funds constructively steer their portfolio companies toward more meaningful alignment with sustainability.
Practical lessons for the industry
From our analysis, clear lessons emerge that other pension funds both inside and outside the Netherlands can adopt to improve sus tainability voting outcomes:
- Set explicit, measurable targets:
Vague promises won’t drive real change. Clear targets, like diversity thresholds or TCFD aligned climate disclosure standards, make voting actionable and impactful. - Leverage global standards:
Incorporating recognized global frameworks (TCFD, UNGPs, OECD Guide lines) enhances consisten cy and credibility across markets. - Make accountability explicit:
Clearly state the voting consequences for inade quate corporate action – such as escalating via votes against directors – to significantly strengthen corporate accountability.
Why the Netherlands leads
Why are Dutch pension funds ahead of peers in proxy voting practices in many respects? A unique combination of regulatory environment, peer account ability, and cultural expecta tions drives their leadership. The Dutch Stewardship Code, largely integrated into the Dutch Corporate Gover nance Code, has further nurtured a culture in which explicit sustainability goals translate directly into en forceable voting action.
Yet, it remains important to acknowledge that Swedish pension funds, driven partly by strong legislative sustain ability mandates for public pension funds (AP Funds) and robust industry norms, set the highest overall standard. Their consistent leadership across diverse sustainability categories demonstrates that effective proxy voting is best achieved through integrated, ambitious policy frameworks, a system atic approach to corporate accountability, and clear sustainability mandates.
Looking ahead: raising the bar
Proxy voting, when done effectively, can drive signifi cant corporate sustainability improvements. Dutch pen sion funds have set an exem plary standard by turning explicit sustainability goals into clear voting outcomes, providing a replicable blue print for pension funds globally.
Ultimately, proxy voting is a powerful lever to catalyze real-world sustainability transformation. Dutch pension funds are showing that clearly articulated, actionable, and enforceable voting practices can genu inely reshape corporate behavior. Their approach sets a benchmark that all responsible investors would do well to follow.
|
SUMMARY Dutch pension funds lead in sustainable proxy voting by embedding clear, enforceable policies. They excel in transparency, gender diversity mandates, human rights, lobbying accountability, and environmental action. Dutch leaders include PFZW, PH&C, PME, PMT, PMA, and Pensioenfonds Vervoer. Their approach sets measurable targets and aligns with global standards like the UNGPs. Strong regulation and peer accountability drive Dutch leadership, offering a blueprint for global pension funds. |