In our paper, we survey the corporate landscape regarding shareholder engagement in Germany. We identify two main factors that constrain the possibilities of shareholders to engage in their company’s business decisions. The first factor concerns the legal design of the Aktiengesellschaft (AG) and in particular its two-tier board structure. A second factor concerns restrictions of shareholders’ involvement in the management of companies, especially when employees have a say in business affairs, due to the German co-determination rules. Empirically, shareholder opposition against management decisions plays a traditionally minor role. However, recent events like the dismissal of the managements’ discharge by the shareholders of Bayer in 2019 raise the question whether a new period of ‘shareholder activism’ is just about to begin. Recent developments rooting in the COVID-19-pandemic may well contribute to that transformation.

The German system of company law and corporate governance is often referred to as a ‘stakeholder value system’ which places it in opposition to Anglo-American ‘shareholder value systems’. This characterisation suggests more scope for the promotion of corporate sustainability. This chapter analyses to what extent key aspects of German company law and corporate governance constitute barriers and create opportunities for sustainable development. These include the question in whose interest German public limited companies (Aktiengesellschaften) are run, the co-determined supervisory board in the two-tier board system, the fact that the executive remuneration structure should be aimed at the ‘company’s sustainable development’, shareholder rights and mandatory nonfinancial information disclosure. It is argued that there is, contrary to the prevailing perception, little scope in German company law and corporate governance for the promotion of the social and environmental dimensions of sustainable development.