Sustainability Risks Policy Summary

Dimensional Funds plc and Dimensional Funds II plc

March 10, 2021

As part of its compliance with Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (“SFDR”), Dimensional Funds plc and Dimensional Funds II plc (the “Funds”) are required to publish on their websites information about their policies on the integration of sustainability risks in their investment decision-making process. To that end, the Funds have adopted a sustainability risks policy for integrating sustainability risks into the investment decision making process (the “Policy”).

In accordance with the Funds’ prospectuses, the Funds have engaged Dimensional Fund Advisors Ltd., the investment manager of the Funds (the “Investment Manager” and, together with its global affiliates, “Dimensional”), to assist them in integrating sustainability risks into the investment decision-making process. Dimensional’s core investment philosophy is based on the belief that in liquid capital markets, security prices reflect available information about fundamental values and the aggregate expectations of market participants. To the extent that sustainability risks are material to a company, Dimensional believes that they will be reflected in a company’s price. Nevertheless, Dimensional takes sustainability risks into consideration where they may have a material negative impact on performance. The Investment Manager integrates sustainability risks into its investment process in following ways:

Diversification
As sustainability risks may impact companies differently, the Investment Manager seeks to invest in a broadly diversified group of securities across many different industries and countries to minimize the impact of risks faced by any individual company held in the Funds.

Research
Dimensional performs research on the relationship between sustainability risks and investment returns.

Monitoring
To help investors and potential investors assess their exposure to sustainability risk, Dimensional provides the carbon footprint of its equity strategies, upon request.

Dimensional monitors numerous vendors of sustainability data to keep informed on data availability. Dimensional also uses data from data vendors to generate its own sustainability data, monitors sustainability-related studies in academic literature, and perform internal sustainability research.

In addition, Dimensional runs a daily news check process, intended to identify companies that may be involved in significant controversies, including those related to sustainability issues. Dimensional may put companies identified as such during the news check process on temporary halt for purchases, or may refer them to Dimensional’s Investment Stewardship team for engagement.

Stewardship and engagement
Dimensional’s Investment Stewardship team seeks to engage with companies to better understand key risks, including reputational risks from mismanagement of material sustainability issues, and the mechanisms in place to identify and address these risks. Engagement informs those companies of Dimensional’s expectation that they monitor all material risks, including those related to sustainability.

The information learned during engagements and the companies’ actions post-engagement may be used as the basis for potential escalation of Dimensional’s stewardship activities, such as proxy voting. If a portfolio company is unresponsive to material sustainability risks, Dimensional may support shareholder proposals related to these issues and may also vote against or withhold voting from directors individually, committee members, or the entire board.

The Funds will review this policy on at least an annual basis and more frequently if necessary.



Disclosure

Dimensional can discuss governance matters with portfolio companies to represent client interests, though Dimensional does not, on behalf of its clients, acquire securities with the purpose or intended effect of changing or influencing the control of a portfolio company.

Issued by Dimensional Fund Advisors Ltd. (DFAL), 20 Triton Street, Regent’s Place, London, NW1 3BF. DFAL is authorised and regulated by the Financial Conduct Authority (FCA) - Firm Reference No. 150100. 

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Risks
Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original value. Past performance is not a guarantee of future results. There is no guarantee strategies will be successful.

Diversification neither assures a profit nor guarantees against loss in a declining market.

Environmental and social screens may limit investment opportunities for the strategy.