Sustainability Due Diligence 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 and maintain on their websites a statement on due diligence policies with respect to principal adverse impacts of investment decisions. To that end, the Funds have each adopted a sustainability due diligence policy (the “Policy”).
It is a part of the Funds’ Policy to rely on Dimensional Fund Advisors Ltd., in its capacity as the investment manager of the Funds (the “Investment Manager” and, together with its global affiliates, “Dimensional”), to assist them in considering the principal adverse impacts of investment decisions on sustainability factors.
Dimensional’s Portfolio Management Group is primarily responsible for identifying and prioritizing principal adverse impacts. Their activities are overseen by Dimensional’s Investment Committee and the Designated Person for Investment Management of the Funds. Principal adverse impacts are reviewed at least annually, taking into account information from third party academics in the fields of climate science and economics, specialized data providers and industry groups. In addition, Dimensional holds periodic meetings with consultants, clients and other stakeholders to better understand their priorities with respect to sustainability. The primary principal adverse impacts Dimensional considers in these strategies will be linked to a particular investor’s requirements and may include, but are not limited to, the following considerations: greenhouse gas emissions intensity, potential emissions from reserves, land use and biodiversity, toxic spills and releases, operational waste, water management, exposure to coal, exposure to significant risk of incidents of child labour, exposure to palm oil, exposure to factory farming, exposure to tobacco products, exposure to controversial weapons and/or exposure to civilian firearms.
Dimensional advocates for effective oversight of environmental and social risk and other governance best practices through engagement with portfolio companies, proxy voting, engagement with regulators and policy makers, and participation in industry events and organizations.
For investors who seek to exclude or underweight companies engaged in unsustainable practices, Dimensional is able to offer strategies that promote environmental or social characteristics by excluding or underweighting securities based on whether the business activities of the portfolio company are deemed to have a principal adverse impact on specific sustainability factors. Investors may also provide Dimensional with an exclusion list as part of the implementation of such strategies.
Dimensional’s Investment Stewardship Group often engages directly with the board and management of portfolio companies to better understand their approach to corporate governance, including management of material environmental and social risks. When prioritizing engagements, Dimensional takes a holistic approach by considering a variety of factors, including a portfolio company’s overall governance profile, relevant sustainability risks, recent public environmental controversies, the collective holdings of Dimensional’s clients in the company, recent or upcoming proxy votes, and follow-ups from prior engagements.
When voting (or refraining from voting) proxies, Dimensional seeks to act in the best interests of the Funds. Dimensional seeks to maximize shareholder value, considering the standards of relevant legal and regulatory regimes, listing requirements, regional corporate governance codes, and any social and sustainability guidelines of specific funds or accounts. Dimensional evaluates management and shareholder proposals on a case-by-case basis.
By way of its global affiliates, Dimensional is a signatory to the United Nations’ Principles of Responsible Investment, the UK Stewardship Code and the Japan Stewardship Code. Dimensional is a member of the Council of Institutional Investors, the Harvard Institutional Investor Forum and the International Corporate Governance Network. In March 2020, Dimensional also became a supporter of the Taskforce for Climate-related Financial Disclosures.
The Funds will each review this policy on at least an annual basis and more frequently if necessary.
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.
DFAL does not give financial advice. You are responsible for deciding whether an investment is suitable for your personal circumstances, and we recommend that a financial adviser helps you with that decision.
The information in this material is intended for the recipient’s background information and use only. It is provided in good faith and without any warranty or, representation as to accuracy or completeness. Information and opinions presented in this material have been obtained or derived from sources believed by DFAL to be reliable and DFAL has reasonable grounds to believe that all factual information herein is true as at the date of this document. It does not constitute investment advice, recommendation, or an offer of any services or products for sale and is not intended to provide a sufficient basis on which to make an investment decision. It is the responsibility of any persons wishing to make a purchase to inform themselves of and observe all applicable laws and regulations. Unauthorised reproduction or transmitting of this material is strictly prohibited. DFAL does not accept responsibility for loss arising from the use of the information contained herein.
DFAL issues information and materials in English and may also issue information and materials in certain other languages. The recipient’s continued acceptance of information and materials from DFAL will constitute the recipient’s consent to be provided with such information and materials, where relevant, in more than one language.
“Dimensional” refers to the Dimensional separate but affiliated entities generally, rather than to one particular entity. These entities are Dimensional Fund Advisors LP, Dimensional Fund Advisors Ltd., Dimensional Ireland Limited, DFA Australia Limited, Dimensional Fund Advisors Canada ULC, Dimensional Fund Advisors Pte. Ltd, Dimensional Japan Ltd., and Dimensional Hong Kong Limited. Dimensional Hong Kong Limited is licensed by the Securities and Futures Commission to conduct Type 1 (dealing in securities) regulated activities only and does not provide asset management services.
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.