Funds Group: Dimensional Funds
Management Company: Dimensional Fund Advisors LP. For some funds, Dimensional Fund Advisors Ltd. and DFA Australia Limited serve as the sub-advisors.
Funds Affected: (1) DFA International Sustainability Core 1 and DFA US Sustainability Core 1, DFA Global Sustainability Fixed Income (2) DFA CSTG&E International Social Core Equity, DFA CSTG&E US Social Core Equity DFA Emerging Markets Social Core, DFA International Social Core, DFA Social Fixed Income, DFA US Social Core Equity, (3) DFA US Core Equity 1, DFA US Core Equity 2
Principal Sustainable Investment Management Strategy: (1) ESG Integration, Exclusions, (2) Exclusions, (3) ESG Integration
DFA’s sustainability core portfolios employ ESG integration strategies and that can potentially include exclusions while the social portfolios employ an exclusionary strategy, as outlined below:
(1) The funds intend to take into account the impact that companies may have on the environment and other sustainability considerations when making investment decisions. Relative to a portfolio without these considerations, the funds intend to exclude or underweight securities of companies that, according to the funds’ sustainability impact considerations, may be less sustainable as compared either to other companies in the funds’ investment universe or other companies with similar business lines. Similarly, relative to a portfolio without sustainability impact considerations, the funds intend to overweight securities of companies that, according to the funds’ sustainability impact considerations, may be more sustainable as compared either to other companies in the funds’ investment universe or other companies with similar business lines. In considering sustainability impact and other factors that DFA believes may be important to investors, the advisor may consider carbon and other greenhouse emissions, or potential emissions, land use, cluster munitions manufacturing, biodiversity, involvement in toxic spills or releases, operational waste, water use, tobacco, child labor, and factory farming activities, among other factors. In particular, the funds may exclude companies that DFA considers to have high carbon or greenhouse gas emissions or reserves that may produce those emissions. The advisor may engage third party service providers to provide research and/or ratings information relating to the funds’ sustainability impact considerations with respect to securities in the portfolio, where information is available from such providers.
(2) The funds seek to purchase securities that are consistent with the Portfolio’s social issue screens, which are monitored by an independent third party. The funds seek to exclude from their investment portfolios those companies that are identified by the portfolios’ social issue screens, as further discussed below. The funds’ social issue screens are designed to identify companies that: (1) earn at least 20% of their total annual revenue through the production and/or sale of conventional or nuclear weapons, their weapon systems, or critical components of these products, or the provision of weapon systems support and service; (2) are engaged in certain for profit business activities in or with the Republic of the Sudan; (3) earn at least 15% of their total annual revenue through the production and/or sale of tobacco or alcohol products, or key products or raw materials necessary for their production; (4) earn at least 20% of their total annual revenue from certain gambling activities, the production of goods used exclusively for gambling, or the provision of certain services in casinos that are fundamental to gambling operations; (5) directly participate in abortions, or develop or manufacture abortive agents or contraceptives; (6) earn at least 15% of their total annual revenue from the rental, sale, distribution or production of pornographic materials, or the ownership or operation of adult entertainment establishments; (7) are involved in the production or manufacture of landmines, cluster munitions, or the essential components of these products; (8) have had major recent controversies relating to child labor infractions in the U.S. or abroad; and/or (9) are involved in stem cell research.
(3) The advisor may also adjust the representation in the portfolio of an eligible company, or exclude a company, that the advisor believes to be negatively impacted by environmental, social or governance factors (including accounting practices and shareholder rights) to a greater degree relative to other issuers.