Dimensional believes that stronger governance practices generally will be reflected in higher stock prices through a combination of lower discount rates and higher cash flows.
As an independent asset management firm, we are committed to encouraging good corporate governance practices at the companies in which we invest. We seek to impact governance in several ways, including through proxy voting and listening to companies held in the portfolios we manage. We also seek to improve internal processes through research on governance matters and participation in industry surveys and events.
For questions about our corporate governance activities or policies, visit the links below or contact us at email@example.com.
Responsible Investment Policy
Responsible Investment Statement
Dimensional’s investment philosophy is based on the belief that in liquid capital markets, prices reflect all publicly available information about fundamental values. As such, Dimensional’s view is that securities traded in those markets reflect the aggregate risk and return expectations of all market participants and competition among market participants drives prices toward fair value.
This belief in markets means that Dimensional expects any value or long-term profitability attributable to a company’s current environmental, social, and governance practices to be reflected in a company’s price. A company can improve its corporate governance practices by aligning company management with shareholder interests, such as by promoting strong board representation, as well as by reducing unnecessary environmental and social risks. Dimensional also believes efforts to improve corporate governance may be reflected in increased valuations through a combination of lower discount rates and higher cash flows. For this reason, Dimensional primarily focuses its responsible investment efforts on improving governance practices in companies within the investment portfolios it manages on behalf of its clients.
Investors, particularly long-term shareholders with significant positions, can be well positioned to positively influence a company’s governance practices. We believe that shareholders have a right to be heard by company management and that it is our responsibility as an investment manager to judiciously exercise shareholder voting rights on behalf of the portfolios we manage, taking into account both the costs and potential benefits. Dimensional broadly incorporates governance considerations into the investment management process through its proxy voting, which incorporates practices to reflect shareholder interests, as well as communicating with portfolio companies to share Dimensional policies and areas of focus with regard to governance practices. Dimensional improves its internal processes through selected projects, research and consistent review of those processes.United Nations Principles for Responsible Investment (“UNPRI”)
As part of its commitment to encouraging strong governance, Dimensional became a signatory to the UNPRI in August 2012. The UNPRI provides a framework for incorporating environmental, social, and corporate governance (“ESG”) considerations into investment management practices. Dimensional commits to adopt and implement the six principles of the UNPRI (the “Principles”) where consistent with its fiduciary duty to clients, including:
Principle 1: Dimensional will incorporate ESG issues into investment analysis and decision-making processes.
Principle 2: Dimensional will incorporate ESG issues into relevant policies and practices.
Principle 3: Dimensional will seek appropriate disclosure on ESG issues from relevant portfolio companies.
Principle 4: Dimensional will promote acceptance and implementation of the Principles within the investment industry.
Principle 5: Dimensional will work to enhance its effectiveness in implementing the Principles.
Principle 6: Dimensional will report on its activities and progress toward implementing the Principles.Responsible Investment Initiatives
Corporate Governance Committee and CG Group
Dimensional has established a Corporate Governance Committee that reports to the Investment Committee. The Corporate Governance Committee is composed of senior executives, officers, directors, and members of the portfolio management team and is responsible for administering Dimensional’s proxy voting policy, considering complex proxy voting cases, and overseeing the Corporate Governance Group.
The Corporate Governance Group is a day-to-day working unit, which implements policies and oversees operations. This group includes dedicated analysts and resides within Portfolio Management. The group also utilises investment management personnel in the Portfolio Management group.
Dimensional’s primary responsible investment focus is on improving governance practices at portfolio companies. As an example, Dimensional generally excludes closely held companies from its universe of eligible securities for its clients on governance grounds, since companies with large strategic shareholders may not represent the interests of a broad set of shareholders. Dimensional may also choose not to purchase companies for its clients where, based on public information, in its judgment, there is a heightened concern of fraudulent or other behavior or situations that may make market information unreliable.
Dimensional also takes environmental and social principles into consideration for certain portfolios it manages. If clients have particular social and/or environmental preferences, Dimensional can implement negative screens or overlays to its underlying investment strategies to provide those clients with tailored investment solutions. Many of these preferences are incorporated into Dimensional’s social funds and sustainability funds.
In social funds, Dimensional seeks to incorporate social considerations into investment strategies by identifying and screening companies to reflect the values of its clients. Dimensional may utilise research from independent third-party vendors, depending on the requirements of each portfolio, to systematically exclude restricted securities.
In sustainability funds, Dimensional seeks to address the sustainability issues important to investors while maintaining sound investment principles. Sustainability considerations are integrated within a robust investment solution that pursues higher expected returns through increased weighting to smaller market cap, lower relative price, and higher profitability securities. Using data collected by Dimensional and research from independent third-party vendors on company business practices, companies are systematically evaluated with regard to sustainability. Investment in those companies is emphasised, reduced, or excluded based on how they fare on key sustainability metrics, including the primary sustainability impact considerations of high greenhouse gas emissions or reserves that may produce those emissions. Dimensional’s approach to sustainability can offer investors the ability to pursue their sustainability and investment goals simultaneously.
With regard to social and/or environmental considerations, it is Dimensional’s belief that investors decide whether those preferences should be aligned with their investment decisions, but that choice should not have to come at the expense of sound investment principles. These views are reflected in Dimensional’s social and sustainability funds.
Approaching Corporate Governance
- Proxy Voting
Proxy voting is the act of exercising shareholder voting rights on behalf of clients. This is Dimensional’s main tool for influencing the board of directors elected to manage a company on shareholders’ behalf as well as addressing other issues of company management. Dimensional may engage external vendors for voting execution and recommendations for certain shareholder meetings but remains responsible for voting decisions. Dimensional takes into consideration the costs associated with voting and generally will vote in instances where the expected economic benefit of doing so outweighs the costs for a given portfolio.
- Company Communications
When there is potential to increase shareholder value in connection with corporate governance, Dimensional will listen to the management of companies and may share with such companies Dimensional’s policies and areas of focus with regard to governance best practices.
- Industry Participation
Dimensional may join or participate in events with relevant industry groups where an opportunity exists to improve its internal processes.
- Internal Projects and Research
Dimensional may conduct research on the implications of certain governance practices and what it means for a company to have good governance policies and practices.
Disclosures and Reporting
Dimensional discloses information concerning its proxy voting records on its website and in other governance-related materials as appropriate, and updates such information as new information becomes available from time to time. Dimensional also posts detailed proxy voting records on its website where required in accordance with applicable regulations.
Dimensional will annually report on its progress towards implementing the UNPRI as required.
Dimensional is committed to improving its sustainability practices globally by seeking to understand the impact of its business operations on the environment and develop offices, plans, and processes that minimise those impacts. Dimensional’s corporate headquarters was awarded a three-star rating by Austin Energy Green Building.
* “Dimensional” refers to the Dimensional separate but affiliated entities generally, rather than one particular entity. These entities are Dimensional Fund Advisors LP, Dimensional Fund Advisors Ltd., DFA Australia Limited, Dimensional Fund Advisors Canada ULC, Dimensional Fund Advisors Pte. Ltd. and Dimensional Japan Ltd.
Frequently Asked Questions
Who is responsible for Corporate Governance at Dimensional?
Dimensional’s global corporate governance activities are managed by the Corporate Governance (CG) group, which sits within Dimensional’s Portfolio Management department. The group implements policies, monitors day-to-day operations, and researches governance issues and industry trends. Our Corporate Governance Committee, comprised of senior management, is responsible for overseeing the CG group, formulating and recommending changes to policy, and making decisions on governance-related matters.
What is Dimensional’s policy on proxy voting?
Dimensional votes or refrains from voting proxies on behalf of Australian trusts as well as those separate account mandates for which clients have given us the authority to vote according to its then current proxy voting policies and procedures. Our voting activities are intended to maximize shareholder value. This involves consideration of the feasibility, costs, and expected benefits of voting for each portfolio. Our proxy voting policies and procedures are summarised here; answers to some specific questions are provided below.
Does Dimensional vote proxies at every company meeting?
Dimensional seeks to vote, or refrain from voting, proxies in a manner that we believe is in the best interest of each portfolio. In instances where the costs—including opportunity costs—of voting exceed the expected economic benefits, we may refrain from voting. Additionally, international market restrictions—such as share blocking, re-registration, and onerous power of attorney requirements—may preclude us from voting in certain markets or at certain company meetings.
Does Dimensional utilize any third-party services in the proxy voting process?
Yes. Dimensional has engaged Institutional Shareholder Services (ISS) to provide information on shareholder meeting dates, research on proxy proposals, and voting recommendations based on our proxy voting policies and procedures. ISS also provides vote execution through its proprietary voting platform. In addition to ISS, we may also review voting recommendations from Glass Lewis and other research providers for selected meetings. Third-party research is only one of several inputs into our voting decision on a given proposal. We retain final discretion on how to vote.
Does Dimensional disclose its voting intentions or share ownership prior to voting?
Dimensional generally does not disclose our voting intentions or the portfolios’ share ownership prior to voting, except as required by applicable laws and regulation.
Does Dimensional make its proxy voting record publicly available?
Yes. We disclose voting information for our Australian trusts on our public website.
Is Dimensional a signatory to the United Nations Principles for Responsible Investment (UN-PRI)?
Yes. Dimensional became a signatory to the UN-PRI in August 2012.
How may I contact Dimensional’s Corporate Governance group?
The group may be contacted via email: firstname.lastname@example.org.
Voting - Australian Trusts
2016 CALENDAR YEAR
From January 1 to December 31, 2016, Dimensional's Australian Wholesale Trusts voted 14,112 proposals (98%) at 1,087 company meetings.1 All Australian meetings for which ballots were received in a timely manner were voted.
PROPOSAL COUNT, BY VOTE INSTRUCTION
The following statistics relate to proposals that were voted:
- Board directorships (56%) and executive compensation (25%) were the most common matters voted.
- Shareholder proposals represented 1.7% of all proposals.
PROPOSALS VOTED ON, BY ISSUE
SUPPORT FOR MANAGEMENT AND SHAREHOLDER PROPOSALS
Proposal Type Number of Proposals Voted Percentage Voted For Percentage Voted Against Antitakeover Related 236 92.8% 7.2% Capitalisation 685 86.7% 13.3% Compensation 3,464 85.8% 14.2% Directors Related 7,894 92.3% 7.7% Procedural Matters 1,319 94.8% 5.2% Reorganization and Mergers 270 96.3% 3.7% Total 13,868 90.7% 9.3%
Proposal Type Number of Proposals Voted Percentage Voted For Percentage Voted Against Directors Related 66 62.1% 37.9% Procedural Matters 178 22.5% 77.5% Total 244 33.2% 66.8%
1. Dimensional votes proxies wherever it is feasible and economical to do so. We may not vote in markets that have share-blocking, re-registration or other practices that impair our ability to sell voted shares. In addition, we consider the costs associated with voting (per vote charges, meeting representation fees, etc.) and vote in instances where the expected economic benefit of voting outweighs the costs for a given portfolio.
Proxy Voting Records