Dimensional’s sustainability strategies are currently primarily designed to decrease exposure to companies that are significant contributors to emissions or those with large fossil fuel reserves (such as oil, gas, and coal) that may lead to future emissions. Other considerations, such as land use and biodiversity, toxic spills and releases, operational waste, and water management, are also variables in the sustainability score. Dimensional’s approach seeks to minimize or exclude investment in companies with lower sustainability scores. The strategies also seek to exclude companies connected to other environmental and social sustainability issues, including: coal, palm oil, factory farming, cluster munitions, civilian firearms, tobacco, and child labor.
Dimensional’s socially focused portfolios use screens to identify stocks for exclusion based on business activity across several issues, such as meaningful involvement in: nuclear weapons; the Republic of Sudan; tobacco; alcohol; gambling; or pornography. Also excluded are companies that are involved in: abortions, abortive agents, or contraceptives; landmines or cluster bombs, civilian firearms; stem cell research; or have had major recent controversies relating to child labor.
More broadly, Dimensional generally excludes closely held companies from its universe of eligible securities for its clients on governance grounds, as described in earlier sections.