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Dimensional Fund Advisors

PRI reporting framework 2020

You are in Direct - Listed Equity Active Ownership » Engagement

Engagement

LEA 02. Reasoning for interaction on ESG issues

Indicate the method of engagement, giving reasons for the interaction.

Type of engagement

Reason for interaction

Individual / Internal staff engagements
Collaborative engagements
Service provider engagements

02.4. Additional information. [Optional]

Dimensional engages with management and dissident groups. While regulatory concerns may impact our ability to act collectively with other investors, we will consider communicating with other investors (and may consider communicating with other stakeholders) in relation to specific portfolio companies when we believe that doing so is in the best interest of our clients, is likely to maximize the value of their investment, is consistent with our policies and guidelines and is permissible under applicable laws and regulations. If we believe that other investors have valid concerns, we may communicate with them to understand their concerns; this may help inform our view of company management.


LEA 03. Process for identifying and prioritising engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagements.

Indicate the criteria used to identify and prioritise engagements for each type of engagement.
Type of engagement
Criteria used to identify/prioritise engagements
Individual / Internal staff engagements

Individual / Internal staff engagements

03.3. Additional information. [Optional]

When prioritizing engagements, Dimensional takes a holistic approach by considering a variety of factors, including a portfolio company’s overall governance profile, recent public ESG controversies, the collective holdings of Dimensional’s clients in the company, recent or upcoming proxy votes, and follow-ups from prior engagements.


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.
Indicate whether you define specific objectives for your organisation’s engagement activities.
Individual / Internal staff engagements

04.2. Additional information. [Optional]


LEA 05. Process for identifying and prioritising collaborative engagement

Indicate whether you monitor and/or review engagement outcomes.
Individual / Internal staff engagements
Indicate whether you do any of the following to monitor and/or review the progress of engagement activities.
Individual / Internal staff engagements

05.3. Additional information. [Optional]

Dimensional tracks communication efforts with detailed notes on the discussion and any follow-up necessary. We monitor any changes that are implemented post-discussion.


LEA 06. Role in engagement process

06.1. Indicate whether your organisation has an escalation strategy when engagements are unsuccessful.

06.2. Indicate the escalation strategies used at your organisation following unsuccessful engagements.

06.3. Additional information. [Optional]

Dimensional uses several escalation mechanisms in the event it has a concern about a portfolio company's corporate governance practices. If Dimensional has concerns that the corporate governance practices of a portfolio company are not consistent with our clients' best interests and the preservation of the value of their investments, we will vote accordingly and have often dissented from the recommendations of management on proxy matters. As Dimensional's clients together can constitute a large shareholding, we believe that our votes have a voice that portfolio company boards and management are sensitive to.

If negative corporate governance practices persist following the exercise of proxy voting in accordance with Dimensional's Proxy Voting Policies and Guidelines, our Investment Stewardship Group may follow up directly with management or the company board to ensure that the company understands the importance we place on good corporate governance. 

Another method of escalation is that if we think that the actions of the directors of a portfolio company are not in the best interests of shareholders, we may decide to vote against those directors that lost our trust not only in any proxy for the portfolio company but also in any election for directors at any other company they are, or may attempt to be, directors. We then communicate this decision to the portfolio company and its board.

Separately, we also escalate directly through letter campaigns directed to portfolio companies on specific corporate stewardship concerns. In general, our priority is to escalate in situations where we believe a conflict of interest exists between management and shareholders.

On a broader scale, we escalate general governance matters through our participation at industry conferences sponsored by the Council of Institutional Investors, the Harvard Corporate Governance Roundtable, and International Corporate Governance Network, among others. We believe this platform allows our voice to be heard in a broader manner and may have more impact at an industry level.


LEA 07. Share insights from engagements with internal/external managers

07.1. Indicate whether insights gained from your organisation`s engagements are shared with investment decision-makers.

Type of engagement

Insights shared

Individual / Internal staff engagements

07.2. Indicate the practices used to ensure that information and insights gained through engagements are shared with investment decision-makers.

          News check process (see 7.4 for full description)
        

07.3. Indicate whether insights gained from your organisation’s engagements are shared with your clients/beneficiaries.

Type of engagement

Insights shared

Individual/Internal staff engagements

07.4. Additional information. [Optional]

Dimensional’s Investment Stewardship Group works closely with portfolio management on daily newschecks to identify companies that may be potential candidates for engagement.  After engagements, the Investment Stewardship Group reports back to Portfolio Management on the outcome of the engagement. In addition, the Investment Stewardship Group collaborates closely with portfolio managers on corporate action matters involving relevant corporate actions (e.g. mergers). 


LEA 08. Tracking number of engagements

08.1. Indicate whether you track the number of your engagement activities.

Type of engagement
Tracking engagements
Individual/Internal staff engagements​

08.2. Additional information. [Optional]


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