Sustainability at LSR
LSR adopts responsible practices, guided by diligent work, professionalism, and initiative.
LSR’s sustainability policy outlines the fund’s main priorities regarding sustainability and how these priorities are integrated into its operations. The policy applies to both internal operations and the fund’s investment activities. Its purpose is to provide a clear framework based on the fund’s sustainability priorities, covering both procedures and the fund’s approach.
It is important to maintain an overview of the ESG factors of the financial instruments in which investments are made in order to identify key impacts and risks. Through clear and comprehensive ESG disclosures, the fund can compare different investments, identify opportunities for improvement, and assess whether investments align with the fund’s objectives for responsible investment, guided by the interests of its members.
LSR’s Sustainability Policy
- Covers the fund’s internal operations and investments
- Environmental factors, social factors, and governance practices
Responsible investments
LSR is guided by the interests of its members when shaping its investment strategy and managing assets. One of the fund’s obligations is to establish ethical standards for its investments, cf. Article 36 of Act No. 129/1997 on Mandatory Pension Insurance and the Operation of Pension Funds.
Regulation (EU) 2019/2088 of the European Parliament and Council has also been incorporated into Icelandic law through legislation on sustainability disclosures in financial services and the classification system for sustainable investments. The purpose of the regulation is to ensure consistent information on how financial market participants assess sustainability-related risks and how principal adverse impacts of sustainability factors should be taken into account in investment decisions.
When assessing investments, potential adverse impacts the investment may have are analysed, with reference to the fund’s sustainability and investment policies. LSR has established procedures for responsible investments, and the fund requires that the companies it invests in operate in line with social values, recognised corporate governance guidelines, and demonstrate responsibility in environmental matters. LSR is a member of the UN PRI – the UN Principles for Responsible Investment – and has thereby committed to integrating environmental, social, and governance (ESG) factors into its investment assessments and decisions.
LSR has adopted the PRI principles for responsible investment and applies these priorities when assessing and analysing sustainability information.
Collaboration and standards
LSR looks to international standards and collaborations in the field of sustainability. The fund aims to be a responsible investor and has therefore implemented and strengthened sustainability factors that support its investment objectives and priorities. Further details on the fund’s collaborations in this area can be found in its sustainability policy, located at the top of this page.
Environmental factors, Social factors and Governance
An important part of implementing the sustainability policy is analysing ESG information and publishing the results publicly. In its sustainability policy, LSR encourages the companies it invests in to demonstrate transparency and report publicly on how their operations align with recognised standards, for example regarding sustainable business practices. LSR’s role as an investor is to analyse this information for individual investments and for the portfolio as a whole, and to assess the outcomes of its investment activities.
Environmental factors
It is the fund’s policy that the companies in which it invests address the environmental impacts of their operations, for example with regard to energy use, carbon footprint, biodiversity, water consumption, and waste management. Companies are also expected to define how they address climate change, with reference to mitigation and adaptation measures. LSR seeks to ensure that companies take environmental impacts into account and apply strategic practices to mitigate negative effects on the environment.
Social factors
LSR places strong emphasis on equality in its operations and prioritises a healthy and safe working environment. Focus is placed on ensuring that employees feel well at work, both in terms of the working environment and workplace culture, and on fostering solidarity, cooperation, and mutual respect among staff. Human rights are fundamental rights, and emphasis is placed on ensuring that all LSR employees are valued and enjoy equal opportunities. Furthermore, LSR focuses on safeguarding human rights in all aspects of the fund’s investment activities, with reference to international law and human rights conventions.
Governance
Good governance is a fundamental pillar of LSR’s operations and ensures professional, transparent, and responsible management of members’ assets. Consideration is given to the composition and structure of boards and management teams of the companies in which the fund invests, as well as to the assessment of defined sustainability processes, sustainability oversight, and follow-up. It is essential that both the fund’s governance and the companies invested in are based on recognised principles of good corporate governance and business ethics.