Sustainability risk refers to those risk factors that may have negative effects on operations — that is, environmental, social, and governance factors that may adversely impact the operations, financial position, and long-term viability of a company, investment, or project. LSR therefore emphasises analysing each investment in terms of environmental, social, and governance factors, along with the underlying risk factors associated with the nature of the investment.

In line with increasing requirements for policies on sustainability risk in investments, it is important to be able to monitor, measure, and assess the effects of investments on sustainability factors. This means that when evaluating investment opportunities, ESG factors are assessed from the perspective of financial risk. Sustainability-related risk is considered where relevant in the investment decision-making process alongside traditional investment risk.

By integrating ESG factors into investment decisions, the fund not only gains deeper insight into its long-term risk but also creates opportunities to support sustainable development and increase value creation. LSR places strong emphasis on regular monitoring of risk factors and comprehensive analyses to evaluate their impact on the portfolio. In this way, the fund seeks to protect the interests of its members, support stability in financial markets, and promote responsible investment that delivers long-term returns while ensuring the fund fulfils its core mission.