Approach to the Integration of Sustainability Risks – Article 3 Disclosure

This disclosure sets out information on Storton Fund Management Ltd (LEI: 984500999A540457B545) (the “AIFM”) and its approach to the integration of sustainability risks, as defined under Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”). Sustainability risks refer to environmental, social, or governance events or conditions that, if they occur, could have a material negative impact on the value of an investment.

Storton integrates sustainability risks into its investment decision-making and oversight processes. The AIFM recognises that sustainability risks may have a material effect on the financial performance of investments and, accordingly, considers the assessment of such risks to be an integral part of its investment management and governance framework.

Storton identifies and reviews sustainability risks relevant to the investments it manages on an ongoing basis to ensure that such assessments remain appropriate and up to date. In the context of real asset and real estate-related investments, sustainability risks are primarily associated with transition risks and physical risks arising from climate change.

Transition risks relate to the process of adjustment towards a lower-carbon economy and may result from policy, legal, technological, or market changes introduced to address climate-related mitigation and adaptation requirements. Depending on their nature and pace, such changes may give rise to financial or reputational risks for investments managed by the AIFM.

Physical risks relate to the physical effects of climate change and may be event-driven (acute) or arise from longer-term shifts in climate patterns (chronic). These risks may have financial implications through direct damage to assets or indirect impacts such as disruption to supply chains, changes in water availability, extreme temperature events, or impacts on operations, transport, and safety.

Storton has committed to incorporating material sustainability risks throughout the relevant stages of the investment lifecycle. Prior to making any investment decision, sustainability considerations form part of the due diligence process carried out in respect of potential investments. Where relevant, identified sustainability risks are documented and considered as part of the investment proposal and internal approval process, ensuring that such risks are appropriately evaluated and, where possible, mitigated when assessing long-term, risk-adjusted returns.

The AIFM is also in the process of updating its internal risk management policies to further formalise the identification, assessment, governance, and monitoring of sustainability risks across the investment lifecycle. Once finalised, these policies will provide a structured framework for the ongoing management of sustainability risks.

Sustainability Risk and Remuneration – Article 5 Disclosure

Storton has implemented a remuneration framework that is aligned with sound risk management principles and takes sustainability risks into account where relevant. Remuneration arrangements are designed to promote compliance with applicable policies, processes, and procedures, including those relating to the management of sustainability risks, and to avoid incentives that may encourage excessive risk-taking inconsistent with the firm’s risk profile.

Statement on Principal Adverse Impacts on Sustainability Factors – Article 4 Disclosure

Article 4 of the SFDR establishes a framework for transparency regarding the principal adverse impacts of investment decisions on sustainability factors. In this context, Storton considers the principal adverse impacts of its investment decisions on sustainability factors in accordance with the applicable regulatory requirements.

From 2024 onwards, Storton will publish, on an annual basis by 30 June, a statement on principal adverse impacts on sustainability factors. This disclosure will be prepared in line with the template set out in Annex I of Commission Delegated Regulation (EU) 2022/1288, which supplements the SFDR with regulatory technical standards.