SFDR Disclosure

Approach to the integration of sustainability risks – Article 3 Disclosure

This disclosure sets out information about the LRC Group and its AIFM’s (Storton Fund Management Ltd [LEI 984500999A540457B545]) approach to the integration of “Sustainability Risks" as defined and required by the SFDR (that is an environmental, social, or governance event or condition that, if it occurs, could have a material negative impact on the value of the investment).

LRC integrates sustainability risks into investment decisions. As LRC recognises that sustainability risks can have a material effect on investment performance, and consequently, the integration of sustainability risk assessments is fundamental to our investment decision-making and management process.

LRC has identified sustainability risks in relation to the investments and reviews them periodically to ensure they are up to date. Those risks are principally in relation to transition and physical risks. The risks that are particular to LRC real estate investments are transition and physical risks;

Transition Risks; Transitioning to a lower-carbon economy may entail extensive policy, legal, technology, and market changes to address mitigation and adaptation requirements related to climate change. Depending on the nature, speed, and focus of these changes, transition risks may pose varying levels of financial and reputational risk to organizations such as LRC.

Physical Risks; Physical risks resulting from climate change can be event driven (acute) or longer-term shifts (chronic) in climate patterns. Physical risks may have financial implications for organizations, such as direct damage to assets and indirect impacts from supply chain disruption. Organizations’ financial performance may also be affected by changes in water availability, sourcing, and quality; food security; and extreme temperature changes affecting organizations’ premises, operations, supply chain, transport needs, and employee safety.

LRC has committed to incorporating significant sustainability risks into the stages of its investment cycle. Before making any investment decisions, a thorough sustainability due diligence process is conducted for potential real estate assets. This includes assessing sustainability risks. The findings from the due diligence are included in the investment proposal and Investment Committee papers, ensuring that sustainability risks are minimized and factored into the investment strategy when they have the potential to impact long-term risk-adjusted returns. 

We are also in the process of updating our Risk Policy to ensure the incorporation and governance of sustainability risk throughout the investment lifecycle. Once finalized, this policy will provide clear guidance on the identification, evaluation, and management of sustainability risks.

Sustainability Risk Remuneration Policy – Article 5 Disclosure

LRC has implemented a remuneration policy that incorporates sustainability risk in investments. Remuneration is aligned with risk management and staff following policies, processes, and procedures set out by LRC, which includes sustainability risk. 

Statement on principal adverse impacts of investment decisions on sustainability factors – Article 4 Disclosure

Article 4 of the SFDR provides a framework to facilitate transparency in relation to the adverse impacts of investment decisions on sustainability factors. This Article contains the requirements for financial market participants disclose on their site they consider principal adverse impacts of investment decisions on sustainability factors. In that context, LRC considers the principal adverse impacts of its investment decisions on sustainability factors. Starting in 2024, by June 30th annually, LRC will publish a report on these adverse impacts regarding sustainability factors, following the specified template in Annex I of the Delegated Regulation (EU) that complements the SFDR with regulatory technical standards (RTS).