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Big thanks for the detailed explanation. In my head it made sense before but now you explain it I'm starting to appreciate the issue with torque and not putting too much on the steerer. I'll obviously make sure the compression plug is correctly fitted that would hopefully prevent damage to the steerer from over-tightening but it is a carbon steerer so I'd need to be careful.
Is there anyone who might be able to make an appropriate shim for me or would it just not be recommended and I should find an alternative 1 1/8 stem?
As steerer shims are single piece slotted, the problem is going to be compressing the shim in order to clamp everything up.
28.6mm (1 1/8”) - 25.4mm (1”) is a difference of 3.2 so shim wall thickness will be 1.6mm.
At 31.8mm - 25.4mm the difference is doubled to 6.4mm so shim wall thickness would be 3.2mm.
You may exceed the torque rating of the stem before you reach a satisfactory clamping force.
As shims to do the job don’t actually (afaik) exist and you’ll be having to make/have one made then you could go for a two piece design but poor alignment of the pieces may cause issues.