2025Annual report

Sustainability is an integrated part of Småkraft’s strategy and business model. In recent years, reporting requirements related to Environmental, Social and Governance (ESG) topics have increased significantly. Småkraft is committed to aligning its processes with the EU Taxonomy, the EUs Sustainable Financial Disclosure (SFDR) and other evolving reporting standards such as the Task Force for Climate Change (TCFD). For the 2025 financial year, Småkraft voluntarily report on double materiality in accordance with the Corporate Sustainability Reporting Directive (CSRD).

Sustainability is about creating real impact, managing risks, seizing opportunities, making strategic investments and optimising operations. Småkraft prioritises the topics that are the most material to Småkraft and its stakeholders.

In 2025, Småkraft maintained a strong position in GRESB’s annual ESG reporting assessment. A separate Sustainability Report further details our performance and approach.

Småkraft’s main sustainability efforts focus on the following topics:

Småkraft’s production history shows that climate change leads to more precipitation and more extreme weather. While our portfolio has proven highly resilient, isolated cases of flood damage underline the importance of understanding how future climate patterns will affect our power plants.

To strengthen our insight and preparedness, Småkraft is partnering with leading research institutions through the Climate Futures innovation centre. Together with NORCE and the Norwegian Computing Center (NR), Småkraft is developing sub-seasonal runoff forecasts and building a deeper understanding of how changing hydrological conditions will influence the catchments in which Småkraft operates.

All energy production, including small-scale hydropower, has an impact on the local environment. Adjustments to river flow between the intake and the power plant, can influence biodiversity and vulnerable species in the surrounding area.

Most of Småkraft’s power plants operate under restrictions on water flow for energy production. This implies that power plants must release water to the river to ensure ecological water flow and avoid drought. Each site is inspected annually to identify and address any negative impacts, and these findings form the basis of our ESG reporting.
Additional concession requirements are bypass valves that ensure sufficient water in the river during an immediate production stop, restrictions regarding water level regulation in the reservoir or specific water flow requirements.

Småkraft occasionally invests in power plants that do not fully meet current regulatory expectations. These issues are identified and assessed as part of Småkraft’s investment process, and the company determines the necessary upgrades to bring each plant into compliance. In most cases, the required improvements are modest, however, at times Småkraft makes more substantial investments to raise environmental standards and ensure responsible long-term operations. Fosstveit power plant,which was reconstructed during 2022-2024, is an example of this.

Småkraft ensures that all critical functions are handled by permanent employees, while non-critical functions are outsourced to trusted partners to secure access to specialised expertise and sufficient capacity. We maintain strong internal competence across all disciplines to ensure the quality of the services we procure.

The company strives to offer equal pay for equal work and does not discriminate based on gender, ethnicity, sexual orientation or religion. Through targeted recruitment efforts, Småkraft works to improve gender balance and prioritise equality when candidates are otherwise equally qualified.

Småkraft also conducts annual employee surveys to monitor the internal working environment and identify trends and implement appropriate measures. In Småkraft’s 2025 employee survey, its employees reported zero cases of discrimination. A confidential whistleblowing channel on Småkraft’s website ensures secure reporting of concerns.

Hydropower plant installations can affect nearby communities, and Småkraft works actively to minimise negative consequences. The company follows requirements in the license provisions and works to ensure that the hydropower plants successfully harmonise with the natural environment.

Småkraft's business model is built to generate value locally. A significant share of the value created from each small-scale hydropower plant remains in the municipalities through investments, maintenance, operations, taxes and waterfall lease payments. In 2025, Småkraft made direct payments of more than EUR 88 million to municipalities throughout Norway and Sweden, creating substantial ripple effects.

Smådalen power plant in Bjørnefjorden municipality is a good example of this. The plant was opened in autumn 2025. After the construction period, the landowners described the project as a positive contribution to the local community. Joint efforts from landowners and local entrepreneurs played a key role in realising the project and demonstrated the value of our long-term partnerships.

Ethical business is about doing the right thing. Småkraft’ business is built on developing and sharing natural resources that matter to many stakeholders. Småkraft aims to act with integrity and transparency towards landowners, suppliers, authorities, investors and creditors.

Småkraft is transparent wherever possible, provided this does not conflict with privacy regulations or compromise competitiveness. Transparency enables stakeholders understand the rationale behind Småkraft’s decisions and demonstrates commitment to responsible business conduct.

To reduce the risk of fraud and misconduct, Småkraft has implemented robust internal control controls. In 2025, Småkraft encountered minor attempts of “CEO fraud” and similar schemes, all of which were detected and stopped due to strengthening security measures developed over years. Småkraft continues to invest in protective measures to safeguard employees, stakeholders, and assets in an increasingly complex risk landscape.