IN ESG

Legal Framework for Sustainable Development in Albania

Non-financial reporting in Albania became mandatory for the first time in 2018, following the latest amendments to Law no. 25/2018 “On Accounting and Financial Statements”, Article 18. This article requires large economic entities, which are of public interest and have more than 500 employees during the reporting period, to include a non-financial report in their activity report.

The non-financial report should provide detailed information for a better understanding of:

• The business model of the economic entity;
• The policies followed by the entity regarding environmental, social, and employment matters, including the systematic verification of financial statements (due diligence);
• The benefits of these policies;
• The main risks related to the entity’s activities, including business connections, products, or services that may cause a reciprocal impact, and how these risks are managed;
• Key non-financial performance indicators related to specific businesses.

If the economic entity does not follow one or more of these policies, the report must provide a clear and reasonable explanation for this decision.

Based on this law, statutory auditors or audit firms must verify, in accordance with the International Standards on Auditing, whether the non-financial report or consolidated non-financial report has been properly prepared.