Actuality in everyday and everyone’s life is crypto-currency, investments in moon, space voyage, and many other activities, which need a huge level of energy consumption and have a huge impact on the environment. The simple question under such circumstances is: “Where are we going, and what are we doing with environment and exhaustible resources?” It seems that people and businesses are reflecting for this question, and the figures of profit, taxes, bonuses, liquidities, etc., are not the only thing important to take care and to report, but social and ethical issues are becoming as important, as they are included in financial reporting as crucial information for third parties. Nowadays businesses are working and developing themselves as part of society, by taking into consideration every damage they cause to the environment and society with their actions or non-actions.

Regarding the above-mentioned importance of social and ethical issues, a new term is developed in financial reporting: “Sustainability”.

Sustainability is related with three key elements such are:

• Environmental Sustainability

Our most basic requirements: unpolluted air, clean water and fresh food, all come from our environment, as does the energy and raw materials we need for construction and transportation. Environmental sustainability is essential if we wish to have and continue to have the resources to meet our needs. In the broadest sense of the definition, environmental sustainability involves the entire global ecosystem (oceans, freshwater systems, land and atmosphere).

• Social Sustainability

A socially sustainable society is one in which all members have equal rights, all share equitably in societal benefits, and all participate equally in the decision-making process. Additionally, a society is unsustainable if it consumes resources faster than they can be renewed naturally, discharges more waste than natural systems can assimilate without degrading, or depends upon distant sources for its most basic requirements.

• Economic Sustainability

Economic sustainability is about much more than the sustained growth of resources and profit margins. Economic sustainability takes into account the social and ecological consequences of economic activity. We need to carefully consider the full life cycle of our goods, from extraction of raw materials, through processing, manufacture, distribution, use, maintenance, repair, and eventual recycling or disposal.

As we can see, three important elements of sustainability are environmental, social and economic, but not unintentionally economic line or circle is the last. The Environment is of primary importance because a healthy ecosystem is required to nourish a robust society. Consequently, Society and Social Responsibility are of secondary importance. Economic Sustainability is third because a prosperous economy cannot exist without a healthy and just society. The fact that nowadays, managers and corporations are becoming more responsible for economic sustainability, means that they are taking care environment and social issues, because they are the two first steps to achieve the economic sustainability.

In Albania the Sustainability Reporting is very new and closely related with the last changes of the Law No. 25/2018 “On Accounting and Financial Statements”. On January, 01, 2019 entered in force the amended Law “On Accounting and Financial Statements”, with some changes related to sustainability reporting. Under this amended Law some companies are obliged to prepare and publish report as it follows:

• Activity progress report

Companies, subject of law No. 25/2018, should prepare the performance report, which through a comprehensive analysis, fairly presents the development and performance of the entity, accompanied by a description of the main risks and uncertainties with which the entity may faces. In order to present as comprehensively as possible, the development, performance and position of the unit, the report should contain key indicators of financial performance and, if possible, non-financial, related activities, including information on environmental and employee issues. The analysis should, where possible, include additional references and explanations of the amounts reported in the financial statements of the reporting period.

The progress report of the activity must also show:

1. a) possible, future developments of the entity;
2. b) activities in the field of research and development;
3. c) information related to the acquisition of its own shares;

ç) the existence of branches of the economic entity;

1. d) for the use of financial instruments by the entity and when it is material for the assessment of assets, liabilities, financial position, profit and loss:
2. i) financial risk management policies and objectives;
3. ii) the entity’s exposure to price risk, credit risk, liquidity risk and cash flow risk.

This report is mandatory for medium and big companies. Under Law No. 25/2018, medium and big companies are the ones that exceed at least two of three following criteria:

• Non-financial report

Big companies, which are of public interest and exceed the criterion of the average number of 500 employees, during the reporting period, should include in the performance report a non-financial report, which contains thenecessary information for a better understanding of the entity’s own development, performance, position and impact of its activity on the environment, social and employment issues, respect for human rights, anti-corruption and bribery issues, including:

1. a) a brief description of the business model of the entity;
2. b) a description of the policies pursued by the entity in relation to these matters, including the implementation of the due diligence process and systematic verification of the financial statements;
3. c) the benefits of these policies;

ç) the main risk related to matters relating to the entity’s operating activity, including, where appropriate, business relationships, products or services, which are likely to have a reciprocal impact and how the entity manages their risk;

1. d) key indicators of non-financial performance in relation to specific businesses.

• Internal management report

Companies with public interest should include in the performance report, another report on the internal management of the entity. This report contains, at least, the following information:

1. a) the reference, as follows, as the case may be:
2. i) rules/codes for the internal management of the entity, the object of which is the entity;
3. ii) the rules/codes for the internal management of the entity that the entity has voluntarily decided to apply;

iii) all relevant information on the entity’s internal management practices that apply beyond the requirements of the legislation;

1. b) a description of the main features of the entity’s internal control and risk management systems related to financial reporting;
2. c) the composition and functioning of the executive governing and supervisory bodies and their committees;

ç) a description of the different policies implemented in relation to the executive management and supervisory bodies of the entity for aspects such as: age, gender or educational and professional background, the objectives of these different policies, such as implemented and results for the reporting period.

• Consolidated activity progress report

The parent entity, in cases when it has the obligation to prepare consolidated financial statements, must also compile the consolidated performance report, considering the adjustments essential, in such a way as to enable the assessment of the position as a whole of the entities involved in consolidation.

• Reporting payments made to state institutions

Big entities and all entities of public interest, which are active in the extractive industry or exploitation for forest timber, should compile and publish a report on payments made to state institutions on an annual basis.

The above-mentioned reports, based on the Law. No. 25/2018 “On Accounting and Financial Statements”, which changed on January 01, 2019, are mandatory for certain companies, especially the ones with public interest. Such reports must be published at Albanian National Business Center, as integral part of Financial Statements, within July 31 for the previous year.