Guide FOR

Preparation of the Non-Financial Report

(methodology for non-financial information reporting)

In accordance with Article 18 of Law 25, dated 10.05.2018 “For Accounting and Financial Statements”)

Hyrja dhe baza ligjore e udhëzuesit

European Commission Communication 1 “Guidelines on non-financial reporting”

 

1. INTRODUCTION

 Law 25, dated 10.05.2018 “On Accounting and Financial Statements”, entered into force on January 1, 2019. The new accounting law aligns with Accounting Directive 2013/34/EU, primarily on the classification of business entities and groups, as well as on the requirements for preparing the statement of activities, the non-financial report, and the internal governance report. The new law has also improved certain requirements related to the publication of financial and non-financial reports. Greater transparency is expected to make entities more flexible and perform better, both financially and non-financially. Over time, this will lead to increased business and employment, as well as greater trust among stakeholders, including investors and consumers. Transparent business management is also in line with the goal of longer-term investments. Requirements for providing explanatory notes on non-financial information apply to certain large entities with more than 500 employees, as the cost of requiring small and medium-sized entities to comply could outweigh the benefits. Entities are required to provide significant and useful information necessary to understand their development, performance, position, and the impact of their activities, rather than a comprehensive and detailed report. Furthermore, explanatory notes may be provided at the group level rather than by each individual economic unit or subsidiary within a group. The Directive also gives units considerable flexibility to present the relevant information in the way they consider most useful, included in a separate report.

Non-binding guidelines

 Article 18 Law 25/2018 refers to the obligation for large undertakings of public interest that exceed the criterion of an average of 500 employees during the reporting period to include a non-financial report in their statement of performance, which contains the information necessary for a better understanding of the economic entity's development, performance, position, and the impact of its activities on the environment, social and employment matters, respect for human rights, anti-corruption, and bribery issues. This article sets out the key issues that the non-financial report must include, while this guide provides further clarification on what should be included in each chapter of the non-financial report, including the key performance indicators (KPIs) non-financial, general and sectoral, with the aim of enabling meaningful, usable and comparable explanations prepared by economic units. […]“. This Guide transposes the European Commission Communication ”Guidelines on non-financial reporting," a document that has taken into account current best practices, international developments, and the results of other related initiatives within the Union. Regardless of this KKK Guidance, entities may choose to use a widely accepted, high-quality reporting framework, either partially or in full compliance with it. Units may rely on an international, European Union, or national reporting framework, and if so, specify the framework they use. The KKK encourages entities to take advantage of the flexibility provided by the requirements set out in Article 18 of the Accounting Law when explaining non-financial information. The guidance in this document is not intended to hinder innovations in reporting practices.

Different reporting frameworks – national, European Union, or international

 In the preparation of this Guidance, KKK it refers to the EC Communication “Guidelines on non-financial reporting”. The principles and content described in the EC Communication “Guidelines on non-financial reporting” are primarily based on frameworks such as:

Kuadrot ndërkombëtare të referencës

• CDP, Projekti i mëparshën për shënimet shpjeguese mbi Karbonin;
• Climate Reporting Standards Board;
• OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, and its Supplements;
• Eco-Management and Audit Scheme (EMAS) and Sectoral Reference Documents;
• European Federation of Associations of Financial Analysts of Key Environmental, Social, and Governance Performance Indicators, a Guide to Integrating Environmental, Social, and Governance KPIs into Financial Analysis and Corporate Valuation;
• Global Initiative and Reporting;
• OECD-FAO Guidance for Responsible Agricultural Supply Chains;
• Guide to the Strategic Report of the Financial Reporting Council (UK);
• Instructions for the Multinational Enterprises of the Organisation for Economic Co-operation and Development (OECD)
• Guiding Principles for the Business and Human Rights Reporting Framework;
• ISO 26000 and the International Organization for Standardization;
• International Integrated Reporting Council;
• Model Guidance on Reporting Environmental, Social, and Governance Information for Investors of the Sustainable Stock Exchanges Initiative (United Nations);
• The Natural Capital Protocol;
• Instruction for Environmental Impact of Production and Organization;
• Board of Sustainable Accounting Standards;
• Sustainabilty Codes of the German Council for Sustainable Development;
• The Tripartite Declaration of Principles concerning Multinational Enterprises and social policies of the International Labour Organization;
• Global Impact (United Nations);
• Sustainable Development Goals (United Nations), Resolution of September 25, 2015 Transforming our world: The 2030 Agenda for Sustainable Development;
• Guiding Principles (United Nations) on Business and Human Rights that implement the UN's “Protect, Respect, and Remedy” framework.;

Important

 This document has been prepared in accordance with Article 18 of Law 25/2018 “For accounting and financial statements” in order to help interested entities present non-financial information in a meaningful, useful, consistent, and more comparable manner. This document contains non-binding guidance and does not create new legal obligations. Entities that use this Guide may also rely on other international, EU, or national frameworks. This document does not constitute a technical standard, and neither the preparers of the non-financial report nor any other party, whether acting on behalf of a preparer or otherwise, should claim that the non-financial report is in compliance with this document.

2. PURPOSE

 The purpose of this Guide is to help entities present non-financial information (on environmental, social, and governance matters) high-quality, material, useful, reliable, and more comparable, in order to promote rapid and sustainable growth, employment, and transparency for interested parties. This non-binding guide is proposed within the reporting requirements set out in the Accounting Act. The guide is intended to help entities prepare a non-financial report that is significant, concise, useful, and compliant with the Act's requirements. In drafting the Guide, considerable effort has been made to avoid undue administrative burden, excessive explanation, or a poor „tick the box„ type of exercise. This non-mandatory guide places emphasis on material information, useful and comparable non-financial information, in accordance with Article 18 of the Accounting Act on the provision of non-financial and diversity information by large undertakings of public interest that exceed the criterion of an average of 500 employees during the reporting period. This guidance is addressed to entities subject to the requirement of the Accounting Law to provide non-financial information in their statement of activities. However, this non-binding guidance may represent best practice for all entities providing non-financial information, including other entities not covered by the scope of the Accounting Law. This guidance has been adapted in the context of the statement of activities. According to Article 18 of the Accounting Law, the statement of activities includes the non-financial report. The purpose of preparing this document is to provide a balanced and flexible guide for reporting non-financial information in a way that helps entities present material information consistently and coherently. This guide should help, as much as possible, to ensure comparability among economic units and sectors. This approach recognizes the wide diversity of businesses and sectors involved, as well as the circumstances that entities must reflect in their reporting. Considerable efforts have been made to avoid a "one-size-fits-all" approach.„one size fits all and also a methodology„more descriptiveThe guide recognizes the importance of links and interrelationships between information (the linkage), whether they are among different aspects of non-financial information or between financial and non-financial information.

3. MAIN PARTNERS

Parimi i informacionit material

• Presented Informational material

Article 18 of the Accounting Law stipulates that the units in question:

...will include in the activity progress report a non-financial report containing information to the extent necessary to understand the development, performance, position, and impact of the unit's activity...

Materiality is a concept commonly used by preparers, auditors, and users of financial information. A full understanding of an entity, including its key value‐chain components, helps identify the main issues and assess what makes information considered material. SNK 1 Financial Statement Presentation, paragraph 7 and SC 1 The overall framework for the preparation of financial statements, paragraph 70, defines material information as “information is material if omitting, misstating, or obscuring it could reasonably be expected to influence the decisions that primary users of general purpose financial statements make about the reporting entity, which provides financial information about a specific economic entity.”. The materiality of individual items is assessed in the context of other similar items. The law introduces a new element that must be taken into account when assessing the materiality of non-financial information by referring to information „to the extent necessary to understand the impact […] of the activity (of the unit) (Article 18 of Law No. 25/2018 “On Accounting and Financial Statements” (O). When non-financial information is provided, it is important to take into account the impact of a unit's activities. Impacts may be positive or negative. The provision of material explanatory information should include both types of impacts, in a clear and balanced manner. The non-financial report is expected to present a fair view of a unit's information to the extent required by the relevant interested parties. Material information must be assessed in a specific context. Information that may be material in one context may not be so in another. The issues considered for inclusion in the non-financial report are specific to the entity's circumstances, taking into account concrete situations and sectoral considerations. Entities within an industry are likely to share similar environmental, social, and governance challenges, for example, due to the resources they rely on to produce goods and services, or the effects they may have on people, society, and the environment. Therefore, it may be appropriate to directly compare relevant non-financial information among units in the same sector. Units may report on a wide range of potential issues. An entity assesses which information is material based on its analysis and how important that information is to understanding the entity's development, performance, position, and impact. This materiality assessment should take into account internal and external factors. Several factors may be considered when assessing the materiality of information, including:

Lista e faktorëve të materialitetit

• Modeling business, strategy, and key riskspurposes, strategies of a unit, the approach of management and systems, values, material and non-material assets, the value chain and key risks, all are considered important.
• Key sectoral issuesSimilar issues are likely to be material for units operating in the same sector or sharing the same supply chains. Issues already identified by competitors, customers, or suppliers are likely to be relevant to a unit.
• Interested the respective stakeholders' expectationsthe units are expected to engage with the relevant stakeholders and seek to better understand their interests and concerns
• The Impact of ActivitiesUnits are expected to consider the current and potential severity of the impacts of the activity. This includes the impacts of products, services, and business relationships (including supply chain aspects).
• Public policies and regulatory incentivesPublic policies and regulations can affect the specific circumstances of an entity and impact materiality.

Units can explain their internal governance arrangements and the processes used to conduct their materiality assessment. Materiality assessments are expected to be reviewed at regular intervals to ensure that reported issues continue to be, or cease to be, material. Assessments should be more frequent in more dynamic and innovative units and sectors, or in units that change and improve their business models or policies, including the process due diligence. However, they may be less frequent in more stable circumstances.

3.2 True, balanced, and understandable information is presented

 The non-financial report should present a fair portrayal of both favorable and unfavorable aspects, and the information should be assessed and presented in an impartial manner. The non-financial report must take into account all possible and reliable inputs, considering the information needs of the relevant stakeholders. Users of the information must not be misled by material misstatements; thus, the entity may not omit material information by overstating immaterial information. The non-financial report must clearly distinguish facts from viewpoints, opinions, or interpretations. Information can be made fairer and more accurate through, for example:

Mënyrat për informacion më të saktë

• appropriate internal governance arrangements (e.g., some independent members of the Supervisory Board or a committee thereof entrusted with responsibility for sustainability and/or transparency matters);
• strong and reliable audits, internal control and reporting systems;
• effective stakeholder engagement; and
• security services, independent, provided by parties outside the unit.

Information can also be made more understandable by using simple language and consistent terminology, avoiding repetitive stock phrases, and, when necessary, providing definitions for technical terms. Material information should be provided in the appropriate context to make it easier to understand. For example, the performance of a unit may,  for example, be presented by referring to its strategies and broader objectives. Entities are expected to describe how non-financial matters relate to their long-term strategy, key risks, and policies. An entity should explain the scope and limitations of the information presented, especially when certain information relates only to one or more of its segments, or excludes specific segments. Clarity can also be improved by explaining internal matters related to non-financial information, such as measurement methods, underlying assumptions, and sources. The non-financial report is not just about providing a list of key performance indicators (KPIs). To properly understand a unit's development, performance, position, and impact, both qualitative and quantitative information must be presented. While quantitative information can be effective in reporting on certain non-financial matters (performance indicators, targets, etc.), qualitative information provides context and makes the non-financial report more useful and easier to understand. A combination of narrative reporting, quantitative information, and visual presentation elements makes communication more effective and transparent. Presenting information in a common business language, in addition to an entity's official language, is likely to improve transparency and help make the information more understandable for relevant investors and other interested parties.

3.3 Comprehensive yet concise information is presented

 In Article 18, the accounting law stipulates that the units in question:

Citimi nga neni 18 i ligjit

‘[… ] The activity performance report will include a non-financial report containing information to the extent necessary to understand the development, performance, position, and impact of the entity's activity, in relation to environmental, social, employee matters, respect for human rights, anti-corruption, and bribery […]‘

At a minimum, material information should be provided for specific categories of issues that are clearly reflected in this article. This includes:

• environmental, social, and employee matters;
• Respect for human rights;
• anti-corruption issues and

The units must also present any other material information.

 Disclosures of material information are expected to provide a complete picture of the unit in the reporting year. This refers to the breadth of information presented. However, the depth of information reported on any particular matter depends on its materiality. An entity should focus on providing the breadth and depth of information that will help stakeholders understand the development, performance, position, and impact of its activities. The non-financial report is also expected to be concise and to avoid immaterial information. Presenting immaterial information can make the non-financial report less understandable because it minimizes the weight of material information. General or non-material information should be avoided. The non-financial report may include internal cross-references or signposts to be concise, limit repetition, and provide links to other information.

Presents strategic and predictive information

 The report is expected to provide information on the business model, its strategy and implementation, and to explain the short-, medium-, and long-term implications of the reported information. Units are expected to present the relevant information about their business model, including their strategy and objectives. The non-financial report provides information on the strategic approach to relevant non-financial issues: what a unit does, and why it does it. By providing information on objectives, best practices, and commitments, an entity can help investors and other stakeholders interpret its performance within a specific context. This can be useful when assessing its future outlook. External monitoring of commitments and progress toward objectives promotes greater transparency with stakeholders. Targets and standards can be presented in qualitative or quantitative terms. As appropriate, units may present material non-financial information based on scientific scenarios. Information about the future allows information users to better assess the capacity and sustainability of a unit's development, position, performance, and impact over time. It also helps users measure the unit's progress toward achieving long-term objectives.

3.5 Presents stakeholder-oriented information

 Units are expected to take into account the information needs of all relevant stakeholders. However, units should focus on the information needs of interested parties as a collective group and not on the individual needs or preferences of shareholders or on unreasonable requests for information from atypical stakeholders. As appropriate, collective groups may include, among others: investors, workers, consumers, suppliers, clients, local communities, public authorities, vulnerable groups, partners, and civil society. Units should provide relevant and useful information about their engagement with the relevant stakeholders and how their information needs are taken into account. For example, ISO 26000 and the OECD Guidelines for Multinational Enterprises provide useful guidance on this.

Stable and coherent information is presented

 The non-financial report is expected to be consistent with the other elements of the activity progress report. The clear link between the information presented in the non-financial report and the other information provided in the performance report makes the information more useful, relevant, and cohesive. The activity progress report should be viewed as a single, balanced, and coherent set of information. When the report content is linked, explaining the key links makes it easier for investors and other interested parties to understand the material information and interdependencies. The content of the non-financial report should be consistent over time. This enables users of the information to understand and compare changes in a unit's development, position, performance, and impact in the past and present, as well as with reliable information about the future. Consistency in the selection and methodology of key performance indicators is important to ensure that the non-financial report is sustainable and reliable. However, updates may be necessary, as key performance indicators can become outdated, or new and better methodologies may be developed that improve the quality of the information. Entities are expected to explain any change in reporting policy or methodology, the reasons for the change, and its effects (for example, by restating prior information and clearly showing the impact of the change in reporting policies or methodologies).

4. CONTENT

 Units are expected to identify the specific thematic aspects and material information to be included in the non-financial report in a fair, balanced, and comprehensive manner, including engagement with stakeholders. The information in the non-financial report is interlinked. For example, the results reflect not only what a unit does (as expressed through its business model, policies, and strategies), but also the unit's specific circumstances and risks, as well as how effectively the unit manages those risks. Explaining the key links and interdependencies improves the quality of the report. When preparing the non-financial report, units must take into account the rules for the protection of personal data.

4.1 Business Model

 Article 18 (1) of the Accounting Law specifies that the non-financial report contains information, which includes:

„a brief description of the unit's business model‘

 The business model of a unit describes how the unit generates and retains value through its products or services over the long term. The business model provides the context for the performance report as a whole. It provides a summary of how a unit operates and the rationale for its structure, describing how it transforms inputs into outputs through business activities. In simpler terms, what a unit does and why it does it. When describing their business model, units may consider including relevant explanatory information regarding:

• their business medicine;
• their organization and structure;
• markets in which they operate;
• objectives and their strategies;
• Trends and key factors that can influence their development in

Units can use key performance indicators to explain their business model, key trends, etc. Units are expected to explain their business model in a clear, understandable, and fact-based manner. A business model is an existing fact. Units should avoid providing immaterial information of a promotional or aspirational nature that distracts from material information. Units are expected to highlight and explain in the reporting year when material changes to their business model have occurred.

4.2 Policies and Due Diligence

Article 18 (1) of the accounting law states that the non-financial report contains information, including:

„a description of the policies pursued by the unit in relation to those matters, including the implementation of the due diligence process;‘

Units must provide material information that presents a fair view of their policies. They must consider disclosing information on key non-financial aspects, their main objectives, and how they plan to achieve those objectives, as well as how they are implementing that plan. Any information provided will take into account the specific circumstances of the entity. In the explanatory notes and the non-financial report, an entity may explain the responsibilities and decisions of the Governing Body and how the allocation of resources relates to objectives, risk management, and desired outcomes. For example, an entity may explain the relevant aspects of governance, including the Supervisory Board. Processes due diligence relate to policies, risk management, and outcomes. Processes due diligence undertaken by an entity to ensure it is working towards a concrete objective (e.g. to ensure carbon emissions are below a certain level or that supply chains are free from human trafficking). Processes due diligence help identify, prevent, and mitigate existing and potential negative side effects. Units must provide explanatory information on the processes of due diligence implemented, including, where necessary and proportionate, information on its suppliers and subcontracting chains. Units may also consider providing information on the decisions made about their creation and how the processes are intended to work, particularly regarding the prevention and mitigation of negative side effects. Units may also consider providing relevant information for setting objectives and measuring progress. Units are expected to highlight and explain any material changes to their key policies and processes. due diligence during the reporting year. It may be that a unit has not established policies for certain matters that it continues to consider material. That unit must provide a clear and reasonable explanation for not having established these policies. Other requirements for non-financial reporting continue to apply (for example, the business model, key risks …). Article 18(2) of the Accounting Law states that “when the entity does not follow policies regarding one or more of the matters provided for in paragraph 1 of this article, the non-financial report must provide a clear and reasonable explanation as to why this has been done.”

4.3 Results

 Article 18 (1) of the accounting law stipulates that the non-financial report must contain information, including:

“benefits of these policies;”

 Units should provide a useful, fair, and balanced view of the benefits of their policies. The non-financial information presented by units should help investors and other interested parties understand and monitor the unit's performance. Providing relevant information on policy benefits can offer useful insights into a unit's strengths and weaknesses. The non-financial report should present, in a comprehensive and concise manner, the results of a unit's operations and activities. Units may consider explaining the relationship between financial and non-financial results and how this is managed over time. The analysis of results should include key non-financial performance indicators. Units are expected to provide information on the key performance indicators they consider most useful for monitoring and assessing progress and supporting comparability between units and sectors. When appropriate, units may also consider presenting and explaining this information in relation to the objectives and best standards to be followed.

4.4 Main risks and their management

 Article 18 (1) of the accounting law states that the non-financial report shall contain information, including:

„riskn main relating to the matters concerning the economic unit's exploitation activity, including, where necessary, business relationships, products or services, which are likely to cause mutual impact and how the economic unit manages their risk;

 Units must provide information on key risks and how they are managed and mitigated. These risks may relate to their activities, products or services, supply chain and business relationships, or other aspects. The report may include an outlook on key, medium-term, and long-term risks. Entities are expected to explain how key risks may affect their business model, operations, financial performance, and the impact of their activities. An entity is expected to present material information on key risks, regardless of whether they arise from its own decisions or actions or from external factors. The entity should explain the processes used to identify and assess such risks. Where relevant and proportionate, the provision of explanatory information should include material information on supply and subcontracting chains. The notes should also include material information on how an entity manages and mitigates its principal risks. An entity is expected to highlight and explain any material change in its principal risks, or in the way it manages them, during the reporting year.

4.5 Key Performance Indicators (KPIs)

 Article 18 (1) of the accounting law states that the non-financial report shall contain information, including:

„threeGuess it main of non-financial performance in relation to specific businesses;

 The non-financial report must include explanatory, descriptive information and information related to key performance indicators. Entities are expected to report those non-financial performance indicators that are useful given their specific circumstances. KPIs should be consistent with the methods used by the entity in its internal management and risk assessment processes. This makes the information in the report more meaningful and useful, as well as improving transparency. Explaining high-quality KPIs that are widely recognized (for example, methods commonly used in a sector or for specific thematic issues) can also improve comparability, especially for units within the same sector or value chain. An entity should explain the KPIs that are necessary to understand the development, performance, position, and impact of its activities. Some KPIs may be useful for a wide range of entities and business circumstances. Other KPIs are more related to the issues and circumstances of a specific sector. Entities are encouraged to explain material, general, and sector-specific KPIs. Considering their specific circumstances and the information needs of investors or other stakeholders, entities are expected to provide a fair and balanced view by using general, sector-specific, and entity-specific KPIs. Users of information tend to value quantitative information highly because it helps them measure progress, monitor sustainability over time, and make comparisons. Appropriate explanations of KPIs help make the non-financial report more understandable. KPIs are also considered effective tools for linking qualitative and quantitative information and for creating internal cross-references within the report. They enable units to provide a balanced and comprehensive overview in a concise and effective manner. KPIs should be used consistently from one reporting period to the next to provide reliable information on progress and trends. Reported KPIs, of course, may evolve over time for business or technical reasons. In these cases, units should explain the reasons why the KPIs changed. Units may consider backcasting historical information, where appropriate, and clearly and effectively explain the effect of these changes. Units may explain the data collection, methodology, and framework on which they relied. They may also provide an analysis of the KPIs presented, explaining, for example, why KPIs were added or removed in the reporting year and how KPIs may evolve in the future. Units may present KPIs in the context of objectives, past performance, and comparison with other units, as appropriate.

4.6 Thematic Aspects

 Article 18(1) of the Accounting Law states that the entities in question „include in the statement of activities a non-financial report, which contains the information necessary for a better understanding of the development of the economic entity itself, performance, position and impact of its activity in relation to the environment, social and employment issues, respect for human rights, anti-corruption and bribery issues […]’. The provision of material explanatory information should ensure a balanced and comprehensive picture of the development, performance, position, and impact of a unit's activities. In certain circumstances, units may consider that providing detailed information on developments (issues) that are pending or under negotiation would be seriously prejudicial. However, providing summary information without serious prejudice can still lead to fulfilling the overall objective of transparency. Thematic aspects are often interlinked. For example, an environmental issue related to a unit's activities, products, or supply chain may also have an impact on the safety and/or health of consumers, employees, suppliers, or on brand reputation. Entities are expected to provide a clear, fair, and comprehensive view that includes all material aspects of an issue. The following issues constitute a non-exhaustive list of thematic aspects that units are expected to take into account when providing non-financial information:

Issues environment

 A unit is expected to provide significant information on the current and potential environmental impacts of its activities, and how current and foreseeable environmental issues may affect the unit's development, performance, or position. This may include:

• Explanatory notes on materials for pollution prevention and control;
• environmental impact of energy use;
• Direct and indirect atmospheric emissions;
• use and protection of natural resources (e.g., water, soil) and protection of biodiversity;
• waste management;
• environmental impacts from transportation or from the use and disposal of products and services; and
• product and service development

Units may refer, where appropriate, to material information provided in the context of specific environmental reporting requirements.

Issues social and employee

 The units are expected to provide material information on social and employee matters. This includes:

• implementation of the legislation in force that governs labor relations;
• diversity issues, such as gender diversity and equal treatment in employment and occupation (including age, gender, sexual orientation, religion, disability, ethnic origin, and other relevant aspects);
• employment issues, including employee consultation and/or participation, employment and working conditions;
• trade union relations, including respect for trade union rights;
• human capital management including restructuring management, career management and employment, reward system, training;
• Occupational health and safety;
• customer relations, including customer satisfaction, accessibility, products with potential effects on their health and safety;
• impacts on vulnerable consumers;
• marketing and responsible research; and
• community relations, including the social and economic development of communities

Units may find it useful to rely on widely recognized and high-quality frameworks, for example the OECD Guidelines for Multinational Enterprises, the ILO Declaration on Multinational Enterprises and Social Policy, or ISO 26000.

Respect human rights

 Units are expected to provide material information on the potential and actual impacts of their operations on rights holders. It is considered „best practice" for a unit to express its commitment to respecting human rights. This commitment may specify what the entity expects from its management, employees, and business partners regarding human rights, including core labor standards. The information may explain whose rights the commitment addresses, for example the rights of children, women, national minorities, persons with disabilities, local communities, smallholder farmers, victims of human trafficking and workers' rights, including those working on temporary contracts, workers in supply chains or subcontractors, migrant workers and their families. Units should consider providing material explanatory information about the process due diligence for human rights and the processes or agreements implemented to prevent human rights abuses. This may include, for example, how a unit's contracts with businesses in its supply chain address human rights issues and how a unit eliminates potential negative impacts on human rights and ensures appropriate redress if human rights have been violated in any instance.

Issues anti-corruption and bribery

 Units are expected to provide substantive information on how they manage issues and phenomena of corruption and bribery. Units may consider providing explanatory information on their organizational structure, decision-making, and management, as well as the resources allocated to combating corruption and bribery. Units may also consider explaining how they assess their efforts to combat corruption and bribery, how they take action to prevent or mitigate adverse impacts, how they monitor effectiveness, and how they communicate on this issue both within and outside the unit.

Other

 Supply chains Units, where it is important and proportionate, are expected to provide material information on supply chain issues that have significant implications for their development, performance, position, or impact. This would include the information necessary for a general understanding of a unit's supply chain and how relevant non-financial issues are taken into account in supply chain management. If a unit considers that providing detailed information on developments (issues) that are pending or under negotiation would be seriously prejudicial, it may fulfill the overall transparency objective by providing summary information that is not seriously prejudicial. Minerals in conflict zones Units, when important and proportional, are expected to provide significant information regarding the process. due diligence to ensure responsible supply chains for tin, tantalum, tungsten, and gold from conflict-affected and high-risk areas. The units are expected to provide important information regarding the performance of policies and practices due diligence, as well as their results, regarding the supply of minerals from conflict zones. They must also demonstrate the steps taken to implement the „five-step framework"3 in the approach due diligence risk-based, in the mineral supply chain as defined in the OECD Due Diligence Guidance, taking into account their position in the supply chain. Units are expected to submit KPIs regarding the nature and number of risks identified, the measures taken to prevent and mitigate these risks, and how the unit has strengthened its efforts in the process. due diligence over time. Specific performance indicators These include:

Treguesit për furnizimin me minerale

• proportion of significant direct suppliers who have adopted and implemented a policy of due diligence for the supply of minerals from conflict-affected and high-risk areas, in accordance with the OECD Due Diligence Guidance;
• responsible sourcing of tin, tantalum, tungsten or gold originating from conflict-affected and high-risk areas; and
• the percentage of significant clients who contractually require information about the process due diligence for minerals originating from conflict zones, according to the guideline for due diligence to the OECD.

5. INFORMATION ON BOARD DIVERSITY

 This section provides specific guidance aimed at helping large listed entities prepare the description of their Board of Directors' diversity policy, which will be included in the internal governance report4. The description of the Board of Directors' diversity policy does not form part of the non-financial report. Therefore, this section of the guidance does not require the provision of material information on diversity as part of the non-financial report. Article 19 of the Accounting Act requires large public interest entities to include in the internal governance report:

Politikat e diversitetit në organet drejtuese

„a description of the various policies implemented concerning the executive and supervisory bodies of the economic unit regarding aspects such as age, gender, or educational and professional background, the objectives of these various policies, how they have been implemented, and the results for the reporting period „kYour The economic unit does not act according to the rules/internal management code of the company, it must provide an explanation of which parts of the internal management code it does not apply and the reasons for these deviations.; „kYour The economic unit has decided not to link to the provisions of a certain internal management code, it explains the reasons for this.

 Aspects of diversity The diversity policy description must specify which diversity criteria have been applied and explain the reasons for their selection. When selecting these criteria, All relevant aspects of diversity must be taken into account to ensure that the Management Board has sufficient diversity of perspectives and the expertise necessary for a sound understanding of current issues and risks as well as the long-term opportunities related to the unit's business. When assessing the profiles required for the optimal diversity of the Management Board, the nature and complexity of the unit's business as well as the social and environmental context in which the unit operates must be taken into account. Diversity aspects should generally cover age, gender, or educational and professional background. When it is important, due to the unit's geographical location and the business sector in which it operates, it is also appropriate to include geographical priority, international experience, expertise in relevant sustainability issues, employee representation, and other aspects, for example, socio-economic background. In selecting a candidate for Board membership based on the specified diversity criteria, generally accepted rules and principles of non-discrimination must be taken into account. Objectives  Units should describe specific and measurable objectives for the relevant aspects of diversity. It is particularly useful to set quantitative objectives and deadlines, especially regarding gender balance. Implementation and results  Units must demonstrate how the objectives of their diversity policy are taken into account in planning, selection, appointment, and evaluation. Units must also demonstrate the role of the relevant committees of the Supervisory Board in these processes. Units should also indicate whether information about the diversity criteria and objectives has been made available to shareholders when they elect or re-elect members of the Supervisory Board, where applicable. Units must indicate the status of implementing their diversity policy and the results of that implementation, at least since the last reporting, for all aspects of the diversity policy. If diversity objectives are not met, the unit must indicate how it intends to meet them, including the expected timeframe within which these objectives are to be met. Source (Author): National Accounting Council. Sharko Non-Financial Reporting Guide_Published full.