ESG Reporting Requirements for UAE Companies: The 2025 Compliance Guide
Environmental, Social, and Governance (ESG) reporting has evolved from a voluntary initiative to a mandatory regulatory requirement for companies operating in the United Arab Emirates. This comprehensive guide provides everything you need to know about compliance, deadlines, and strategic implementation.
📑 Table of Contents
- Executive Summary: The New Era of Mandatory ESG
- The UAE's ESG Regulatory Landscape
- Who Must Report? Determining Your Obligations
- Key Frameworks & Standards: GRI, TCFD, and More
- A 6-Step Roadmap to ESG Implementation
- Penalties for Non-Compliance & Strategic Advantages
- Frequently Asked Questions (FAQs)
- Conclusion: Turning Compliance into Competitive Advantage
Executive Summary: The New Era of Mandatory ESG
The UAE's commitment to sustainability, highlighted by its Net Zero by 2050 Strategic Initiative, has transformed ESG from a corporate social responsibility topic into a legal obligation. The landscape changed fundamentally with the introduction of Federal Decree-Law No. 11 of 2024 on the Reduction of Climate Change Effects, which came into force on May 30, 2025.
This law, along with mandates from the Securities and Commodities Authority (SCA) for listed companies, creates a multi-layered compliance environment. Businesses that fail to comply face fines ranging from AED 50,000 to AED 2,000,000, with penalties potentially doubling for repeat violations.
Need Expert Guidance on ESG Compliance?
Navigating the complex ESG reporting landscape requires specialized expertise. At One Desk Solution, we integrate ESG reporting with traditional accounting, VAT, and audit services to provide a seamless compliance solution.
Call or WhatsApp us today at +971-52 797 1228 for a consultation to assess your ESG obligations and develop a tailored implementation strategy.
Contact Our ESG Experts Message on WhatsAppThe UAE's ESG Regulatory Landscape
The UAE's regulatory framework consists of multiple overlapping requirements that vary based on your company's structure, location, and size.
Federal Climate Change Law (No. 11 of 2024)
This landmark legislation represents the most significant expansion of ESG obligations in UAE history, applying to virtually all entities that contribute to greenhouse gas emissions.
| Aspect | Requirement | Deadline/Details |
|---|---|---|
| Applicability | Public and private legal persons, including free zone entities | Effective from May 30, 2025 |
| Measurement | GHG emissions (Scope 1 & 2 mandatory, Scope 3 recommended) | Using approved methodologies |
| Reporting | Submit via MOCCAE's MRV platform | First report due May 30, 2026 |
| Reduction | Implement and demonstrate emission reduction strategies | Aligned with national targets |
| Record Keeping | Maintain documentation for at least 5 years | Subject to audit |
Exchange-Specific Requirements
| Exchange/Authority | Requirement | Key Framework | Deadline |
|---|---|---|---|
| All Listed PJSCs (ADX/DFM) | Annual Sustainability Report | GRI Standards mandatory | Within 90 days of financial year-end |
| Abu Dhabi Global Market (ADGM) | ESG Disclosures for in-scope entities | TCFD, SASB, or GRI (comply or explain) | Filed with annual accounts |
| Dubai International Financial Centre (DIFC) | Sustainability reporting expectations | Aligns with international standards | Annual reporting |
Who Must Report? Determining Your Obligations
Understanding your specific obligations requires analyzing your company's structure. The following flowchart illustrates the decision-making process:
⚠️ Important Note on Free Zones
Contrary to some assumptions, free zone entities are explicitly included under the Climate Change Law's requirements. Both ADGM and DIFC companies face additional jurisdiction-specific requirements layered on top of federal obligations.
Key Frameworks & Standards: GRI, TCFD, and More
UAE regulations reference internationally recognized reporting frameworks. Understanding these is crucial for compliance.
| Framework | Focus & Purpose | Common Use Case in UAE |
|---|---|---|
| GRI (Global Reporting Initiative) | Comprehensive impact reporting for all stakeholders | Mandatory for listed PJSCs; go-to standard for holistic reports |
| TCFD Recommendations | Climate-related financial risks & opportunities | Increasingly mandated (e.g., ADGM); essential for Climate Law compliance |
| SASB Standards | Industry-specific, financially material topics | Ideal for investor communication on financial performance issues |
| IFRS S1 & S2 (ISSB) | Global baseline for sustainability-related financial info | Emerging as future global standard; early adoption future-proofs reporting |
Best Practice: Many leading companies adopt a dual-framework approach, using GRI for broad stakeholder reporting and SASB/TCFD for investor-focused financial disclosures.
A 6-Step Roadmap to ESG Implementation
With the first Climate Law reporting deadline of May 30, 2026, a structured implementation approach is essential. The following table outlines a phased strategy:
| Phase | Key Activities | Timeline | Outcome |
|---|---|---|---|
| 1. Assess & Prioritize | Conduct materiality assessment; Identify applicable laws; Form ESG committee | Months 1-2 | Materiality matrix; Regulatory checklist; Governance structure |
| 2. Measure & Baseline | Establish data collection for Scope 1 & 2 emissions; Gather social/governance data | Months 2-4 | Verified GHG inventory; Baseline ESG metrics |
| 3. Strategize & Set Goals | Develop reduction plans; Set ESG targets; Draft policies | Months 4-6 | ESG strategy with time-bound goals |
| 4. Report & Disclose | Prepare reports per standards; Submit to regulators | Months 6-9 | Published sustainability report; Regulatory filings |
| 5. Assure & Verify | Third-party verification of key metrics; Internal audit | Months 9-10 | Assured report; Enhanced credibility |
| 6. Improve & Communicate | Analyze performance; Engage stakeholders; Plan next cycle | Ongoing | Continuous improvement; Stronger stakeholder relationships |
Expert Insight: Common Implementation Pitfalls
From our experience at One Desk Solution, companies often underestimate three key challenges:
- Data Fragmentation: ESG data often sits in separate departments (HR, facilities, procurement). Integration is crucial.
- Scope 3 Emissions: While not always mandatory, value chain emissions are increasingly expected by investors.
- Greenwashing Risks: Vague claims without data backing can lead to reputational damage and regulatory action.
Our integrated approach connects ESG reporting with your existing financial systems, ensuring consistency and reducing implementation burden.
Penalties for Non-Compliance & Strategic Advantages
Penalties Under the Climate Change Law
| Violation Type | Initial Penalty Range (AED) | Repeat Violation Penalty |
|---|---|---|
| Failure to measure emissions | 50,000 - 500,000 | Double initial penalty |
| Failure to report | 100,000 - 1,000,000 | Double initial penalty |
| Failure to implement reduction strategies | 200,000 - 2,000,000 | Double initial penalty |
| Providing false information | 500,000 - 2,000,000 | Double initial penalty |
Strategic Advantages of Proactive ESG Compliance
💰 Enhanced Access to Capital
Strong ESG performance attracts sustainable investment and can secure better financing terms. UAE's growing green finance market favors compliant companies.
⚡ Operational Efficiency
Measuring environmental performance uncovers efficiency opportunities, often leading to significant cost savings in energy, water, and waste management.
🤝 Stakeholder Trust
Transparency builds credibility with customers, employees, and regulators. This enhances brand reputation and aids talent attraction/retention.
Frequently Asked Questions (FAQs)
1. Does the UAE Climate Law apply to small businesses and free zones?
Yes. The Federal Climate Change Law applies broadly to "public and private legal persons" whose operations result in emissions, explicitly including entities in free zones. While implementing rules may specify thresholds, there is currently no blanket exemption for SMEs. All companies should evaluate their obligations based on their emission levels.
2. What is the difference between the Climate Law report and a GRI Sustainability Report?
These are separate but complementary obligations. The Climate Law report is a mandatory, data-focused submission to the government (MOCCAE) tracking your GHG emissions. The GRI Sustainability Report (for listed companies) is a broader public disclosure covering environmental, social, and governance performance for all stakeholders. Many companies will need to produce both.
3. Is third-party assurance (audit) required for ESG reports?
For the Climate Law, third-party verification of emissions data is required, especially for larger emitters. For exchange-mandated sustainability reports, while not always explicitly required, independent assurance is increasingly expected by investors and is considered a best practice to enhance credibility and trust. We recommend it for material metrics.
4. Which ESG reporting framework should my company use?
The framework is often dictated by your obligations. Listed companies must use GRI Standards. For other companies or to provide additional information, integrating multiple frameworks is common: SASB for investor-relevant financial materiality, TCFD for climate risk disclosure, and aligning with ISSB standards is advisable for future-proofing. The key is selecting frameworks that address your material topics.
5. What is the single biggest mistake companies make in ESG reporting?
The most common and damaging mistake is greenwashing—making vague, aspirational, or unsubstantiated claims without robust data and concrete action plans to back them up. This exposes companies to reputational damage and regulatory risk. Credibility stems from transparency about both progress and challenges, supported by verifiable data.
Conclusion: Turning Compliance into Competitive Advantage
The era of voluntary ESG in the UAE has conclusively ended. With the implementation of the Federal Climate Change Law and stringent exchange requirements, ESG reporting is now a mandatory aspect of corporate governance and regulatory compliance.
Businesses that approach ESG as a strategic imperative rather than a compliance burden will reap multiple benefits: enhanced access to capital, operational efficiencies, stronger stakeholder relationships, and improved risk management. With the first reporting deadline of May 30, 2026 approaching, timely action is crucial.
Ready to Implement Your ESG Reporting Framework?
One Desk Solution offers integrated ESG compliance services that connect seamlessly with your existing accounting, VAT, and audit functions. Our experts help you navigate the complex regulatory landscape, establish robust data collection systems, and prepare credible reports that meet all UAE requirements.
Contact us today to begin your ESG journey:
📞 Call/WhatsApp: +971-52 797 1228
📍 Email: info@onedesksolution.com
🌐 Website: https://onedesksolution.com
Schedule a Consultation View Our ServicesFinal Thought from Our Experts
"The transition to mandatory ESG reporting represents more than regulatory change—it's a fundamental shift in how businesses create and demonstrate value. Companies that embrace this shift with strategic intent will differentiate themselves in an increasingly sustainability-conscious market. At One Desk Solution, we're committed to helping UAE businesses not just comply, but excel in this new environment."
- The One Desk Solution ESG Advisory Team
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