Regulatory Extract:
High-emission entities must register and align with new adaptation, mitigation, and disclosure mandates under UAE’s climate policy update and ESG compliance strategy. ESG BROADCAST shares key takeaways.
In preparation for the enforcement of the UAE’s landmark Federal Decree-Law No. (11) of 2024 “On the Reduction of Climate Change Effects,” effective from May 30, 2025, new regulatory guidance has been issued to support organizations in achieving timely and effective compliance. The guidance, developed in consultation with the Ministry of Climate Change and Environment (MOCCAE), outlines phased implementation strategies for entities falling under the purview of the law, with a particular focus on high-emission sectors.
The law applies specifically to organizations emitting 500,000 metric tons or more of carbon dioxide equivalent annually (Scope 1 and 2), classified as “entities of huge carbon emissions.” These entities are legally required to establish climate governance structures, measurement, reporting, and verification (MRV) systems, and submit baseline emissions data by June 28, 2025, to the National Carbon Credit Registry (NCCR). Voluntary registry participation is encouraged for other entities seeking to trade carbon credits or demonstrate proactive sustainability measures.
Following the registration phase, entities must develop tailored emissions reduction strategies with clear targets and mitigation actions. From May 2026 onward, regulated entities are required to operationalize climate adaptation plans that assess physical climate risks to assets and supply chains and implement resilience-building measures. Annual compliance reports, verified by accredited third-party agencies, must document emissions trends, reduction outcomes, and energy efficiency measures.
Long-term obligations extend beyond 2026, mandating that businesses align with the UAE Net Zero by 2050 initiative. Organizations are urged to develop decarbonization roadmaps and adopt international reporting standards, including those of the Task Force on Climate-related Financial Disclosures (TCFD). Strategic climate disclosures will be instrumental in maintaining investor confidence, securing green finance, and meeting growing stakeholder expectations.
Non-compliance with the law invites penalties of up to AED 1 million, suspension of operations, legal action, and potential reputational damage. The guidance emphasizes early compliance not only as a legal requirement but as a strategic opportunity. It highlights benefits such as access to sustainability-linked loans, enhanced brand positioning, and market entry into the rapidly expanding carbon trading and climate technology sectors.
Strategic significance lies in the UAE’s clear positioning of climate legislation as a catalyst for sustainable innovation and private sector leadership. High-emitting firms must act swiftly to register with the NCCR and embed low-carbon strategies across operations to meet the May 2025 regulatory threshold. ESG professionals should leverage this guidance to integrate climate risk into core business planning and reporting cycles.
ESG BROADCAST will continue monitoring the updates related to this topic. Stay tuned to be updated on the related policy and pivotal regulatory shift.
