ESG Reporting in the UAE: What Federal Decree-Law No. 11 of 2024 Means for Businesses

Federal Decree-Law No. 11 of 2024 has shifted ESG reporting in the UAE from a voluntary best practice to a federal legal duty. The law came into force on 30 May 2025 and applies to all public and private sector entities, including those operating in free zones. It stands as the first binding climate framework of its kind in the MENA region, signalling a turning point in how the country expects businesses to engage with climate accountability.

According to PwC's Middle East ESG Survey, regulatory readiness has consistently been cited as a leading driver of ESG strategy adoption among regional businesses, reflecting how proactively the market has prepared for the next phase of disclosure.¹

The numbers behind this momentum are significant. Research from Bloomberg Intelligence projects that global ESG assets under management will exceed USD 40 trillion by 2030, representing more than 25% of total assets under management worldwide.² Closer to home, the International Energy Agency reports that the Middle East attracted around USD 175 billion in total energy investment in 2024, with roughly 15% going to clean energy.

The same source notes that the UAE has committed USD 30 billion in catalytic capital through a climate-focused investment initiative announced at COP28.³ Data from the UAE Ministry of Climate Change and Environment confirms that the country has committed to cutting emissions by 40% by 2030 under the latest update to its Nationally Determined Contribution to the UNFCCC, on the path to net zero by 2050.⁴

The case for ESG readiness in the UAE is now a quantitative one, visible in capital flows, regional investment, and national climate commitments.

Sources: Bloomberg Intelligence (2024); International Energy Agency, World Energy Investment 2024; UAE Ministry of Climate Change and Environment.

The next chapter has now begun. On 30 May 2025, Federal Decree-Law No. 11 of 2024 on the Reduction of Climate Change Effects entered into force.

For UAE businesses, the questions are straightforward. What does the law cover? Who does it apply to? What is required, and by when? This blog covers each one, including for companies in free zones like Meydan Free Zone.

ESG Reporting in the UAE: From Voluntary to Mandatory

ESG reporting in the UAE has, until now, sat across a few overlapping but optional layers:

• Listed companies on the Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX) have had sustainability reporting obligations through the Securities and Commodities Authority's governance framework.
• The ADGM Financial Services Regulatory Authority (FSRA) and DIFC's Dubai Financial Services Authority (DFSA) have introduced their own sustainable finance and ESG disclosure frameworks for the entities they regulate.
• Most other businesses, including private companies, SMEs, and free zone entities, were under no direct ESG reporting mandate.

Federal Decree-Law No. 11 of 2024 introduces a separate, nationwide layer that sits above all of this. Its focus is narrower than full-spectrum ESG (it is specifically about the climate dimension), but its reach is much wider. For the first time, climate reporting in the UAE is a federal legal duty rather than a voluntary commitment.

Key Provisions of Federal Decree-Law No. 11 of 2024

The law was issued on 28 August 2024 and came into force on 30 May 2025, with full compliance expected by 30 May 2026.

In short, it sets out to:

• Measure, monitor, and reduce greenhouse gas emissions across the country
• Help sectors and communities adapt to climate-related risks
• Support clean technologies, research, and private sector innovation
• Build national emissions data and back international climate cooperation
• Align with the UAE's Net Zero by 2050 Strategic Initiative and its Paris Agreement commitments

The law calls entities within scope "Sources", meaning sources of greenhouse gas emissions. Sources are expected to cut emissions through one or more recognised means, such as:

• Energy efficiency
• Clean energy
• Natural carbon sinks
• Carbon capture, use, and storage (CCUS)
• Alternatives to saturated fluorocarbons
• Carbon offsetting
• Integrated waste management

The Ministry of Climate Change and Environment (MOCCAE) leads at the federal level, working with local authorities, including those of the free zones.

How the New Law Sits Alongside Existing UAE Frameworks

Several ESG frameworks are now active in the UAE, each with its own scope and audience. Here is how they fit together:

Who Does It Apply To?

The law applies to all "sources" of greenhouse gas emissions in the country, and that scope is deliberately broad. It covers:

• Public and private sector entities, whatever the ownership structure
• Mainland and free zone companies
• Businesses of any size, though some obligations (like carbon credit registration) only kick in above certain thresholds
• Every sector, even if specific reduction targets will vary once the implementing resolutions land

There is no blanket exemption for SMEs, startups, or service businesses. If your operations produce emissions, whether that comes from a manufacturing plant, a delivery fleet, an office, a data centre, or a retail unit, you fall within scope.

What UAE Businesses Are Expected to Do

The law sets the framework. The detailed methodologies are still being finalised by MOCCAE through implementing resolutions. The broad direction, however, is already clear.

1. Measure emissions

Businesses will need to quantify the greenhouse gas emissions associated with their operations, using methodologies approved by MOCCAE. International best practice distinguishes between three scopes:

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2. Report and maintain records

Emissions data will need to be reported to the relevant federal or local authority, with records retained for compliance and verification purposes. Reported data is expected to be independently verified, in line with international MRV (measurement, reporting, and verification) standards.

3. Reduce emissions

Reporting alone is not enough. The law requires businesses to actively contribute to emission reduction through recognised means, including energy efficiency improvements, renewable energy adoption, carbon capture, offsetting, and integrated waste management.

4. Assess and plan for climate risk

The law also expects businesses and sectors to assess climate-related risks and build adaptation plans, with federal and local authorities coordinating the bigger-picture response.

5. Participate in carbon markets where applicable

Businesses that exceed their reduction targets can participate in carbon credit trading through the National Carbon Credit Registry.

Penalties for Non-Compliance

The law sets out clear financial consequences for non-compliance:

• Administrative fines range from AED 50,000 to AED 2,000,000 per violation.
• Repeat violations of the same provision within two years are subject to double penalties.

What's Still Pending

The law is in force, but several operational elements are still being finalised:

• Implementing resolutions setting out reporting methodologies, scopes, formats, and timelines for different categories of business
• Sector-specific emission reduction targets, which the Cabinet is empowered to set annually
• The detailed schedule of violations and corresponding penalties, to be issued by Cabinet resolution
• Sector-specific adaptation plans, to be developed in coordination with MOCCAE

Until these are published, the specifics (what to report, when, in what format, and to whom) remain to be confirmed. The direction, though, is clear. Businesses that start getting the basics in place now, like collecting emissions data and building familiarity with carbon accounting, will be in a much better position once the details land.

Final Thoughts

Federal Decree-Law No. 11 of 2024 marks a clear shift in how climate reporting is treated in the UAE. The law is in force, the direction is set, and the implementing detail will follow. For now, the obligation on most businesses is one of awareness and preparation: understanding where their emissions come from, where their data lives, and where the gaps in their reporting capability sit, before the operational requirements are finalised.

A business that begins tracking its energy and fuel use today will be in a stronger position to file its first emissions report on time, win supplier contracts that increasingly require disclosure, and unlock financing tied to ESG performance. A business that waits until the implementing resolutions land may find itself doing all three at once, under pressure.

As a registrar to thousands of businesses across sectors, Meydan Free Zone is committed to keeping its community informed of regulatory developments that affect them. The full text of the law can be accessed on the UAE Legislation portal, with updates available via the Ministry of Climate Change and Environment.

Citations

¹ PwC Middle East, The 2023 Middle East Environmental, Social & Governance Report: Moving from Start-up to Scale-up on ESG, 2023.

² Bloomberg Intelligence, Global ESG Assets Predicted to Hit $40 Trillion by 2030, Despite Challenging Environment, Press Release, 8 January 2024.

³ International Energy Agency, World Energy Investment 2024: Middle East, 2024.

⁴ UAE Ministry of Climate Change and Environment, UAE Accelerates to Net Zero with Nationwide Emissions Reduction of 40% by 2030 in Proactive Third Update to Second NDC, 2023.