Author: Umashankar Mani
The United Arab Emirates (UAE) climate regulatory landscape has entered a significant new phase. The UAE's climate regulatory landscape continues to evolve following the enactment of Federal Decree-Law No. 11 of 2024 on the Reduction of Climate Change Effects (the "Climate Law"). The legislation establishes a comprehensive framework for climate governance, greenhouse gas ("GHG") emissions management and climate-related reporting obligations across the UAE, including within free zones. Article 18 of the Climate Law originally provided for a one-year transition period (“Transition Period”) intended to facilitate implementation of the new regulatory framework and support compliance readiness among affected entities. Subsequent regulatory developments reflect the UAE's phased approach to implementation, recognising that the practical operation of the reporting framework remains dependent upon further technical guidance and implementation measures, which will assist businesses in determining the scope and extent of any applicable reporting and compliance obligations. As the regulatory framework continues to evolve through implementing regulations, ministerial decisions and technical guidance issued by the relevant authorities the Transition Period has been extended, businesses should continue to monitor developments and assess the practical implications of the Climate Law for their operations.
The Climate Law represents a key component of the UAE's broader commitment to climate neutrality and sustainable economic development. While environmental, social and governance ("ESG") considerations have gained increasing prominence over the past decade, the Climate Law marks a notable shift from voluntary sustainability initiatives towards a structured framework of legal obligations, regulatory oversight and enforcement.
As climate-related reporting becomes embedded within the UAE's compliance landscape, organisations are increasingly expected to understand, measure and manage the environmental impact of their operations in a manner that is transparent, verifiable and aligned with national climate objectives.
Federal Decree-Law No. 11 of 2024 establishes a comprehensive framework aimed at reducing greenhouse gas ("GHG") emissions, enhancing climate resilience and supporting the UAE's long-term climate strategy. The legislation is designed not only to strengthen the country's response to climate change but also to facilitate the collection of reliable climate-related data and support informed policymaking.
Importantly, the scope of the law is broad. Article 3 expressly provides that the Climate Law applies to sources operating within the UAE, including entities established in free zones. This confirms the UAE's intention to implement a nationwide climate governance framework and underscores the relevance of the legislation to businesses operating across a wide range of sectors.
The law also places considerable emphasis on emissions reduction. Pursuant to Article 4, sources are expected to contribute towards reducing emissions through measures such as improving energy efficiency, adopting clean energy solutions, enhancing natural carbon sinks, implementing carbon capture and storage technologies, utilising carbon offsetting mechanisms and promoting integrated waste management practices. These measures reflect the UAE's objective of encouraging practical action alongside regulatory reporting.
For many organisations, the most significant aspect of the Climate Law is the introduction of a formal framework for the measurement, reporting and verification ("MRV") of GHG emissions.
Under Article 6, entities designated by the Ministry of Climate Change and Environment ("MOCCAE") and the relevant competent authorities are required to regularly measure emissions generated by their activities, prepare emissions inventories and submit periodic reports in accordance with prescribed standards and methodologies. Businesses may also be required to provide information relating to existing emissions reduction measures, planned mitigation initiatives and the anticipated outcomes of those measures, in accordance with applicable regulatory requirements and guidance issued by the competent authorities.
The reporting obligations extend beyond the submission of emissions data. Article 6 further requires entities to maintain records relating to emissions measurements and supporting documentation for a period of five years, enabling regulators to verify reported information and assess compliance where necessary. The Ministry is also empowered to establish electronic systems for emissions measurement and reporting, further reinforcing the UAE's objective of creating a consistent and transparent climate reporting framework.
The Climate Law is further supported by implementing measures, including Cabinet Resolution No. 67 of 2024 establishing the National Register for Carbon Credits, which provides a framework for the recording and management of carbon credits representing verified greenhouse gas emissions reductions or removals. In parallel, emissions measurement and reporting obligations are increasingly informed by internationally recognised methodologies, including the GHG Protocol, which categorises emissions as:
For many businesses, compliance may require a significant enhancement of existing reporting systems. Climate-related information is often dispersed across multiple operational functions, including procurement, facilities management, logistics, manufacturing and finance. Establishing effective processes for collecting, validating and retaining such information will therefore be essential to meeting ongoing regulatory requirements.
The implications of the Climate Law extend beyond environmental compliance.
As climate disclosures become subject to regulatory scrutiny, organisations may need to reconsider how climate-related obligations are managed within existing governance and compliance frameworks. Responsibility for compliance is unlikely to rest solely with sustainability teams. Legal, compliance, finance and operational functions will increasingly need to collaborate to ensure the accuracy, consistency and reliability of climate-related disclosures.
The growing importance of climate-related information is also being driven by commercial considerations. Investors, lenders, insurers and business partners are paying greater attention to emissions management and sustainability performance when evaluating risk and making commercial decisions. Reliable climate reporting is therefore becoming an important indicator of sound governance and effective risk management.
Climate disclosure has evolved beyond a sustainability exercise and is increasingly becoming a regulatory, governance and business risk consideration requiring ongoing oversight and accountability.
The Climate Law is supported by a robust enforcement framework intended to ensure compliance and maintain confidence in climate-related disclosures.
Under Article 14, designated officials may be granted judicial authority to detect and investigate violations of the law and its implementing regulations. More significantly, Article 15 provides that breaches relating to emissions measurement, reporting and record-keeping obligations may result in fines ranging from AED 50,000 to AED 2 million.
The consequences may be even more significant in cases of repeated non-compliance. Pursuant to Article 16, penalties may be doubled where the same violation is repeated within two years from the date of a final judgment of conviction. The law further contemplates additional administrative penalties and enforcement measures through resolutions to be issued under Article 17.
These provisions demonstrate that climate compliance is intended to be treated as a substantive legal obligation rather than a voluntary reporting initiative.
The Climate Law represents a significant development in the UAE's climate governance framework and reflects the country's broader commitment to sustainability and emissions reduction. Businesses operating in the UAE should continue to monitor implementing regulations, ministerial decisions and sector-specific guidance issued by MOCCAE and other competent authorities.
Organisations may also wish to assess existing governance structures, emissions monitoring systems and reporting processes to ensure they are capable of supporting future compliance requirements. Early preparation will assist businesses in adapting to evolving regulatory expectations and demonstrating effective climate governance practices.
As the regulatory framework continues to develop, organisations that invest in robust governance mechanisms, reliable data collection systems and effective compliance procedures will be better positioned to respond to future climate-related obligations.
The Climate Law represents an important milestone in the UAE's climate governance journey. While the reporting framework continues to evolve through implementing measures and technical guidance, climate-related reporting and emissions management are becoming increasingly important components of the UAE's broader compliance landscape. As regulatory expectations continue to develop, businesses that invest in robust governance, reliable data systems and effective compliance processes will be best positioned to navigate this new regulatory landscape.
"Businesses should utilise the current period to assess their climate reporting capabilities, strengthen governance frameworks and monitor regulatory developments relevant to the implementation of the Climate Law."
“For many organisations, the race to meet the climate disclosure deadline has already begun.”
Note: This Legal Update / Newsletter is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.
The United Arab Emirates (UAE) climate regulatory landscape has entered a significant new phase. The UAE's climate regulatory landscape continues to evolve following the enactment of Federal Decree-Law No. 11 of 2024 on the Reduction of Climate Change Effects (the "Climate Law"). The legislation establishes a comprehensive framework for climate governance, greenhouse gas ("GHG") emissions management and climate-related reporting obligations across the UAE, including within free zones. Article 18 of the Climate Law originally provided for a one-year transition period (“Transition Period”) intended to facilitate implementation of the new regulatory framework and support compliance readiness among affected entities. Subsequent regulatory developments reflect the UAE's phased approach to implementation, recognising that the practical operation of the reporting framework remains dependent upon further technical guidance and implementation measures, which will assist businesses in determining the scope and extent of any applicable reporting and compliance obligations. As the regulatory framework continues to evolve through implementing regulations, ministerial decisions and technical guidance issued by the relevant authorities the Transition Period has been extended, businesses should continue to monitor developments and assess the practical implications of the Climate Law for their operations.
The Climate Law represents a key component of the UAE's broader commitment to climate neutrality and sustainable economic development. While environmental, social and governance ("ESG") considerations have gained increasing prominence over the past decade, the Climate Law marks a notable shift from voluntary sustainability initiatives towards a structured framework of legal obligations, regulatory oversight and enforcement.
As climate-related reporting becomes embedded within the UAE's compliance landscape, organisations are increasingly expected to understand, measure and manage the environmental impact of their operations in a manner that is transparent, verifiable and aligned with national climate objectives.
A Nationwide Framework for Climate Governance
Federal Decree-Law No. 11 of 2024 establishes a comprehensive framework aimed at reducing greenhouse gas ("GHG") emissions, enhancing climate resilience and supporting the UAE's long-term climate strategy. The legislation is designed not only to strengthen the country's response to climate change but also to facilitate the collection of reliable climate-related data and support informed policymaking.Importantly, the scope of the law is broad. Article 3 expressly provides that the Climate Law applies to sources operating within the UAE, including entities established in free zones. This confirms the UAE's intention to implement a nationwide climate governance framework and underscores the relevance of the legislation to businesses operating across a wide range of sectors.
The law also places considerable emphasis on emissions reduction. Pursuant to Article 4, sources are expected to contribute towards reducing emissions through measures such as improving energy efficiency, adopting clean energy solutions, enhancing natural carbon sinks, implementing carbon capture and storage technologies, utilising carbon offsetting mechanisms and promoting integrated waste management practices. These measures reflect the UAE's objective of encouraging practical action alongside regulatory reporting.
Climate Reporting Moves Beyond ESG
For many organisations, the most significant aspect of the Climate Law is the introduction of a formal framework for the measurement, reporting and verification ("MRV") of GHG emissions.Under Article 6, entities designated by the Ministry of Climate Change and Environment ("MOCCAE") and the relevant competent authorities are required to regularly measure emissions generated by their activities, prepare emissions inventories and submit periodic reports in accordance with prescribed standards and methodologies. Businesses may also be required to provide information relating to existing emissions reduction measures, planned mitigation initiatives and the anticipated outcomes of those measures, in accordance with applicable regulatory requirements and guidance issued by the competent authorities.
The reporting obligations extend beyond the submission of emissions data. Article 6 further requires entities to maintain records relating to emissions measurements and supporting documentation for a period of five years, enabling regulators to verify reported information and assess compliance where necessary. The Ministry is also empowered to establish electronic systems for emissions measurement and reporting, further reinforcing the UAE's objective of creating a consistent and transparent climate reporting framework.
The Climate Law is further supported by implementing measures, including Cabinet Resolution No. 67 of 2024 establishing the National Register for Carbon Credits, which provides a framework for the recording and management of carbon credits representing verified greenhouse gas emissions reductions or removals. In parallel, emissions measurement and reporting obligations are increasingly informed by internationally recognised methodologies, including the GHG Protocol, which categorises emissions as:
- Scope 1: Direct emissions from sources owned or controlled by the entity.
- Scope 2: Indirect emissions resulting from the consumption of purchased electricity, steam, heating or cooling.
- Scope 3: Other indirect emissions arising across the entity's value chain, including certain upstream and downstream activities. These classifications are expected to play an increasingly important role in emissions measurement, reporting and climate-related compliance across regulated sectors.
For many businesses, compliance may require a significant enhancement of existing reporting systems. Climate-related information is often dispersed across multiple operational functions, including procurement, facilities management, logistics, manufacturing and finance. Establishing effective processes for collecting, validating and retaining such information will therefore be essential to meeting ongoing regulatory requirements.
Governance, Risk and Accountability
The implications of the Climate Law extend beyond environmental compliance.As climate disclosures become subject to regulatory scrutiny, organisations may need to reconsider how climate-related obligations are managed within existing governance and compliance frameworks. Responsibility for compliance is unlikely to rest solely with sustainability teams. Legal, compliance, finance and operational functions will increasingly need to collaborate to ensure the accuracy, consistency and reliability of climate-related disclosures.
The growing importance of climate-related information is also being driven by commercial considerations. Investors, lenders, insurers and business partners are paying greater attention to emissions management and sustainability performance when evaluating risk and making commercial decisions. Reliable climate reporting is therefore becoming an important indicator of sound governance and effective risk management.
Climate disclosure has evolved beyond a sustainability exercise and is increasingly becoming a regulatory, governance and business risk consideration requiring ongoing oversight and accountability.
Enforcement and Regulatory Expectations
The Climate Law is supported by a robust enforcement framework intended to ensure compliance and maintain confidence in climate-related disclosures.Under Article 14, designated officials may be granted judicial authority to detect and investigate violations of the law and its implementing regulations. More significantly, Article 15 provides that breaches relating to emissions measurement, reporting and record-keeping obligations may result in fines ranging from AED 50,000 to AED 2 million.
The consequences may be even more significant in cases of repeated non-compliance. Pursuant to Article 16, penalties may be doubled where the same violation is repeated within two years from the date of a final judgment of conviction. The law further contemplates additional administrative penalties and enforcement measures through resolutions to be issued under Article 17.
These provisions demonstrate that climate compliance is intended to be treated as a substantive legal obligation rather than a voluntary reporting initiative.
The Road Ahead
The Climate Law represents a significant development in the UAE's climate governance framework and reflects the country's broader commitment to sustainability and emissions reduction. Businesses operating in the UAE should continue to monitor implementing regulations, ministerial decisions and sector-specific guidance issued by MOCCAE and other competent authorities.Organisations may also wish to assess existing governance structures, emissions monitoring systems and reporting processes to ensure they are capable of supporting future compliance requirements. Early preparation will assist businesses in adapting to evolving regulatory expectations and demonstrating effective climate governance practices.
As the regulatory framework continues to develop, organisations that invest in robust governance mechanisms, reliable data collection systems and effective compliance procedures will be better positioned to respond to future climate-related obligations.
The Climate Law represents an important milestone in the UAE's climate governance journey. While the reporting framework continues to evolve through implementing measures and technical guidance, climate-related reporting and emissions management are becoming increasingly important components of the UAE's broader compliance landscape. As regulatory expectations continue to develop, businesses that invest in robust governance, reliable data systems and effective compliance processes will be best positioned to navigate this new regulatory landscape.
For businesses operating in the UAE, the message is clear:
"Businesses should utilise the current period to assess their climate reporting capabilities, strengthen governance frameworks and monitor regulatory developments relevant to the implementation of the Climate Law."“For many organisations, the race to meet the climate disclosure deadline has already begun.”
Note: This Legal Update / Newsletter is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.