For many years, sustainability and ESG sat comfortably in the realm of voluntary ambition in the UAE. Forward-thinking companies embraced it as good practice, a reputational enhancer, or a signal to investors. Indeed, the federal government approved The UAE’s Green Agenda 2023 in 2015 but in my opinion, the real game-changing moment came in 2023 with the hosting of COP28 in Dubai. This marked a pivotal moment in the private-sector’s approach to and adoption of sustainable practices, one notable example being the ban on single-use plastics.
With the introduction of Federal Decree-Law No. 11 of 2024 on the Reduction of Climate Change Effects, climate accountability has moved from aspiration to obligation. When the law entered into force on 30 May 2025, it marked a fundamental shift in how businesses across the UAE must operate, govern, and compete. While organisations generally have until 30 May 2026 to put the necessary systems and reporting frameworks in place, the direction of travel is unmistakable: ESG is no longer optional, and it is no longer peripheral.
For British businesses operating in Dubai and across the UAE, this moment should be seen not as a regulatory burden, but as a strategic inflection point.
Legalising Climate Accountability
New UAE climate law applies broadly from private companies and free-zone entities to government organisations; all are within scope. At the core of the change, the message is clear, businesses are now legally required to measure, report, and reduce their greenhouse gas emissions.
It underscores a very decisive transition away from voluntary sustainability reporting towards legally enforceable climate action and for many organisations, particularly those with UK roots, this alignment will feel logical as most will already be familiar with evolving ESG expectations. For others, it will require a sharp and considered recalibration of internal capabilities, governance structures, and operational priorities.
Either way, climate accountability is no longer a matter of corporate choice. It is embedded in the regulatory fabric of the UAE’s economy.
Updates in Practice
The legislation introduces three core obligations for businesses.
1) Companies must measure and report their greenhouse gas emissions in line with national standards. This requires robust data collection, clear methodologies, and consistent reporting processes, not ad hoc estimates or marketing-led findings.
2) Organisations are expected to implement emissions mitigation measures and strategies that harmonise with the UAE’s national climate goals, going beyond disclosure and into calculated action: reducing emissions, improving efficiency, and strengthening resilience to climate-related risks.
3) The law enables participation in climate action mechanisms, including mitigation, adaptation, and carbon credit programmes. These mechanisms are designed to accelerate emissions reductions across the economy while encouraging innovation and collaboration.
Importantly, penalties for non-compliance are built into the framework – ensuring that climate compliance now carries legal and operational consequences, not just reputational ones.
This change crystallises a reality that has been building for some time; that ESG is no longer a “nice-to-have” or a side project housed within communications or CSR teams, it is a strategic business imperative.
From a risk management perspective, regulatory scrutiny is increasing, investor expectations are tightening, and climate-related risks are becoming more material to business continuity, so companies without credible ESG frameworks expose themselves to compliance, financial, and reputational risks.
Those businesses who switch-up the ESG strategy will find that it is a source of competitive advantage. Leadership embedding sustainability into their strategy are often finding key business benefits including increased attractiveness to international partners and being better positioned to access capital. In a market like the UAE, which is actively positioning itself as a global hub for sustainable growth, this matters.
Most importantly, ESG provides a foundation for innovation and long-term value creation; with operational efficiency, new services, and stronger stakeholder trust, organisations that integrate ESG into governance, strategy and day-to-day operations are better prepared for a regulated, climate-conscious future.
What should businesses do now?
The transition or “grace period” which will end in May 2026 offered and still offers a window for action, those companies who haven’t started, should put ESG at the top of the action list as there is still time to move decisively.
Start with establishing credible data collection systems for emissions that can withstand regulatory and investor scrutiny, as without reliable data, meaningful action is impossible. The data will then have to be validated by an approved third party.
Then, businesses should set science-aligned emissions targets and define clear mitigation pathways. Climate risk should be integrated into board-level governance, enterprise risk management, and strategic planning, not treated as a technical or environmental issue alone.
Equally important is building internal capability – ESG literacy at senior leadership level, clear accountability, and cross-functional ownership will be essential to delivering compliance and value.
Better for all
Taken together, the UAE’s new climate law positions the country as a regional leader in climate accountability and regulatory clarity. It sends a strong signal to global investors, partners and stakeholders that sustainability is central to the nation’s economic vision.
For corporate operations, particularly those with strong UK ties and international outlooks, the message is equally clear, those that act early, invest thoughtfully by embedding ESG into the core of their operations will be better prepared, not only for incoming and immediate regulations, but for tomorrow’s expectations.
Climate action in the UAE is no longer about whether to engage, but about how well and how quickly businesses respond. The strategic advantage will belong to those who recognise that ESG is now fundamental to doing business in the UAE, and who shun reactive in favour of a proactive approach from board-level down.
