The urgency of the climate change crisis has led countries around the world to implement policies aimed at measuring and reducing carbon footprints and promoting environmental sustainability. The United Arab Emirates took a significant step in this direction with Federal Decree-Law No. (11) of 2024 on the Reduction of Climate Change Effects, commonly referred to as the UAE Climate Law, which became effective May 30, 2025. This law is designed to combat the impacts of climate change in the UAE by establishing a framework for managing greenhouse gas (GHG) emissions.
S&P Global recently convened a breakfast briefing and roundtable discussion centered on the UAE Climate Law that brought together professionals from a range of sectors including industrials, financials and consumer services. The session covered the legislation’s scope, applicability and reporting requirements, and what steps UAE-based companies can consider to prepare for upcoming disclosure mandates.
In this blog, we summarize that discussion and delve into what the UAE Climate Law entails, its implications for various sectors and how it aims to foster a sustainable future in the UAE.
What are the UAE Climate Law’s objectives and what is its scope?
The UAE Climate Law is a legal framework aimed at mitigating the impacts of climate change through the management of GHG emissions. The law mandates that all “sources” of emissions, defined as “public and private legal persons, as well as individual enterprises,” actively monitor, report and verify their GHG output, according to a summary of the law published by the UAE. The law’s primary objectives include reducing climate change effects on the environment, economy and society, promoting transparency and aligning with national sustainability goals. By requiring organizations to disclose their emissions data, it enhances accountability and public awareness. The law supports the country’s framework for building an economy that is less reliant on oil, known as UAE Vision 2030, by encouraging lower emissions, cleaner energy and planning for climate risks.
The UAE Climate Law has a wide-reaching scope. According to S&P Global data, approximately 9,300 industrial companies across diverse industries, including manufacturing and construction, will be affected. Around 200 publicly listed entities are also subject to regulatory oversight, alongside about 4,900 businesses in the consumer goods sector. Financial institutions, including approximately 3,000 companies in the banking and finance sector, will also be impacted. Additionally, 35,000 private businesses operating in various sectors, including services and retail, will need to comply with the law. There is a compliance timeline of one year for affected entities.
The UAE Climate Law outlines several requirements for entities to comply. First and foremost, entities are required to monitor, report and verify their GHG emissions accurately. This involves tracking emissions sources, quantities and reduction measures, and disclosing this information regularly. Second, companies must establish decarbonization targets that align with national-level sector-specific goals. In addition, organizations are required to develop and implement strategies that not only reduce emissions but also enhance their resilience to the impacts of climate change. This includes identifying potential risks and developing plans to address them.
Sources of emissions can face penalties for noncompliance. Violations of Article 6 of the law, which establishes how sources should measure and report their emissions, can result in fines ranging from 50,000 to 2 million UAE dirhams. Repeat offenses within a two-year period may incur double the penalty.
Mitigation and adaptation measures
Mitigation and adaptation are two essential components of the UAE Climate Law. Mitigation refers to efforts aimed at reducing GHG emissions. The law encourages companies to adopt various measures such as investing in renewable energy initiatives, such as solar, wind and other renewable energy projects, to reduce reliance on fossil fuels. Additionally, organizations are expected to focus on constructing energy-efficient buildings by upgrading existing facilities and implementing higher energy efficiency standards. The law also pushes for sources of emissions to pursue carbon offsets and emissions trading.
Adaptation, on the other hand, involves adjusting practices and systems to minimize the negative impacts of climate change. Under Article 7 of the law, the UAE plans to develop adaptation plans for the infrastructure, energy, environment, health and insurance sectors, among others. Concerned entities will be expected to submit data on economic and non-economic losses and damages resulting from climate change impacts and to implement adaptation plans aligned with the requirements set out for the relevant sector. One example of climate adaptation is implementing better water management practices to reduce water consumption.
Corporate readiness for the UAE Climate Law
Businesses can take several proactive steps to align with the new requirements. One basic step is to establish a GHG emissions baseline. A company can conduct assessments to identify their current emissions levels to serve as a reference point for measuring future reductions. Setting decarbonization targets is another important step. S&P Global offers a structured assessment and planning approach to support companies expected to align with the UAE’s requirements.
This approach begins with a status quo assessment to evaluate the company’s operational structure, ESG strategy, existing climate data and reporting frameworks. We map applicable UAE Climate Law disclosure requirements, categorizing them into mandatory and voluntary elements, then perform a gap analysis to assess the company’s current compliance and disclosure readiness.
A GHG inventory readiness assessment follows, including a review of data aggregation processes, calculation methods and evidence sources. We help define organizational boundaries based on the company’s legal and operational structure to measure Scope 1 and Scope 2 emissions and ensure alignment with the GHG Protocol. Based on our findings, we propose a gap closure roadmap. To build internal ESG capacity, our Sustainability Academy Program can provide modular ESG training, including post-module testing and certification, to reinforce learning.
The visual below shows a typical climate strategy journey — from GHG emissions inventory and target setting, to climate risk assessment, mitigation measures and adaptation planning.
Sustainable finance plays a crucial role in supporting the objectives of the UAE Climate Law. As the UAE continues to prioritize sustainability, corporate interest in sustainable bond issuance and transition finance in sectors that are traditionally hard to decarbonize will likely increase.
Green bonds, for instance, are financial instruments designed to fund projects that have positive environmental impacts. Sustainable debt issuance now represents about an 11% stable share of the global bond market, according to S&P Global Ratings. Green bond issuance reached a record high of $622 billion in 2024, and S&P Global Ratings expects “increased issuance in low-income and emerging economies to address the climate finance gap.”
Blue bonds, a type of green bond that focuses on financing ocean or water-related restoration or protection projects, are also gaining traction in the UAE. The Dubai-based port terminal operator DP World became the first Middle Eastern company to issue a blue bond in December 2024. The $100 million bond will support projects in sustainable marine transportation, port infrastructure improvements that reduce environmental impact and initiatives to reduce water pollution in coastal environments, according to the company.
The UAE Climate Law aims to tackle climate change by promoting greater awareness of sustainability within the UAE. Understanding its implications may enable businesses to identify economic opportunities and risks that could arise from initiatives associated with its implementation.