Today's Edition
MAYS IBRAHIM (ABU DHABI)
Businesses across the UAE are adjusting to new sweeping climate compliance requirements under Federal Decree-Law No. (11) of 2024, now officially in effect.
The law mandates all entities operating in the UAE, including those in free zones, to measure, track, and manage their greenhouse gas (GHG) emissions. A one-month grace period, ending on June 28, was granted for registration and initial compliance.
Cabinet Resolution No. 67 of 2024 details the specific thresholds and implementation requirements under the law. It defines “entities of huge carbon emissions” as those emitting an equivalent of at least 500,000 metric tonnes of carbon dioxide annually (Scope 1 and 2).
These entities are required to register with the National Registry of Carbon Credit (NRCC) and implement full Monitoring, Reporting, and Verification protocols (MRV).
Failure to comply with the UAE Climate Change Law may result in financial penalties of up to Dh1 million and temporary business suspension until all requirements are met.
However, experts say businesses should look beyond penalties and recognise the legislation as a launchpad for innovation and future-proof growth.
“The law’s comprehensive approach, combining regulation, market-based incentives, and innovation support, positions the UAE to lead the region in green economic transformation,” Amro Zakaria, Co-founder of Kyoto Network and CEO of Madarik Ventures, told Aletihad.
“It not only helps future-proof the economy against climate risks but also unlocks new opportunities for sustainable growth, investment, and job creation,” the global financial markets strategist added.
Creating New Growth Vectors
Nahla Nabil, an ESG and Sustainability Strategist, views this new law as an economic blueprint for diversification - one that creates new growth vectors while protecting existing ones.
“What excites me most is that the law is sending strong signals to both sides of the market,” she told Aletihad.
“On the supply chain, it’s driving innovation: carbon capture, clean tech, nature-based solutions. All of these are moving from nice-to-have to must-have. On the demand side, businesses now urgently need climate expertise, advisory services, and MRV systems and that’s where I see an explosion in new jobs and opportunities,” Nabil said.
She noted that UAE educational institutions are already developing programmes around climate risk and emissions management, laying the groundwork for a future-ready, knowledge-based economy.
“The law also lays the foundation for a national carbon market. If done right, the UAE could lead the region in green finance, not just meeting targets but setting the benchmark,” said Nabil.
She also pointed out that as global regulations like the EU’s Carbon Border Adjustment Mechanism (CBAM) come into effect, having verified emissions data becomes a matter of trade resilience, not just good governance.
While some companies may limit themselves to basic compliance, Nabil argued that those that thrive will be the ones exploring how the law can create value and drive innovation.
“The law gives us direction, from tracking emissions to exploring cleaner operations. But it’s not just about rules. It’s about clarity. When we know where we’re heading, it’s easier to make smart, future-focused decisions.”
Expanding Impact
According to Nabil, companies that are ready to move beyond compliance should focus on emissions hotspots to identify innovation potential, engage early in carbon credit systems, and support customers in reducing their emissions to expand the impact of their climate strategies.
Zakaria pointed out that the law encourages research and development (R&D) and innovation, offering incentives for the private sector to develop climate solutions, such as clean energy, carbon capture, and alternatives to high-emission materials.
Companies can also engage in carbon trading, turning emissions reductions into financial assets and new revenue streams, he added.
“Research has proven that companies that have an ESG strategy and an environmentally conscious mindset are generally more profitable. One reason for that is that the cost of capital (finance rates) is lower for projects with lower carbon intensity,” Zakaria said.
Over time, he added, compliance with this law will help UAE firms reduce their carbon footprint, positioning them for better access to international markets that may soon be out of reach for high carbon foot print companies and high carbon intensity products.
Going Beyond Emissions
According to Zakaria, the law introduces several market-based tools to support implementation, including Carbon Credit Market/ETS, Carbon Offsetting and Shadow Pricing, Technology Adoption Incentives, Green Tax Incentives, Sustainable Finance Frameworkm, and Performance Indicators.
Nabil pointed to the law’s alignment with international climate frameworks, without losing sight of national priorities.
“Post-COP28, it’s clear the UAE isn’t just pledging alignment with the Paris Agreement, it’s embedding it. The law reinforces our Nationally Determined Contributions and puts in place the systems to act on them,” she said.
“The National Carbon Credit Registry is also a forward-looking move, signalling readiness for Article 6 and future participation in global carbon markets, not just keeping pace, but helping shape what’s next.”
From an ESG standpoint, Nabil said the law reflects global standards like TCFD (Task Force on Climate-related Financial Disclosures) and the GHG Protocol, offering a robust foundation for environmental reporting.
While the current focus is on emissions, she expects broader governance and risk disclosures aligned with GRI and ISSB to follow.
“That evolution feels natural, and the UAE’s approach has been open and adaptive. The real progress will come with implementation, and I’m optimistic we’re heading toward even deeper global alignment.”
Nabil views this law as a foundational step in a broader ESG (Environmental, Social, and Governance) shift.
“At first glance, it may seem like the law is mostly focused on emissions and the environment - the ‘E’ in ESG. But when you read deeper, you realise it’s more than that. This is a framework law,” she said. “It’s meant to be built on, with future ministerial resolutions, technical guidelines, and sector-specific policies that will gradually define the full ESG landscape.”
Nabil points to Article 7 on climate adaptation, which moves beyond environmental metrics to address health systems, infrastructure resilience, early warning systems, and inter-agency coordination - elements that touch on both social and governance priorities.
“Even the definitions section makes it clear: climate impacts are not just about nature, they include effects on lives, health, economies, and culture,” she explained. “The law sets the stage for ESG reporting that is people-centred, risk-aware, and impact-driven.”
