Who Is Covered
The short answer: virtually every business in the UAE that generates GHG emissions. The law does not prescribe minimum thresholds based on turnover, headcount or emissions volume. Whether you are a multinational conglomerate or a small trading company, if your activities generate GHG emissions, you fall within scope. This is not a voluntary sustainability initiative — it is a mandatory regulatory framework with enforcement mechanisms.
Three Core Obligations
First, monitoring and reporting: companies must register with the national MRV (Monitoring, Reporting and Verification) system, prepare a GHG emissions inventory covering Scope 1 and Scope 2 emissions, and submit annual reports to the Ministry of Climate Change and Environment (MOCCAE). All supporting data must be retained for at least five years.
Second, implementing a GHG reduction plan: beyond measuring and reporting, companies must demonstrate concrete steps to reduce their carbon footprint. This involves submitting details of existing and planned reduction measures as part of annual regulatory filings, aligned with sector-specific targets to be published by the UAE Cabinet.
Third, conducting a climate risk assessment: entities are required to identify and address both physical risks (supply chain disruption from extreme weather) and transition risks (evolving regulations, carbon pricing, shifting consumer preferences).
What This Means for Corporate Structuring
For companies establishing or restructuring entities in the UAE, climate compliance adds a new layer to the corporate structuring analysis. The choice between mainland and free zone registration now includes climate reporting obligations. Companies with multiple UAE entities should evaluate whether a consolidated or entity-level reporting approach is more efficient.
Scope 3 reporting — covering indirect emissions from supply chains — is anticipated to become formally mandatory from 2027. Due diligence processes for acquisitions should now include climate compliance assessment alongside traditional financial and legal review.
Related Insights
UAE Corporate Tax: The Second Filing Season and the Compliance Traps That Catch BusinessesFTA audit capacity increased 135% in 2024. QFZP mandatory audits now apply to all free zone entities. The penalty framew... Mandatory Employee Health Insurance in the UAE: Employer Obligations and ComplianceHealth insurance for employees is mandatory across all UAE emirates. We outline the current regulatory requirements, emp... AML Enforcement in the UAE 2026: What Every Business Must Get RightDNFBP obligations are expanding. CDD, EDD, goAML registration, STR reporting and staff training are non-negotiable. The ...What the UAE Climate Law Actually Requires
Federal Decree-Law 11 of 2024 (UAE Climate Change Law) introduced binding greenhouse-gas reporting and reduction obligations on UAE entities. Implementing regulations through 2024–2025 specified the entity scope, reporting templates and verification requirements. The May 2026 reporting deadline is the first hard date for full compliance under the framework, covering scope 1 and scope 2 emissions for in-scope entities for the 2025 reporting year. Beyond reporting, the law requires entities above defined thresholds to implement reduction plans aligned with the UAE's Net Zero 2050 strategy.
| Obligation | Trigger | Deadline | Verification |
|---|---|---|---|
| Scope 1 + 2 emissions inventory | Energy use above threshold; sector-specific lists | Annual, by 31 May for prior year | Approved verifier required >threshold |
| Reduction plan filing | Significant emitters | Within 12 months of designation | Approved by MOCCAE |
| Climate-disclosure in annual report | Listed companies | With audited financials | Auditor sign-off |
| Carbon credit registration | Voluntary participation | — | UAE Carbon Alliance registry |
| Climate-related contingent liability | Where regulator-set reduction targets are missed | Sanctions regime under development | — |
Who Is In Scope
The initial implementation focuses on three populations: heavy industry (cement, aluminium, refineries, petrochemicals, steel); large energy and utility companies; and large commercial real-estate portfolios. Phased extension is expected to professional services, financial-services and large retail in 2027–2028. For most Polaris client base entities, the immediate compliance obligation is not the operational emission reporting but the supply-chain disclosure requirement that flows down from in-scope clients — large customers are increasingly asking their suppliers to report scope 1, 2 and 3 emissions as part of procurement.
The Reputational and Procurement Dimension
For services-led businesses not directly in scope of mandatory reporting, the more immediate question is supply-chain. Multinational clients increasingly require their service providers to demonstrate emissions tracking, reduction plans and climate-aligned procurement policies. A UAE professional-services SME bidding for a large multinational mandate in 2026 may find emissions reporting in the RFP, regardless of UAE legal requirements. The pragmatic posture is to maintain a minimum-viable emissions inventory and policy framework — typically achievable for under AED 30,000 of one-off cost.
How This Interacts With Tax
The UAE has not yet introduced a carbon tax. Verifiable emission-reduction projects can generate carbon credits tradable through the UAE Carbon Alliance, with potential income treated as ordinary CT-taxable income absent specific guidance. Capital expenditure on emission-reduction equipment is deductible under standard CT depreciation rules. The 2024 climate law sits alongside, not in place of, broader sustainability reporting frameworks (TCFD, ISSB) that listed and regulated entities increasingly face. Advisory engagements for clients in scope typically coordinate the climate reporting with the existing financial reporting calendar.
- May 2026 is the first hard deadline for in-scope emission reporting under Federal Decree-Law 11 of 2024.
- Initial scope: heavy industry, large energy/utilities, large commercial real-estate.
- Services-led SMEs face supply-chain disclosure requirements from multinational clients, even outside legal scope.
- No UAE carbon tax yet; carbon credits tradable through UAE Carbon Alliance.
- Minimum-viable emissions inventory and policy is typically achievable for under AED 30,000 one-off cost.
Polaris Perspective
Polaris advises clients on the intersection of corporate structuring and regulatory compliance — including the new climate reporting framework. We help businesses understand their obligations, design appropriate reporting structures and ensure ongoing compliance with MOCCAE requirements.
Arrange a Consultation →