The UAE has been one of the leading countries in the Middle East taking solid steps on mandatory sustainability and ESG (Environmental, Social and Governance) reporting over the past couple of years. Under the UAE’s ‘Net Zero by 2050’ strategy, Dubai and Abu Dhabi stock market rules, and upcoming Federal Corporate Sustainability Disclosure Framework, sustainability reporting is now a legally mandated requirement for thousands of firms not just an add-on.
In this blog, we take a deep dive into the new mandatory sustainability reporting obligations for UAE based organizations including what is required, who must comply, what standards should the companies consider and how can organizations transform their obligatory reporting into meaningful business value.
What is Sustainability Reporting?
Sustainability reporting measures disclosing and being accountable for organizational performance compared to sustainable principles. Over time, it has become a requirement for businesses. Unlike financial reports as we know them, themes in a sustainability report range from carbon emissions and water use to labor practices, human rights policies, diversity considerations and anti-corruption efforts, they can even contribute towards the UN’s Sustainable Development Goals (SDGs).
The Value of Sustainability Reporting
It’s important to recognize the benefits of sustainability reporting go far beyond just complying:
- Increased attractiveness of ESG (domestic funds and international investors)
- Improved access to green and sustainable financing (sukuk, loans, bonds)
- Increased brand image and customer retention
- Increased risk management and operational efficiency
- Greater employee engagement and talent acquisition
- Preparation for future carbon border taxes and global supply chain demands
GCC companies with advanced ESG disclosure practices have also been found to have a lower cost of capital and higher valuation multiples by studies from PwC and Deloitte.
Key Requirements for Sustainability Reporting
Below are the key factors that UAE companies need to consider when they prepare their sustainability reports.
UAE ESG Disclosure Regulations Compliance
This list could be applicable to some business types:
- Mandate of ESG disclosures for companies listed in stock markets regulated by SCA.
- ESG disclosure is currently on a voluntary and increasingly emphatic basis for private companies, SMEs and free zone entities.
- There is also a need for transparency around environmental, social, and governance impacts.
Firms are to adhere and report evidence of compliance with a recognized sustainability reporting framework in order to remain comparable and consistent.
Use of Recognized International Reporting Frameworks
The UAE recommends the following international standards:
- GRI Standards (Global Reporting Initiative)
- IFRS Sustainability Disclosure Standards (ISSB)
- SASB Standards (Sustainability Accounting Standards Board)
- UN SDGs (Sustainable Development Goals)
These standards help businesses with the preparation of transparent, consistent, and comparable reports.
Environmental Performance Disclosures
Reports must include measurable environmental data such as:
- Greenhouse gas emissions (Scope 1, 2, and where applicable, Scope 3)
- Water consumption and conservation initiatives
- Waste generation and recycling percentages
- Renewable energy usage
- Pollution and biodiversity impact
Social Responsibility Disclosures
Companies should provide insights on:
- Workforce management and labor standards
- Health and safety performance
- Diversity, equal opportunity, and inclusion
- Employee engagement, training, and development
- Community service and CSR initiatives
Governance and Ethical Standards
Governance disclosures normally include:
- Board oversight of ESG issues
- Anti-corruption policies
- Ethics and compliance mechanisms
- Data privacy and cybersecurity practices
- Transparent communication about risks and checks
- Sound governance supports corporate credibility and investor confidence.
Materiality Assessment
On the basis of international best practices, there are some sustainability issues to which companies based in the UAE must give priority.
- Their business model
- Stakeholders
- Their long-term risks and opportunities
Materiality assessments ensure the report is not filled with vague or irrelevant measures but topics that really matter strategically.
Consistent Data Collection and Reporting Systems
For businesses, reliable internal mechanisms for the following are required:
- ESG data collection
- Monitoring and evaluation
- Internal audits
- Performance tracking
- Reliable data means more reliable reports, and year-on-year compliance.
Independent Assurance (Optional but Recommended)
Today, many UAE organizations are asking for third-party assurance to:
- Validate ESG data accuracy
- Enhance trustworthiness of the report
- Meet investor expectations
In addition, external assurance enhances the transparency and international credibility of the report.
Sustainability Reporting Guide:
Here is a real-world sustainability reporting approach which many businesses in the UAE are now pursuing:
- Perform double materiality assessment (communicate with stakeholders)
- Conduct gap analysis under GRI, ISSB and local regulatory requirements
- Develop or add to data collection mechanisms (energy, HR, procurement, emissions)
- Calculate Scope 1, 2 and material Scope 3 emissions using the GHG Protocol Calculator.
- Write the report using selected framework(s)
- Get internal approvals as well as outside assurance
- Publish the sustainability report alongside the annual report
- Submit your ESG data via the regulator portals (ADX, DFM, SCA)
Conclusion
Qualifying what the critical requirements for sustainable reporting in Emirati companies are should no longer be a matter of compliance but remain a strategic necessity. Firms that take sustainability reporting seriously, as a value-creation tool and not just a box-ticking exercise, outpace their counterparts in investor trust, financing terms, and long-term resilience.
Whether you are a PJSC, family conglomerate, or SME that is getting ready for regulations down the line, it is time to put in place strong ESG data systems and data collection/reporting capabilities.
