It is increasingly clear to stakeholders around the world that the climate crisis is the defining challenge of our generation. Yet, it also presents a major opportunity for nations, companies, and individuals to lead on climate adaptation and climate action. Few countries are as forward-thinking as the UAE, as demonstrated by its new game-changing law designed to tackle the impacts of climate change.
As part of its updated Nationally Determined Contributions (NDCs) under the Paris Agreement, the UAE has pledged to cut emissions by 47% by 2035 compared to 2019 levels. This law is further reinforced by Cabinet Resolution No. 67 of 2024, which sets out compliance obligations for entities classified as large emitters.
AGS recently conducted a briefing outlining the implications of the UAE Climate Decree, covering the law’s scope and how stakeholders can leverage it to build more resilient businesses and contribute to a greener economy.
The Federal Decree No. (11) of 2024 on the Reduction of Climate Change Effects came into effect on May 30, 2025. It establishes a comprehensive framework for emissions reductions, climate adaptation, and the development of capacity needed to transition to a cleaner, greener economy.
The Decree applies to all emission sources within the UAE, including free zones, to “ensure effective contribution to international efforts aimed at mitigating the impacts of climate change and achieving climate neutrality.”
The law aims to support the UAE’s transition to a knowledge-based, low-carbon economy, aligned with UAE Vision 2030. It encourages lower emissions, cleaner energy adoption, and climate resilience.
More specifically, the UAE Climate Law aims to:
To achieve these objectives, the new law encourages stakeholders to harness energy efficiency, new clean technologies such as carbon capture, circular waste solutions, and nature-based solutions to achieve climate neutrality. To measure progress, the new law sets out plans for an emissions inventory.
A crucial part of the Decree is establishing an inventory to measure, report, and verify (MRV) emissions data. Government entities will need to submit periodic reports and take improvement measures. Emissions data must be collected over five years, with annual assessments by the Ministry.
Making an emissions inventory work requires everyone to get involved in inputting and managing the vast climate data needed. As such, the new law applies to all public and private sector entities in the UAE, including individual enterprises whose activities contribute to GHG emissions. This includes those located in free zones. Essentially, if your organization generates emissions, it should be prepared.
While all companies may participate voluntarily, mandatory compliance applies to entities emitting:
Smaller companies, while not yet required to comply, are encouraged to act proactively to future-proof their businesses.
“In the UAE, we do not see sustainability as an option, but as a strategic path to ensure the nation’s prosperity.” – Dr. Amna bint Abdullah Al Dahak, Minister of Climate Change and Environment
| Benefits of Early Compliance | Small to Medium Enterprises (SMEs) | Large Corporations (Large Caps) |
|---|---|---|
| Partnership Opportunities | Build partnerships with large clients seeking low-carbon suppliers. | Procure sustainable suppliers and create value-chain impact. |
| Market Advantage | Ensure climate-compliant products for clients and partners. | Strengthen regional reputation and win more government contracts. |
| Innovation | Drive innovation in clean tech and energy. | Accelerate innovation across operations and technologies. |
| Cost Efficiency | Reduce future risks and penalties by preparing early. | Avoid carbon border taxes through low-emission sourcing. |
| Growth & Expansion | Improve competitiveness and prepare for expanding regulations. | Increase stakeholder trust and long-term resilience. |
Registered entities under the National Register of Carbon Credits (NRCC) gain access to carbon markets and financing opportunities. Companies reducing emissions below the compliance threshold can voluntarily register and trade carbon credits.
Early compliance also brings advantages in:
The cost of non-compliance with Article 6 of the law will result in a fine of between 50,000 and 2 million UAE Dirhams. These fines can increase for multiple non-compliance events within two years. To ensure this does not happen, the law advises designating at least one staff member or manager to the position of climate officer. Businesses are granted a one-month grace period ending June 28, 2025, during which they must ensure that ‘all necessary systems for compliance are operational’.
Under Article 7, the UAE will develop adaptation plans for sectors such as:
Entities in these sectors (and others) must strengthen their climate risk management and sustainability governance by:
The Climate Decree aims to ensure that climate and sustainability are not nice-to-haves; they are essential catalysts for business growth and should inform every aspect of business models going forward. According to Pinsent Simmons, while large businesses may already have measures in place to record or even reduce emissions, ‘smaller firms are likely to have some catching up to do to ‘future proof’ projects in terms of emissions strategies in their particular sector.
The quicker you prepare, the better your chances of success. At AGS, our teams are here to help, whatever your size or sector. Below, we outline the basic steps that we can help with to get started:
| Step | What It Means |
|---|---|
| Understand Your Position | Review existing policies, frameworks, processes, and data management practices to establish your baseline. |
| Perform a Gap Analysis | Map the Decree’s legal requirements to your current reporting processes and identify areas needing alignment. |
| Assess GHG Inventory Readiness | Evaluate whether your data collection and reporting systems meet new emissions inventory standards. |
| Develop a Roadmap | Build a clear, phased plan to achieve compliance and integrate requirements into day-to-day operations. |
| Build Capacity | Upskill internal teams or appoint a climate officer to lead climate compliance and innovation efforts. |
| AGS Support | AGS can support organizations of all sizes across each of these key steps. |
Once your baseline is clear, you can begin developing a comprehensive climate compliance roadmap. This may involve changing business models, overhauling systems, and working closely with suppliers to understand and reduce value-chain emissions.
| Steps | Implications |
|---|---|
| Develop your unique GHG inventory by quantifying your emissions (Scope 1, 2, and ideally Scope 3) | Invest in or ensure fit-for-purpose climate and ESG data management systems are in place. |
| Set ambitious yet achievable targets and timescales | Establish clear accountability and ensure all relevant teams are aligned and involved in target-setting. |
| Perform a climate risk assessment, taking your targets into account | Overhaul your risk management approach to ensure best practice, capture climate opportunities, and engage an assurance partner for compliance. |
| Identify climate mitigation measures and develop a mitigation plan | Join sector initiatives or co-create them with the private and public sectors. Develop near- and long-term mitigation targets aligned with ISO 14064 and UAE reporting standards. |
| Create a full climate adaptation plan and identify the levers to activate it (renewables, carbon capture, circularity, offsets) | Fully assess your business model to ensure climate adaptation is integrated into decision-making, investment processes, and value-chain choices. |
While the new UAE Climate Decree may initially seem daunting, it provides forward-thinking organizations with a pathway to sustainable long-term growth. It also strengthens the UAE’s sustainable finance landscape, accelerating national progress.
Whether you are advanced in your climate journey or just starting, early action, supported by expert guidance, will ensure that your business becomes climate-literate, climate-compliant, and climate-ready.
