As the UAE accelerates its national sustainability agenda, climate action is moving decisively from voluntary commitments to formal regulatory obligation. Federal Decree-Law No. 11 of 2024 on the Reduction of the Effects of Climate Change represents a major shift, introducing enforceable requirements around emissions management together with administrative penalties for non-compliance.
While detailed implementation frameworks and reporting mechanisms are still evolving, the direction is clear. Organisations are now expected to demonstrate measurable progress in understanding, managing and governing their climate impact.
For many businesses, this shift goes well beyond compliance. It signals that sustainability data is rapidly taking on the same strategic importance as financial data—information that boards and executives must be able to trust, interrogate and use to inform decision-making.
Against this backdrop, companies across sectors such as industry, real estate, logistics, finance and investment are reassessing how their ESG data is generated, validated and governed. Jomy Joseph, Director at CoralDune Partners and former Regional Director for UL Solutions in the Middle East and Africa, notes that adoption of the new law is already underway, but in a phased and uneven manner. Larger organisations, particularly those with international investors, lenders or global customers, are leading the response, using Decree 11 to strengthen governance, improve data quality and clarify internal accountability.
Joseph explains that the next wave of impact will flow through supply chains, as contractors, manufacturers, logistics providers and service companies are increasingly required to provide credible emissions data by customers responding to regulatory and investor pressure. While awareness among mid-sized companies remains mixed, this is expected to change rapidly, as the UAE’s Net Zero 2050 commitment and broader sustainability agenda leave little room for inaction.
Although Decree 11 allows for significant financial penalties—ranging from AED 50,000 to AED 2 million, with escalating consequences for repeat violations—Joseph believes that commercial pressures will be felt first. Companies may face exclusion from tenders, increased scrutiny from banks and insurers, or reputational risk where sustainability claims cannot be substantiated. Even before enforcement is applied directly, market expectations are already aligning closely with regulatory intent.
At CoralDune Partners, the focus is on helping boards and executive teams embed ESG reporting as a core governance and performance-management function. Joseph emphasises that effective ESG reporting is not a communications exercise, but a structured process grounded in materiality, consistency and accountability. This requires establishing a clear emissions baseline, agreeing on robust calculation methodologies and maintaining continuity from year to year, supported by internal controls and audit trails.
Equally important is linking emissions reduction to practical operational levers such as energy use, procurement decisions, logistics optimisation, product design and building performance. For mid-sized organisations, the challenge lies in achieving this without unnecessary complexity, by building a credible and scalable foundation that leadership can rely on rather than replicating large-enterprise reporting models.
Technology, and increasingly artificial intelligence, is playing a growing role in enabling this shift. While spreadsheets remain common, they are not designed for regulated, long-term reporting under investor and regulatory scrutiny. AI can automate data capture from invoices, fuel records, utility bills and ERP systems, ensure consistent classification and highlight anomalies before data reaches senior management. It also enables scenario analysis, allowing organisations to assess how operational changes affect both emissions and cost.
Importantly, Decree 11 is not limited to large enterprises. Its scope is defined by emissions-generating activities rather than company size, meaning smaller businesses and startups should not assume they are out of scope. For these organisations, compliance does not require complex reporting. A basic emissions baseline, transparent calculation records and a focused set of practical reduction actions are often sufficient to begin, particularly as many will first feel the impact through customer and supply-chain requirements.
One of the most significant challenges Joseph identifies is trust in the data itself. While many organisations can produce sustainability statements, far fewer can clearly explain how figures were calculated or demonstrate consistency over time. This elevates ESG reporting to a board-level issue, as weak data directly translates into regulatory, commercial and reputational risk.
Reducing greenwashing risk requires moving from claims to evidence through structured measurement, reporting and verification processes. Independent assurance under recognised standards, along with tools such as life cycle assessments and environmental product declarations, helps convert sustainability intent into measurable and defensible performance.
As sustainability data increasingly influences access to capital, insurance and investment, Decree 11 is not simply a compliance requirement. It is a clear signal that credible ESG reporting is becoming integral to competitiveness and long-term growth in a low-carbon economy.
