UAE’s Climate Change Decree-Law: Paving the Way to a Sustainable Future
The UAE has taken a significant step in tackling climate change with the introduction of its 2024 Climate Change Decree-Law. This new legislation sets a clear path toward reducing emissions and enhancing sustainability, marking a pivotal moment in the nation's efforts to combat the global climate crisis.
Aims and Goals of the Decree-Law
The law outlines several key goals:
Mitigating climate change impacts through emission reductions and achieving climate neutrality.
Adapting to climate change effects, particularly in vulnerable sectors like health, energy, and infrastructure.
Supporting innovation and private sector involvement in finding technological solutions for both adaptation and mitigation.
Strengthening global cooperation through shared data, joint projects, and climate-focused partnerships.
Key Strategies for Mitigating Emissions
Under this new framework, the UAE aims to drastically cut its emissions by:
Improving energy efficiency across industries.
Investing in clean energy solutions, such as solar and wind power.
Enhancing natural carbon sinks like forests and wetlands.
Adopting Carbon Capture, Use, and Storage (CCUS) to trap carbon emissions from industrial processes.
Carbon offsetting, where businesses invest in green projects like renewable energy, reforestation, and sustainable agriculture to balance out their emissions.
Climate Adaptation: Preparing for a Changing Future
The law also focuses on adaptation, ensuring the country is ready for the inevitable impacts of climate change. Key areas of focus include:
Infrastructure resilience, ensuring buildings and transport systems can withstand climate-related events.
Developing robust healthcare systems to address climate-related illnesses.
Updating insurance policies to cover climate risks.
The government will be working closely with local authorities and industries to create and implement specific adaptation plans for each sector.
Tracking and Reporting Emissions: A New Era of Accountability
Transparency is at the core of the law’s implementation. Entities will be required to:
Measure and report their emissions regularly.
Maintain emission records for at least five years to ensure accountability.
Submit detailed reports on efforts to reduce emissions, with the Ministry of Climate Change and Environment ensuring that all data is accurate and reliable.
This system is designed to provide clear and verifiable data on the progress the UAE is making toward its climate goals.
Incentives and Carbon Pricing: Encouraging Green Innovation
To drive further action, the UAE will implement incentive mechanisms:
Carbon offsetting, where businesses can invest in projects to balance out their emissions.
Introducing carbon pricing and shadow prices, which will help measure the environmental impact of business activities.
By using these tools, the law hopes to stimulate private sector investment in green technologies and sustainable practices.
Penalties for Non-Compliance
The law also comes with serious penalties for non-compliance:
Entities that fail to measure, report, or reduce emissions may face fines ranging from AED 50,000 to AED 2 million.
Penalties will be doubled for repeated violations, showing that the UAE is serious about enforcing its climate goals.
How Does the UAE’s Law Compare to Global Sustainability Regulations?
While the UAE’s sustainability reporting law is comprehensive and tailored to the country’s specific goals, it also aligns with global best practices in sustainability reporting.
EU’s Corporate Sustainability Reporting Directive (CSRD)
The EU’s CSRD requires more detailed and frequent disclosures, particularly around double materiality, which considers both financial impacts and societal effects of business operations. The UAE law is less stringent in terms of mandatory third-party audits but is moving in the same direction with its emphasis on transparency.
U.S. SEC’s Climate Disclosure Rule
The SEC's rule focuses primarily on climate-related financial risks and mandates the reporting of Scope 1 and Scope 2 emissions, with some companies required to report Scope 3 emissions as well. Similar to the UAE’s law, the U.S. rule highlights the need for financial resilience in the face of climate risks but is more focused on the financial sector.
UAE’s Federal Decree-Law No. (11) of 2024
The UAE law strikes a balance between regulatory compliance and flexibility for businesses. It ensures that companies meet national sustainability goals while adopting global reporting standards. The law’s flexibility allows businesses to tailor their reports to industry-specific needs, ensuring the framework supports both local and global market access.
The role of strategic advisors like AGS is becoming increasingly important in this context. As a UAE-based consultancy, AGS helps businesses integrate sustainability into their operations through sector-specific ESG frameworks, GHG accounting, and data-driven strategies. Their expertise in decarbonization, value chain analysis, and embedding sustainability into business models supports companies in improving ESG compliance, enhancing brand reputation, and accessing sustainable financing.
How Footprint Intelligence helps companies stay compliant
Footprint Intelligence offers a practical solution for businesses and organizations to track and manage their environmental impact. By providing detailed insights into carbon footprints, it allows companies to measure, report, and reduce their emissions effectively. This helps align with the UAE's new regulations while also contributing to broader sustainability efforts.
Incorporating Footprint Intelligence into sustainability strategies helps businesses stay compliant with regulatory standards, improve transparency in emissions reporting, and make informed decisions that drive long-term sustainability.
🎥 Watch our product demo to see how we can help your business stay ahead.
To explore more about corporate sustainability, check out our Sustainability Guide.
