THE UAE AND ESG

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Even though I have run four large organizations over the last 35 years that I have lived outside India (In Hong Kong, Germany, Singapore and Dubai), and even though most organizations now have a fairly clear idea about the need for ESG implementing and reporting, for my own learning, I decided to dig a little more into the ESG scene in the UAE after completing my ESG Director’s Certification Program.

Three decades ago, I created for myself the acronym SOL.FL. Which stands for “Student of Life. For Life”.? I have been lucky to have one of India’s top ESG experts to coach me specifically about Directorial requirements at Board level, particularly related to India’s BRSR reporting standards. I must confess that I am a beginner at learning and analyzing these ESG and BRSR reports. Therefore, if there are some errors or omissions, I am sure I would be excused.

Here is a snapshot of what I have pieced together over the past few months

I feel proud to say that I reside in a country - United Arab Emirates (UAE) – that is very clearly committed to solidifying its position as a global leader in sustainable finance by implementing regulatory frameworks aligned with international ESG standards. The UAE has strengthened its ESG regulations, aligning with the UAE Vision 2030 and Net Zero strategies by 2050. A key development in this landscape is the mandatory ESG reporting requirement for companies listed on the Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX), introduced by the Securities and Commodities Authority (SCA).

In 2020, the SCA issued a Board Decision requiring public joint stock companies listed on DFM and ADX to publish annual sustainability reports detailing their long- term strategies and the impact of their activities on the environment, society, economy, and governance.

As of 2025, the Abu Dhabi Global Market (ADGM) has implemented a regulatory framework mandating Environmental, Social, and Governance (ESG) disclosures for certain entities.

This framework, enacted on June 21, 2023, requires companies registered within ADGM that meet specific turnover or assets under management (AUM) thresholds to prepare and submit ESG disclosures. Entities not meeting these thresholds may choose to comply voluntarily, as of now. For those who know how the UAE pushes its boundaries, voluntarily complying would be a good initiative.

The framework mandates that in-scope companies align their ESG disclosures with globally recognized standards. While the Task Force on Climate-related Financial Disclosures (TCFD) is a prominent framework, ADGM allows entities to select any globally recognized standard that aligns with their business operations. To support businesses in their transition, the UAE government has introduced fiscal incentives encouraging the integration of ESG principles into corporate strategies.

The UAE has implemented several initiatives to encourage companies and entities to integrate these ESG principles into their corporate strategies. These measures aim to promote sustainable development and responsible business practices across the nation.

To date, ESG reporting has been voluntary for companies in the UAE, unless they are public joint stock companies listed on the Abu Dhabi Securities Exchange (ADX) or Dubai Financial Market (DFM). The Global Reporting Initiative (GRI) standard forms the basis for the guidance issued by the UAE's Securities & Commodities Authority in 2020, which mandates the listed companies to issue an annual report disclosing their non-financial performance.

The UAE is very actively developing sustainable finance instruments such as Green bonds and Sukuk. Green Bonds and Green Sukuk play a crucial role in financing the transition to a low-carbon economy. They provide investors with ethical and sustainable investment opportunities while enabling companies and governments to secure funding for green projects.

Today’s consumers and investors prioritize ethical businesses. Proactively managing compliance enhances brand reputation and stakeholder confidence, making the company a preferred partner in any industry.

Regulations are evolving towards sustainable and socially responsible business practices. Investing in compliance ensures that a company is future-proof, resilient, and aligned with global ESG trends.

Even for someone like me, who is now a certified ESG Director, ESG reporting can be confusing due to the various methodologies, frameworks, and standards out there. Organizations have become overwhelmed with hundreds of different guides and approaches. Faced with standards such as GRI, Sustainability Accounting Standards Board (SASB), Carbon Disclosure Project (CDP), and Task Force on Climate-Related Financial Disclosures (TCFD), there is much uncertainty regarding which standard is best for them. Although each of those standards may serve a different purpose, there is an element of overlap. Therefore, it would greatly help to work with a team who are knowledgeable, experienced, qualified, and above all, ethically correct.

Given the UAE's expanding position as a prominent financial hub, rising acknowledgement of the significance of ESG data for investors, mounting demands from stakeholders, and the UAE's declaration of a 2050 net-zero target, there are indications that more stringent ESG reporting requirements may be enforced soon. This could centre on climate-related disclosures and may encompass the release of transition plans that showcase how a company's strategy aligns with the UAE's net-zero ambition. Once ESG reporting standards are fully standardized, it is likely that we may see this mandate established.

The UAE is taking major strides in integrating ESG commitments with AI innovation. These will serve as a successful test-case and blueprint for nations and businesses worldwide. In a world that stands on the precipice of massive technological revolutions and mega environmental challenges, the UAE could offer strategies for a harmonious blend of both. And as always, good private sector companies for whom ESG reporting is currently not mandatory could lead the way to be self-starters in better helping the vision of this nation.