In May last year, a federal decree came into force that makes climate accountability a legal obligation for every business operating in the UAE, including SMEs and public organisations, with no exemptions for freezones. Businesses have since had a year to prepare for this law having been allowed time to fully comply with it by the end of last month, but have they?
What this ultimately means is that climate reporting in the UAE is no longer voluntary. The new law requires every organisation to measure, report and reduce its emissions, maintain verified data for five years, and submit a formal reduction plan and climate risk assessment. Non-compliance can carry fines of up to Dh2 million (almost $550,000), doubling to Dh4 million for repeat offences, along with license suspensions and exclusions from government procurement.
This is a bold and potentially game-changing new regulation. It shows the region and the world how seriously the UAE is taking its environmental stewardship, and I’m looking forward to seeing the results come into effect. Supporting climate action and turning ambitions into tangible outcomes is the mission that lies at the core of my own business ventures, and I believe that we all have a responsibility to make our planet a priority.
Implementing the requirements of the climate law can, and should, reimagine how boards consider sustainability in their business plans and operations – especially for those that did not previously prioritise climate. For many years, I have championed and sought out solutions that would allow more women to step into board positions and broaden perspectives in decision-making. Now, we must make sure that climate and nature are equally represented.
According to the international research organisation World Resources Institute, global greenhouse gas emissions rose by 50 per cent between 1990 and 2023. The overwhelming majority of emissions – more than 76 per cent – came from the energy sector, followed by agriculture at 12 per cent, industrial processes at 6.2 per cent and waste at 3.8 per cent. Here in the UAE, about 30 per cent of our gross domestic product still comes from hydrocarbons, but we are also investing significantly in renewable energy and non-oil sectors.
The UAE’s Net Zero by 2050 strategy is a serious undertaking designed to benefit all our communities, and particularly those most vulnerable to the effects of climate change. The new climate law lists supporting innovation, research and development, with an explicit role for the private sector, as one of its five statutory objectives, alongside requiring sector-specific adaptation plans across infrastructure, energy, health, environment and insurance.
Boards should not see this as a limitation or another box to tick. Instead, they should understand what this moment actually asks of them.
The floods experienced in the UAE in 2024 were not a future scenario but a live demonstration that climate risks shape businesses. Insured losses from that weather event reportedly reached as high as $2.4 billion. The financial case for taking climate seriously is no longer theoretical. Last year, a climate governance report launched through Chapter Zero UAE at Abu Dhabi Sustainability Week stated that 84 per cent of S&P 500 companies already report climate change as a risk factor – this awareness needs to filter down to all entities.
We established the UAE arm of Chapter Zero in 2023 to equip board directors with the knowledge and skills to embed climate governance into their decision-making. Since then, we have onboarded 10 new partners and connected with more than 200 business leaders. Boards bear the ultimate responsibility for ensuring that climate-related risks and opportunities are governed effectively. In our latest report, we laid out recommendations for action at fundamental, advanced and leading levels depending on the maturity of an organisation’s integration of climate governance.
Board members have a fiduciary duty towards their shareholders, and therefore climate must be a key topic of discussion. There is a financial benefit to climate governance being done well. According to a 2025 report released by the CDP – an independent organisation that helps entities, both public and private, to disclose their environmental impact – firms investing in physical climate risk management achieved a $21 return for every $1.
In countries like Australia, the UK and the US, shareholders have brought legal claims against directors for failing to manage or disclose climate-related financial risks, and courts are increasingly receptive to such claims. Insurance companies are responding to this shift, with climate governance now a factor in how policies are priced and structured. Boards that prioritise climate governance will build organisations that are more resilient and competitive, and also build trust. The price of inaction will have a material impact.
It’s time for business leaders to step up, recognise the realities of climate change and the impact that their operations are having, and take accountability. The UAE’s new law is a huge step in the right direction; the players that implement it properly and even go the extra mile will reap the benefits, and so will our planet.
