Understanding the UAE Federal Climate Law: A Business-Centric Perspective
Climate change is now a central risk factor across national planning, investor frameworks, and corporate strategy. The UAE’s Net Zero by 2050 Strategic Initiative, launched in 2021, and the subsequent enactment of Federal Decree-Law No. 11 of 2024 on Climate Change mark a material development in the region’s regulatory and policy landscape. Together, they provide a formalized pathway for decarbonization, supported by legal mechanisms and governance frameworks that compel participation across sectors.
Federal Decree-Law No. 11 of 2024, titled “On the Reduction of Climate Change Effects,” was enacted on August 28, 2024, and is scheduled to come into force on May 30, 2025. This nine-month interim period allows for the development of executive regulations, sector-specific guidelines, and preparatory measures by both public and private entities.
Structured Climate Targets with Defined Timelines
At COP27 in November 2022, the UAE formalized its Net Zero by 2050 Pathway, outlining the following GHG reduction targets against a 2019 baseline:
- 18% by 2030
- 60% by 2040
- 100% (Net Zero) by 2050
The Net Zero strategy spans six sectors—power, industry, transport, buildings, waste, and agriculture—and is structured through over 25 national programmes. Beyond emissions reduction, the strategy includes quantitative projections on economic outputs, including job creation in low-carbon sectors and contributions to GDP, although realisation of these projections will depend on implementation, market uptake, and global demand conditions.
Key Components of the Law
- Legal Commitment to Net Zero: Codifies the 2050 target into law, creating a binding objective for public and private actors.
- Distributed Governance Structure: Allocates responsibilities across federal ministries, local governments, and relevant private-sector entities.
- Environmental Safeguards: Integrates climate objectives with conservation of ecosystems and biodiversity.
- Support for Science and Innovation: Mandates data systems and support for research and technology as enablers of climate transition.
Regulatory Implications for Businesses
The law introduces compliance expectations for companies, particularly those in emissions-intensive sectors. These include:
- GHG Reporting: Disclosure of emissions data and climate-related risks
- Alignment with National Targets: Operational strategies must conform to national decarbonization objectives
- Mitigation and Adaptation: Companies are expected to develop and implement response plans aligned with national frameworks
- Participation in Market Mechanisms: Likely involvement in carbon markets or offset schemes once instituted
- Data Sharing: Contribution to centralized climate monitoring systems
While detailed mechanisms will be specified in executive regulations and ministerial decisions, the direction of regulatory travel is clear. Companies will need to adopt internal systems to track compliance and position themselves for transition-related developments.
Strategic Implications: Risk and Opportunity
The law represents a structural change with implications across business operations, investment decisions, and supply chain planning. It introduces both compliance obligations and strategic considerations:
- Policy Clarity: The formalization of targets through law enhances visibility into long-term climate policy, enabling better scenario planning.
- Cost of Inaction: Non-compliance may result in regulatory, reputational, and market-access risks, especially in sectors exposed to global trade and investor scrutiny.
- Opportunity Realignment: Companies aligned with the transition may benefit from incentives, green finance, and early access to new markets shaped by sustainability criteria.
Next Steps for Companies
Firms operating in the UAE should assess the impact of the climate law across operational, financial, and strategic domains. Key steps include:
- Conducting baseline emissions assessments and forward-looking climate risk modelling
- Establishing internal governance for sustainability and regulatory tracking
- Setting science-based or SBTi-aligned emission reduction targets
- Preparing for participation in reporting frameworks and future emissions markets
- Engaging with regulators and sector platforms to stay informed of evolving rules
The UAE’s net-zero strategy and climate law establish a national framework that aligns with global climate governance trends. For stakeholders—public and private—the shift introduces regulatory certainty, while also requiring alignment of operations, disclosures, and capital allocation with climate goals. Over the next 12–24 months, the emergence of sector-specific regulations, carbon market infrastructure, and compliance systems will be key determinants of pace and impact.
How Endurisk Can Support UAE Businesses in the Transition
Endurisk Advisory partners with organizations to navigate this evolving landscape through a combination of regulatory insight, climate risk assessment, and implementation support. Our services are designed to align business operations with emerging climate laws and stakeholder expectations:
- Regulatory Readiness: We interpret evolving legal requirements and executive regulations to help clients understand compliance obligations and timelines.
- Climate Risk Diagnostics: We assess transition and physical risks across operations and supply chains, integrating climate considerations into enterprise risk frameworks.
- GHG Accounting and Reporting: We help businesses develop credible GHG inventories, establish baselines, and build internal systems for emissions tracking and disclosure.
- Strategy Integration: We align ESG and decarbonization goals with core business strategies—ensuring that sustainability is not siloed but embedded into financial, operational, and governance structures.
- Capacity Building: Through workshops and board-level briefings, we prepare leadership teams and key departments to make informed, forward-looking decisions.
As regulatory mechanisms solidify, early action will be critical to remain compliant, competitive, and resilient. Endurisk supports businesses not only in managing risks but in capturing the value creation opportunities of a low-carbon economy.
To explore how your organization can respond proactively to the UAE’s climate transition, contact us at Endurisk Advisory for a tailored consultation.
