Federal Decree-Law No. (11) of 2024 on the Reduction of Climate Change Effects marks a turning point for businesses operating in the United Arab Emirates. Having entered into force on 30 May 2025, the Law imposes binding obligations on all public and private entities whose activities generate greenhouse gas (GHG) emissions regardless of size, sector, or whether the entity operates on the mainland or within a free zone. With the first compliance deadline set for 30 May 2026, the window for action is closing rapidly.

Who Is Affected?

The short answer is: virtually every business in the UAE that generate GHG. The Law does not prescribe minimum thresholds based on turnover, headcount or emissions volume. Whether you are a multinational conglomerate or a small trading company, if your activities generate GHG emissions, you fall within scope. This is not a voluntary sustainability initiative. It is an enforceable legal obligation carrying significant financial penalties for non-compliance.

The Four Core Obligations

The Law establishes four pillars of compliance that affected entities must address.

First, measuring and reporting GHG emissions: This is the most immediate requirement. Companies must quantify their emissions across three recognised scopes:

• Scope 1 covers direct emissions from sources such as company vehicles and onsite generators;
• Scope 2 addresses indirect emissions from purchased electricity and cooling; and
• Scope 3 captures value-chain emissions, including freight and logistics.

Scope 3 reporting is anticipated to become formally mandatory from 2027, but businesses are well advised to begin mapping these emissions now. All supporting data must be retained for at least five (5) years and made available to the Ministry of Climate Change and Environment (MOCCAE) upon request.

Second, implementing a GHG emissions reduction plan: Beyond simply measuring and reporting, companies must demonstrate concrete steps to reduce their carbon footprint. This involves submitting details of existing and planned reduction measures as part of annual regulatory filings, aligned with sector-specific targets to be published by the UAE Cabinet on MOCCAE’s recommendation. Practical measures might include energy efficiency upgrades, delivery route optimisation and supply chain engagement.

Third, conducting a climate risk assessment: Entities are required to identify and address both physical risks such as supply chain disruption from extreme weather and transition risks, including evolving regulations driven by climate policy. These risks must be documented and a mitigation strategy must be put in place. Sector-specific guidance is still being developed but the underlying obligation already applies.

Fourth, carbon credit registration for large emitters: Entities emitting 0.5 million metric tonnes or more of CO₂ equivalent per annum must register  with the National Register for Carbon Credits. Most small and medium-sized enterprises will fall below this threshold, but companies should monitor their emissions profile carefully, particularly if operations expand.

How to Register

The primary compliance mechanism is the national Monitoring, Reporting and Verification (MRV) system. Entities must register on the platform, create an administrator account, and assign roles for data provision and validation. Once approved by the relevant Emirate-level focal point, additional users can be added. Data submission is expected to take place during the first half of each year on an annual cycle.

Importantly, the MRV system is still under development nonetheless companies are expected to register within the timeline. A technical guidance manual is expected in the coming weeks, which will clarify the revised schedule and provide detailed procedural guidance.

For entities with operations in Abu Dhabi, a separate process may apply through the Enhanced Transparency Framework MRV system developed by the Environment Agency – Abu Dhabi, which is linked to the national platform.

Penalties for Non-Compliance

The enforcement framework is robust. A first violation may attract an administrative fine ranging from AED 50,000 to AED 2,000,000. Repeat offences within two years can double that figure to AED 4,000,000. In cases of persistent or egregious non-compliance, authorities may impose operational restrictions, suspend activities or revoke trade licences. Beyond direct penalties, non-compliance may also jeopardise access to government procurement, green financing and commercial partnerships.

Act Now

Despite the flexibility being offered around the MRV system’s development, the Law is in force and the compliance deadline is approaching. Businesses should appoint an internal compliance lead, begin gathering operational data (including utility bills, fuel receipts, refrigerant records) and initiate the MRV registration process without further delay.

If your organisation requires guidance on navigating the UAE’s new climate compliance framework, registering with the national MRV system or preparing your GHG inventory, we invite you to contact us for a discussion. Our team would be delighted to explore how we can support your compliance objectives and ensure your business is fully prepared ahead of the May 2026 deadline.