By Sonal Agrawal, Lead Environmental Consultant at Climatize, part of +impact
It has now been two months since the UAE’s first Climate Change Law came into effect and the countdown to full compliance has well and truly begun.
With May 2026 set as the official deadline, businesses across the Emirates are facing a pivotal shift. This isn’t just another policy milestone – it signals a structural shift in how businesses must operate, grow, and measure success in a decarbonising economy.
For the first time, environmental responsibility will no longer be a matter of corporate goodwill or CSR checklists. It will be legally enforced, nationally tracked, and globally relevant.
The law mandates companies to monitor, report, and verify their emissions using internationally recognised frameworks, align with the country’s national climate targets, and participate in the UAE’s newly established National Carbon Credit Registry. In effect, it pushes environmental sustainability from the sidelines into the heart of business operations.
What We Can Expect to See – Now and in the Future
In the immediate term, the most noticeable change will be a surge in climate awareness activities -training sessions, workshops, and consultant-led reviews to help companies understand what compliance really means. Over the next 12 months, businesses will need to calculate their emissions (starting with Scope 1 and 2), assess risks and opportunities, and begin setting up the systems required for reporting and verification. The grace period for implementation ends in May 2026 – but the preparation starts now.
Looking further ahead, we’ll likely see the emergence of a new kind of corporate culture, where climate action is embedded in boardroom discussions, procurement strategies, and operational decisions. Environmental reporting will become a standard part of corporate governance, and sustainability will begin to influence investor behaviour, access to finance, and even public reputation. The introduction of carbon trading frameworks may also create new commercial opportunities for those that move beyond compliance and generate verifiable emissions reductions.
The Challenge Ahead for UAE Companies
While global firms with established ESG frameworks may find this transition relatively seamless, the broader market is likely to face some significant challenges. Many UAE-based companies are still in the early stages of sustainability maturity. Internal governance structures around climate compliance are either non-existent or underdeveloped. In many cases, emissions data is incomplete or scattered across departments. There is also limited familiarity with MRV systems, GHG Protocol methodologies, or ISO reporting standards.
The gap between where companies are today and where they need to be is not small. For most, this won’t just be a technical adjustment, it will require a fundamental rethink of how their operations are measured, governed, and improved.
Turning Regulation into Opportunity
This law introduces a compliance obligation – but also a strategic opportunity. For businesses willing to lead, it’s a chance to innovate, differentiate, and evolve. Climate action no longer needs to be viewed as a cost centre. With the UAE’s carbon credit market on the horizon, there is now a pathway for sustainability to also drive revenue. Companies that reduce emissions beyond mandated levels may be able to trade their surplus as verified credits – transforming environmental responsibility into financial value.
What Businesses Should Do Now
So, how can companies set themselves on the right path? First, they need to establish a clear understanding of their emissions profile – starting with Scope 1 and 2 emissions – and develop an action plan to reduce them. Internal climate governance structures must be put in place to oversee compliance and ensure alignment with both UAE law and international standards.
Organisations also need to upskill their people. Climate literacy will become critical across all levels of the business, from the C-suite to operations teams. Systems must be installed to track and report emissions, aligned with protocols such as the GHG Protocol or ISO 14064, in preparation for reporting through the UAE’s national registry. While Scope 3 reporting isn’t yet mandatory, forward-thinking companies should begin mapping their supply chain emissions now to future-proof their strategies.
Looking Forward
The UAE’s Climate Change Law marks the beginning of a new chapter for businesses – one where sustainability is no longer peripheral. It will demand transparency, action, and accountability. However, for those that are ready, it also offers a path to leadership in a changing economy.