ESG Reporting UAE 2025: Sustainability Compliance & Audit Guide

Is your UAE business prepared for mandatory ESG reporting? With Dubai's ambitious Net Zero 2050 strategy and increasing regulatory focus on sustainability, ESG (Environmental, Social, Governance) reporting is transitioning from voluntary best practice to mandatory compliance for many UAE companies. Listed companies, financial institutions, and large corporations now face ESG disclosure requirementsand the scope continues expanding.

As sustainability reporting specialists with 37 years UAE experience, we've helped 200+ companies implement ESG reporting frameworks. This guide covers ESG reporting requirements, applicable frameworks (GRI, SASB, TCFD), compliance deadlines, audit requirements, and implementation strategies.

What is ESG Reporting?

ESG Reporting is the disclosure of a company's environmental, social, and governance performance and impacts.

Three Pillars:

E - Environmental:

Carbon emissions & climate impact
Energy consumption & efficiency
Water usage & conservation
Waste management & circular economy
Pollution & environmental protection
Biodiversity & ecosystem impact

S - Social:

Employee health, safety & wellbeing
Diversity, equity & inclusion
Labor practices & human rights
Community engagement & impact
Customer satisfaction & data privacy
Supply chain responsibility

G - Governance:

Board composition & independence
Executive compensation
Business ethics & anti-corruption
Risk management
Regulatory compliance
Stakeholder engagement

UAE ESG Regulatory Landscape

Current Requirements

Mandatory ESG Disclosure (UAE):

1. Securities & Commodities Authority (SCA)

Applies to: All UAE listed companies
Effective: 2019 (enhanced 2021)
Framework: SCA ESG Disclosure Guide
Frequency: Annual

2. Dubai Financial Services Authority (DFSA)

Applies to: DIFC-regulated firms
Effective: 2022
Framework: DFSA ESG disclosure rules
Frequency: Annual

3. Abu Dhabi Securities Exchange (ADX)

Applies to: ADX-listed companies
Effective: 2020
Framework: ADX ESG Guidance
Frequency: Annual (ESG report alongside financial statements)

4. Dubai International Financial Centre (DIFC)

Applies to: DIFC companies (specific sectors)
Effective: 2022
Framework: TCFD-aligned disclosure

Voluntary Frameworks (Widely Adopted)

GRI Standards (Global Reporting Initiative)

Most widely used globally
Comprehensive materiality-based reporting
300+ UAE companies use GRI

SASB Standards (Sustainability Accounting Standards Board)

Industry-specific metrics
Investor-focused
Growing UAE adoption

TCFD (Task Force on Climate-related Financial Disclosures)

Climate risk focus
Governance, strategy, risk, metrics
Mandatory for DIFC financial firms

UN Global Compact

10 principles (human rights, labor, environment, anti-corruption)
100+ UAE signatories

Who Must Comply?

Mandatory ESG Reporting

Required for:

All UAE listed companies (DFM, ADX, Nasdaq Dubai)
DIFC-regulated financial firms
ADX-listed companies (separate ESG report)
Large state-owned enterprises
Companies in regulated sectors (banking, insurance)

Strongly Recommended For

Should Consider:

Large private companies (>AED 100M revenue)
Companies with international investors
Export-oriented businesses
Companies in high-impact sectors (energy, manufacturing, construction)
Family businesses planning succession/sale

Stakeholder-Driven Requirements

Even if not legally required, ESG reporting needed for:

Bank financing (ESG-linked loans increasing)
Investor relations (PE/VC funds require ESG due diligence)
Customer requirements (B2B clients, especially international)
Supply chain inclusion (large corporations requiring supplier ESG)
Tender requirements (government projects increasingly require ESG)

ESG Reporting Frameworks for UAE Companies

GRI Standards (Most Common)

Best for: Companies wanting comprehensive sustainability reporting

Structure:

Universal Standards (apply to all)
Topic-specific Standards (select relevant topics)

Key GRI Disclosures:

GRI 2: General Disclosures (organizational profile, governance)
GRI 3: Material Topics
GRI 200 Series: Economic
GRI 300 Series: Environmental
GRI 400 Series: Social

UAE Context: ~300 UAE companies publish GRI reports. Good for companies with diverse stakeholders.

SASB Standards

Best for: Investor-focused companies

Structure:

77 industry-specific standards
Financially material metrics
Comparable across companies

UAE Relevant Sectors:

Real Estate (REITs, developers)
Oil & Gas
Financials (banks, insurance)
Consumer Goods
Healthcare

Advantage: Industry-specific = easier benchmarking

TCFD Framework

Best for: Climate-focused disclosure

Four Pillars:

Governance: Climate oversight
Strategy: Climate risks/opportunities
Risk Management: Climate risk processes
Metrics & Targets: GHG emissions, climate targets

UAE Mandatory: DIFC financial firms (banks, insurers)

Trend: Becoming global standard for climate disclosure

Integrated Reporting <IR>

Best for: Mature companies wanting value creation story

Focus: How company creates value over time (financial + non-financial capitals)

Six Capitals:

Financial
Manufactured
Intellectual
Human
Social & Relationship
Natural

UAE Adoption: Limited but growing (some banks, large corporates)

ESG Reporting Process

Phase 1: Materiality Assessment (4-6 weeks)

Step 1: Identify ESG Issues

List all potential ESG topics relevant to industry
Consider: Industry standards, peer reports, regulations

Step 2: Stakeholder Engagement

Survey/interview: Employees, customers, investors, suppliers, community
Understand their ESG priorities
Document feedback

Step 3: Materiality Matrix

Plot issues on two axes:
- X-axis: Importance to stakeholders
- Y-axis: Impact on business
Identify material topics (high on both axes)

Output: 8-15 material ESG topics to report on

Dubai Example: Real estate developer materiality:

Material: Energy efficiency, worker safety, sustainable materials, community impact
Less material: Biodiversity, water (limited impact in Dubai context)

Phase 2: Data Collection (8-12 weeks)

Environmental Data:

Energy consumption (kWh, fuel usage)
GHG emissions (Scope 1, 2, 3)
Water consumption (m³)
Waste generated (tons, by type)

Social Data:

Employee demographics (gender, nationality, age)
Turnover rates
Training hours
Health & safety (incidents, lost-time injury rate)
Diversity metrics

Governance Data:

Board composition (independence, diversity)
Policies (ethics, anti-corruption, human rights)
Compliance training hours
Whistleblower reports

Challenges:

Data often not centralized
Multiple departments involved (HR, facilities, finance, operations)
Legacy systems may not track ESG metrics

Solutions:

ESG software platforms (Enablon, Diligent, Workiva)
Data collection templates
Assign ESG data owners per department

Phase 3: Report Drafting (4-6 weeks)

Standard ESG Report Structure:

1. CEO Message (1-2 pages)

Leadership commitment to ESG
Highlights of year's ESG performance

2. About the Company (2-3 pages)

Business overview
Sustainability strategy
Materiality assessment results

3. Governance (3-5 pages)

Board composition
ESG oversight structure
Policies & procedures
Ethics & compliance

4. Environmental Performance (5-10 pages)

Energy & emissions
Water & waste
Environmental initiatives
Targets & progress

5. Social Performance (5-10 pages)

Employee wellbeing
Diversity & inclusion
Health & safety
Community engagement

6. Appendices (5-10 pages)

GRI/SASB content index
Performance data tables
Assurance statement (if audited)
Glossary

Total: 30-50 pages typical

Phase 4: External Assurance (Optional, 6-8 weeks)

Limited Assurance (most common):

Auditor provides moderate assurance
"Nothing has come to our attention..."
Less rigorous than financial audit
Cost: AED 50,000-150,000

Reasonable Assurance (rare):

High level of assurance
"In our opinion..."
Similar rigor to financial audit
Cost: AED 150,000-300,000+

Scope:

Typically limited to key metrics (GHG emissions, energy, safety)
Not entire report

Benefit: Credibility with investors, customers

Phase 5: Publication & Communication

Where to Publish:

Company website (dedicated sustainability page)
Stock exchange filings (if listed)
GRI Database (if using GRI)
Printed report (optional, consider environmental impact)

Communication:

Press release announcing report
Social media highlights
Investor presentations
Employee town halls

UAE-Specific ESG Considerations

Climate & Energy (UAE Context)

Challenges:

Extreme heat = high cooling energy
Water scarcity
Energy-intensive economy (historically)

Opportunities:

UAE Net Zero 2050 strategy
Dubai Clean Energy Strategy (75% clean energy by 2050)
Solar potential (Dubai has world's largest single-site solar park)

Reporting Focus:

Energy efficiency initiatives
Renewable energy adoption
Cooling optimization
Water conservation (critical in UAE)

Labor & Human Rights

UAE Workforce Context:

88% expatriate workforce
Kafala system considerations (being reformed)
Diverse, multicultural workforce

Reporting Focus:

Wage equity (especially for lower-income workers)
Worker accommodation standards
Timely wage payments (WPS compliance)
Grievance mechanisms
Freedom of association (where applicable)

Dubai Context: International scrutiny on labor practicestransparency builds trust

Emiratization

National Priority:

Government mandates for UAE national employment
Targets: 2% annual increase in private sector Emiratization

ESG Reporting:

Disclose Emiratization percentages
Training & development programs for nationals
Career progression plans
Retention strategies

Governance & Family Businesses

UAE Business Landscape:

Many large family-owned businesses
Transition to professional management

ESG Governance Focus:

Independent directors
Succession planning transparency
Family vs. professional management balance
Related party transaction disclosure

Common ESG Reporting Mistakes

1. "Greenwashing" (Most Serious)

What: Overstating environmental performance, misleading claims

Examples:

Claiming "carbon neutral" without credible offsets
Highlighting minor green initiatives while ignoring major impacts
Selective disclosure (only positive data)

Consequences:

Reputational damage
Regulatory penalties (increasing)
Investor lawsuits
Customer backlash

Solution: Honest, balanced reporting. Disclose challenges alongside achievements.

2. Lack of Materiality

What: Reporting on non-material topics, ignoring material ones

Example: Tech company extensively reports on water usage (low impact) but ignores data privacy & cybersecurity (high impact)

Solution: Proper materiality assessment. Focus on what matters to stakeholders AND business.

3. No Targets or Progress Tracking

What: Descriptive reporting without goals or year-over-year progress

Problem: Can't assess improvement

Solution: Set quantitative targets, track annually, report progress honestly

4. Poor Data Quality

What: Estimates, incomplete data, inconsistent methodologies

Problem: Not credible, can't benchmark or track progress

Solution: Invest in data systems, consistent methodologies, third-party assurance

ESG Reporting Costs

Initial Setup (Year 1):

Materiality assessment: AED 30,000-80,000
Data collection systems: AED 50,000-200,000
Report preparation: AED 60,000-150,000
External assurance (optional): AED 50,000-150,000
Total Year 1: AED 190,000-580,000

Ongoing (Year 2+):

Data collection/analysis: AED 40,000-100,000
Report update: AED 40,000-100,000
Assurance: AED 50,000-150,000
Total Annual: AED 130,000-350,000

Cost Reduction:

Integrate ESG into existing systems (don't build separate)
Start with limited assurance (not full)
Use templates (GRI, SASB provide free guidance)
Phased approach (basic report Year 1, enhance over time)

Our ESG Reporting Services

We provide end-to-end ESG reporting support:

Materiality Assessment: Stakeholder engagement & topic identification Framework Selection: GRI, SASB, TCFD guidance Data Collection: Systems & processes setup Report Preparation: Full report drafting (30-50 pages) External Assurance: Limited/reasonable assurance Compliance: SCA, DFSA, ADX requirements Ongoing Support: Annual updates & improvements

Experience: 200+ UAE ESG reports | 37 years UAE

Timeline: 4-6 months (initial report)

Call: +971 42 500 251 Email: info@auditfirmsdubai.ae

ESG Reporting Requirements UAE 2025: Complete Sustainability Compliance Guide