ESG Policy (UAE)

An ESG Policy in the United Arab Emirates is a formal corporate commitment document that establishes a company's approach to Environmental, Social, and Governance standards, aligned with the UAE's ambitious sustainability agenda and the growing expectations of regulators, investors, employees, and commercial partners. ESG stands for Environmental, Social, and Governance — three interconnected pillars that together reflect how a company manages its impacts on the planet, its people, and its own internal governance structures.

The UAE's commitment to ESG leadership is anchored in the UAE Net Zero 2050 Strategic Initiative — announced in October 2021 and making the UAE the first MENA country to commit to net zero greenhouse gas emissions — the UAE Green Agenda 2015-2030, the UAE Energy Strategy 2050, and the UAE National Climate Change Plan 2017-2050. The UAE's hosting of COP28 in Dubai in November and December 2023 catalysed a significant acceleration in ESG policy development across the public and private sectors, with both Abu Dhabi and Dubai launching green economy initiatives and mandatory ESG disclosure frameworks.

For companies registered on the UAE mainland or in free zones, the ESG landscape encompasses: environmental obligations under the UAE Federal Law No. 12 of 2018 on Integrated Waste Management, Abu Dhabi and Dubai emirate-level environmental regulations, green building standards such as the Estidama Pearl Rating System and Dubai Green Building Regulations; social obligations under the UAE Labour Law, Federal Decree-Law No. 33 of 2021, and Emiratisation requirements under the Nafis programme administered by the Ministry of Human Resources and Emiratisation (MOHRE); and governance obligations under the Commercial Companies Law, Federal Decree-Law No. 32 of 2021, the Securities and Commodities Authority (SCA) Corporate Governance Code, and the SCA ESG Disclosure Guidance for listed companies.

For financial institutions regulated by the Central Bank of the UAE, the Sustainable Finance Framework provides guidance on integrating ESG risk into credit assessment and investment decisions. For companies listed on the Abu Dhabi Securities Exchange (ADX) or the Dubai Financial Market (DFM), mandatory ESG disclosure aligned with the GRI Standards and TCFD recommendations is required by the SCA.

The forms-legal.com ESG Policy (UAE) template provides a complete, customisable policy covering all three ESG pillars, aligned with UAE regulatory requirements and international best practice frameworks including GRI, TCFD, and IFRS Sustainability Standards. Available in PDF and Word format for immediate adoption.

An ESG Policy is needed in the UAE in the following circumstances.

Listed companies on the ADX and DFM are required by the SCA Corporate Governance Code and ESG Disclosure Guidance to adopt formal ESG governance frameworks and make mandatory disclosures on material ESG indicators including greenhouse gas emissions, energy use, water consumption, employee welfare, Emiratisation performance, board diversity, and anti-corruption programmes.

Large private companies seeking access to green finance — including green bonds, sustainability-linked loans, and ESG-screened investment — are increasingly required by financial institutions, including First Abu Dhabi Bank, Emirates NBD, and Abu Dhabi Commercial Bank, to demonstrate credible ESG policies as a condition of financing.

Multinational companies with UAE operations are subject to ESG reporting requirements in their home jurisdictions — such as the EU Corporate Sustainability Reporting Directive (CSRD) or UK Companies Act mandatory climate risk disclosures — and must include their UAE operations in group ESG reporting, requiring local ESG policies.

Companies participating in UAE government procurement — particularly in Abu Dhabi through the Abu Dhabi Department of Economic Development and in Dubai through the Dubai Supply Chain Management department — are increasingly subject to ESG criteria in tender evaluation, including environmental management plans and social compliance declarations.

Any company in the UAE that employs 50 or more workers in skilled roles is already subject to Emiratisation requirements under the Nafis programme — the social pillar of an ESG policy provides the framework for meeting and reporting on these obligations.

Companies in the [Industry Sector] sector should be particularly attentive to sector-specific ESG regulations and reporting expectations, as different sectors face materially different environmental and social risks.

A complete UAE ESG Policy must address all three pillars — Environmental, Social, and Governance — with specific commitments, measurable targets, and clear accountability.

Environmental pillar: Greenhouse gas emissions measurement and reduction targets aligned with UAE Net Zero 2050 commitments; energy efficiency and renewable energy transition plans consistent with the UAE Energy Strategy 2050; water conservation in line with the UAE Water Security Strategy 2036; waste minimisation and recycling under Federal Law No. 12 of 2018; and environmental impact assessment for high-impact operations. Sector-specific environmental KPIs — such as scope 1 and 2 emissions intensity, energy consumption per unit of revenue, water withdrawal, and waste to landfill — should be defined and tracked annually.

Social pillar: Compliance with UAE Labour Law, Federal Decree-Law No. 33 of 2021 — including the Wage Protection System mandated by MOHRE; Emiratisation targets and Nafis programme performance; occupational health and safety standards; diversity and inclusion commitments; supply chain labour standards; and community investment aligned with UAE social development priorities. Specific social KPIs — Emiratisation percentage, employee training hours, workplace accident rate — should be tracked and disclosed.

Governance pillar: Board composition and independence; anti-bribery and corruption programme aligned with UAE Penal Code Federal Decree-Law No. 31 of 2021; anti-money laundering compliance under Federal Decree-Law No. 20 of 2018; compliance with the Commercial Companies Law Federal Decree-Law No. 32 of 2021; data protection under the PDPL; and whistleblower protection mechanisms.

ESG reporting framework: Selection of a recognised reporting standard — GRI, TCFD, IFRS ISSB, or SCA ESG Disclosure Guidance — and commitment to annual ESG reporting. The forms-legal.com ESG Policy (UAE) template includes all three pillars with specific UAE statutory references and KPI guidance.

Completing the UAE ESG Policy begins with entering the company's full registered name and emirate, followed by the effective date — typically the board approval date for the policy.

Select the industry sector. ESG materiality — which environmental, social, and governance issues matter most — varies significantly by sector. Financial services companies face governance and social risks as their primary ESG issues, while real estate and construction companies have significant environmental risks from embodied carbon and operational energy use. Oil, gas, and energy companies face transition risk and Scope 3 emissions as material issues. The sector selection shapes the emphasis of the ESG programme and the KPIs that should be prioritised.

Designate the ESG Officer. Enter the name and title of the person or committee responsible for ESG implementation and reporting. For smaller companies, this may be the general manager or CFO acting as sustainability lead; for larger companies, a dedicated Chief Sustainability Officer or ESG committee with board-level participation. The ESG Officer must have adequate authority, resources, and access to data to implement the policy and compile the annual ESG report.

Select the ESG reporting framework. Listed companies should use the SCA ESG Disclosure Guidance, supplemented by GRI Standards and TCFD recommendations. Companies with international investors or capital market access should use IFRS ISSB standards. Companies reporting internally only should still adopt a recognised framework to ensure completeness and comparability.

After completing the wizard, arrange for board approval of the policy. Conduct a materiality assessment — a systematic process for identifying which ESG issues are most material to the company's business and stakeholders — to set specific, measurable KPIs. Review the policy annually in conjunction with the ESG report to assess progress against targets and update commitments as UAE regulatory requirements evolve.

Legal requirements relevant to a UAE ESG Policy arise from multiple layers of federal and emirate-level law and regulation.

Environmental requirements: UAE Federal Law No. 12 of 2018 on Integrated Waste Management imposes obligations on commercial establishments for waste reduction, segregation, and lawful disposal. The Federal Law No. 24 of 1999 on Protection of the Environment — as amended — imposes environmental permit and impact assessment requirements for certain industrial activities. Emirate-level regulations from the Environment Agency Abu Dhabi and the Dubai Supreme Council of Energy add specific requirements for industrial facilities, including emissions reporting and water discharge limits.

Social requirements: UAE Labour Law, Federal Decree-Law No. 33 of 2021, sets minimum standards for employment contracts, working hours, leave entitlements, end-of-service gratuity, and worker welfare. Cabinet Resolution No. 1 of 2022 implements the Labour Law's provisions on flexible work and domestic workers. MOHRE's Emiratisation requirements under the Nafis programme — enacted through Cabinet Decision No. 46 of 2022 — impose binding annual UAE national employment percentages on private sector companies with 50 or more workers. The UAE Occupational Health and Safety Law — Federal Decree-Law No. 8 of 2022 on Occupational Health and Safety in the Workplace — imposes obligations on employers to provide safe working environments, conduct risk assessments, and report occupational accidents to MOHRE.

Governance requirements: The Commercial Companies Law, Federal Decree-Law No. 32 of 2021, imposes fiduciary duties on directors including loyalty, care, and compliance obligations. For listed companies, the SCA Corporate Governance Code imposes board composition, audit committee, and disclosure requirements. The SCA ESG Disclosure Guidance (2022) sets out mandatory ESG disclosures for listed companies. The DIFC and ADGM apply their own corporate governance frameworks, including climate-related disclosure requirements aligned with TCFD.

Common mistakes in UAE ESG policies include the following.

Publishing aspirational commitments without measurable targets or baseline data is the most prevalent ESG policy failure. A policy that states the company 'is committed to reducing its environmental impact' without specifying a baseline year, a percentage reduction target, and a timeline provides no accountability and no way to measure progress. Under the SCA ESG Disclosure Guidance, listed companies are required to disclose specific, quantified metrics. Even non-listed companies should define measurable KPIs — emission intensity per AED million of revenue, Emiratisation percentage by year, accident rate per million hours worked — to give the policy operational substance.

Ignoring Emiratisation obligations in the social pillar is a significant gap for UAE private sector employers with 50 or more workers. Emiratisation is not optional — companies that miss their Nafis programme targets face financial penalties from MOHRE. The Nafis programme — administered jointly by the Ministry of Human Resources and Emiratisation (MOHRE) and the Abu Dhabi Development Holding Company — sets specific annual Emiratisation percentages for targeted industries. An ESG policy that does not address Emiratisation targets and reporting misses one of the most material social compliance obligations in the UAE private sector.

Failing to align the ESG reporting framework with the company's capital market or financing context creates mismatched expectations. A company that seeks green bond financing will be expected to use ISSB or TCFD standards; one reporting to the SCA will use the SCA ESG Disclosure Guidance. Using an inappropriate or internally devised framework that does not align with what counterparties and regulators expect reduces the credibility of ESG disclosures. First Abu Dhabi Bank, Emirates NBD, and international banks conducting ESG due diligence on UAE borrowers have specific disclosure expectations that vary by framework.

Treating ESG as a marketing exercise rather than a governance and compliance framework — having an ESG policy for public relations purposes but without board oversight, data collection systems, or integration into business decision-making — exposes companies to greenwashing risk and, as ESG regulation tightens, to regulatory sanction. Genuine ESG integration requires board commitment, dedicated resource, and measurable action. The UAE's National Programme for Advanced Technologies and the Abu Dhabi ESG Data Platform are developing monitoring tools that will make corporate ESG performance more transparent to regulators and investors.

Failing to address climate transition risk in the environmental pillar is a growing oversight. Companies in the UAE's oil and gas, real estate, and transportation sectors face material transition risks as the UAE decarbonises toward Net Zero 2050. An ESG policy that only addresses current operational emissions without acknowledging transition risk — changes in asset values, regulatory costs, and market shifts as the UAE economy decarbonises — does not provide the forward-looking risk assessment that the TCFD framework and IFRS ISSB S2 require.