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Navigating ESG Regulations in the Middle East: Compliance, Strategy & Disclosure

2025-04-25

As ESG (Environmental, Social, and Governance) practices become central to business strategy, the Middle East is witnessing a surge in regulatory frameworks to align with global sustainability standards. This blog summarizes key insights from our webinar on ESG regulations across the region and offers a practical roadmap for ESG reporting.

The Evolution of ESG in the Middle East

Over the last two decades, ESG has evolved from CSR (Corporate Social Responsibility) to a strategic imperative. Global and regional milestones shaping ESG include:

  • COP18 (Doha, 2012): Advanced sustainable finance and technology transfer
  • COP28 (Dubai, 2023): Reinforced global fossil fuel transition and accountability gaps
  • GCC Unified ESG Metrics (2023): Announced by Gulf Exchange for listed companies
  • UAE Free Zones ESG Mandate (2023) and Islamic Finance ESG Rule (Saudi Arabia, 2022)

Country-Level ESG Regulations Overview

United Arab Emirates (UAE)

1. Capital Market Requirements:
  • DFM and ADX require ESG disclosures under Securities & Commodities Authority (SCA)
  • Integrated Reporting + Sustainability Report mandated by Article 76 of Joint Stock Companies Guide
  • ESG disclosure guides (DFM 2023, ADX 2019) provide 30 KPIs
2. Climate Law (2024):
  • Federal Decree Law 11 mandates climate action for all public and private entities starting May 30, 2025
  • Requires GHG inventory (Scopes 1, 2, 3), reduction strategy, and data archiving
  • Penalties: AED 50,000 to AED 2 million
3. Net Zero Target: 2050 (rated "Average" by Climate Action Tracker)
Oman
  • Muscat Stock Exchange (MSX): Mandatory ESG disclosure (30 KPIs) from March 31, 2025
  • Net Zero Target: 2050
  • Climate Strategy: Clear 2030, 2040, and 2050 emission reduction targets for top 5 emitting sectors (Industry, Oil & Gas, Transport, Buildings, Power)
  • Vision 2040: Integrates GDP and climate goals
Saudi Arabia
  • Saudi Exchange: ESG disclosure is voluntary (aligned with international frameworks like GRI, TCFD)
  • Vision 2030: Aligns ESG with development and diversification
  • Net Zero Target: 2060 (Rated "Poor" by Climate Action Tracker)
  • Emission Goals: Reduce GHGs by 278 MtCO2e by 2030, plant 600M trees
Qatar
  • Qatar Stock Exchange: ESG disclosures are voluntary but encouraged
  • Climate Goals: 25% emission reduction by 2030; 4 GW renewable energy target; protection of 30% of land and marine areas
Kuwait
  • Boursa Kuwait: Mandatory ESG reporting (30 KPIs) from FY2025 (to be published in 2026)
  • No net zero target yet
  • National Development Plan 2035: Focuses on renewable energy
Bahrain
  • Bahrain Bourse: ESG disclosures are voluntary (29 KPIs)
  • Vision 2030: Sustainability as a core principle
Other Countries
  • Net-zero targets exist in Cyprus, Israel, Jordan, Palestine, Turkey
  • Many are SSE Initiative signatories with voluntary ESG reporting

Roadmap for ESG Reporting in the Middle East

Whether you're a listed company or a private enterprise, here’s how to get started:

1. Understand Regional Requirements

  • Identify relevant stock exchange regulations and national laws (e.g., UAE Climate Law, Oman MSX guide)
  • Determine if your company is subject to mandatory or voluntary disclosure

2. Conduct Materiality Assessment

  • Use GRI 3 or stakeholder engagement to identify material ESG topics

3. Develop a GHG Inventory

  • Include Scopes 1, 2, and 3 for comprehensive baseline emissions data

4. Set Climate Goals

  • Align with national targets (e.g., Oman’s sector-wise reductions or UAE’s 2050 net zero)

5. Build a Mitigation Plan

  • Identify energy efficiency, renewable energy, or offset strategies

6. Compile ESG Report

  • Align with frameworks (GRI, SASB, TCFD, CDP, IR)
  • Incorporate country-specific KPIs and formats

7. Conduct Assurance

  • Opt for limited or reasonable assurance, especially for GHG data or priority KPIs

8. Publish Report

  • Via company website and/or designated ESG portals (e.g., MSX ESG Platform)

Case Study: UAE Public Bank (Hypothetical)

  • Check Regulation: Must comply with ADX ESG Guide + SCA integrated report
  • Materiality Assessment: Use GRI 3 to identify topics like emissions, governance, data privacy
  • GHG Inventory: Scope 1 (branches), Scope 2 (electricity), Scope 3 (employee commute, vendors)
  • Mitigation Plan: Green branches, solar procurement, offset investments
  • Report & Assurance: Limited assurance + publish on website

How Sustainium Can Help

Sustainium offers:

  • Automated carbon accounting (Scopes 1, 2, 3)
  • Disclosure-ready reporting for UAE, KSA, Oman, Kuwait, and global frameworks
  • Regional emission factor libraries (Arabic/English)
  • Multi-site & multi-subsidiary dashboarding
  • Expert services for ESG strategy, materiality assessment, and assurance support