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ESG Reporting and Sustainability Disclosures: What UAE Companies Need to Know in 2026
Sustainability has become an increasingly relevant business consideration in the UAE.
Companies are now paying closer attention to how environmental issues, workforce practices
and corporate governance can influence business operations, financial planning and long-term
growth
For UAE businesses, ESG reporting in 2026 is therefore moving beyond general statements
about sustainability. Companies may need to demonstrate how important environmental, social
and governance matters are identified, monitored and incorporated into business decisions.
UAE businesses may have different sustainability disclosure obligations depending on their
industry and regulatory environment. Requirements and expectations can vary depending on the
company’s sector, regulatory environment, listing status, financial activities and stakeholder
expectations.
Understanding these differences is essential before preparing an ESG or sustainability disclosure.
What Does ESG Reporting Mean for a UAE Business?
ESG stands for Environmental, Social and Governance. These three areas cover a wide range
of business-related matters.
The environmental component can include subjects such as energy consumption, greenhouse gas
emissions, water usage, waste, pollution and resource efficiency.
The social component generally relates to people and communities. Employee welfare,
workplace safety, training, labour practices, diversity, customer considerations and community
engagement can all fall within this area.
Governance focuses on the way an organisation is directed and controlled. It can involve board
oversight, business ethics, compliance procedures, internal controls, risk management and
accountability.
The relevance of each area depends on the nature of the company.
A consultancy, manufacturer, bank and technology company will not necessarily have the same
sustainability risks. An effective reporting process should therefore concentrate on the issues that
have a meaningful connection with the organisation.
ESG Compliance in the UAE: Reporting Requirements for Businesses in 2026
The UAE does not have a single ESG reporting rule that applies equally to every business.
The obligations applicable to a business can depend on several factors, including:
Listed companies and businesses operating in regulated sectors may encounter more specific
disclosure expectations than privately held businesses.
Companies should first determine which ESG reporting requirements apply to them before
choosing a reporting framework or preparing disclosures.
Why ESG Information Is Becoming More Important
ESG information can provide insight into issues that may influence a company’s future
performance.
For example, rising energy costs can affect operating expenditure. Extreme weather events can
create physical risks for certain assets and supply chains. Workforce problems can influence
productivity and employee retention. Weak governance systems can expose an organisation to
compliance and reputational problems.
Consequently, sustainability information can have a connection with broader business planning.
For some companies, lenders and investors may also request information about sustainabilityrelated risks before making financial decisions.
As a result, businesses are increasingly treating ESG reporting as part of their risk management,
governance, and financial planning processes.
Understanding Sustainability Disclosure Standards
International sustainability reporting has developed considerably in recent years.
The International Sustainability Standards Board (ISSB) has established IFRS Sustainability
Disclosure Standards that focus on sustainability-related information relevant to an entity’s
prospects.
IFRS S1 provides general requirements for communicating information about sustainabilityrelated risks and opportunities that could reasonably be expected to influence an organisation’s
prospects.
IFRS S2 concentrates specifically on climate-related risks and opportunities.
These standards are particularly relevant when companies and stakeholders want sustainability
information to be connected with financial decision-making rather than presented as a
completely separate corporate activity.
Following a global ESG framework does not automatically create the same legal reporting duties
for every company in the UAE. Businesses should consider their particular regulatory and
commercial circumstances.
The Role of Climate Information in ESG Reporting
Climate-related information has become one of the most developed areas of sustainability
disclosure.
Businesses may need to consider two broad categories of climate-related exposure.
Physical risks can arise from events or longer-term changes in environmental conditions.
Depending on the location and nature of a business, these could affect buildings, equipment,
logistics, employees or suppliers.
Transition risks can emerge as economies move toward lower-carbon technologies and
practices. Changes in regulations, customer preferences, technology and market conditions can
create new costs or business opportunities.
Companies are not necessarily required to disclose every possible climate-related issue. The
focus should be on matters that are relevant to its activities and could have a meaningful business
impact.
ESG Governance: Establishing Clear Responsibility
ESG reporting becomes difficult when responsibility is unclear.
A company should know who is responsible for collecting information, reviewing figures,
monitoring risks and approving disclosures.
Depending on the organisation, different responsibilities may sit with:
The exact structure can differ between businesses.
What matters is that responsibilities are documented and that ESG information does not depend
entirely on one individual without appropriate review.
Identifying Material ESG Issues
One of the most important stages in ESG reporting is deciding which topics deserve attention.
A company should consider the nature of its operations, locations, employees, customers,
suppliers and financial activities.
For example, a company with large physical facilities may need to monitor energy and water
consumption closely. A business with a large workforce may place greater emphasis on
employee safety, training and retention. A financial institution may need to consider
sustainability-related risks within financing and investment activities.
The purpose of a materiality assessment is to create a reporting process that reflects the
company’s actual circumstances.
More ESG information does not automatically mean better ESG reporting. Relevant and
reliable information is generally more useful than a large collection of unrelated figures.
Which ESG Metrics Can Companies Track?
There is no universal list of metrics suitable for every UAE business.
Environmental indicators may include:
Social indicators may include:
Governance indicators can include:
Companies should select metrics that are meaningful for their operations instead of attempting to
measure every possible ESG indicator.
Building a Reliable ESG Data Process
One of the biggest practical challenges in sustainability reporting is data collection.
ESG information is often spread across multiple departments.
The finance department may hold financial information, HR may maintain workforce records,
facilities teams may track electricity and water consumption, while compliance departments may
maintain information about policies and incidents.
A structured data process can help bring this information together.
Companies should define:
Maintaining this information systematically can make future reporting periods more consistent.
Why Data Accuracy Matters in Sustainability Disclosures
ESG statements can attract questions when the supporting information is unclear.
For example, if a company reports a reduction in emissions, it should understand how the figure
was calculated and what period it covers. If employee training numbers are disclosed, the
company should have records supporting those figures.
A documented methodology can make year-on-year comparisons easier.
Companies should also avoid presenting estimates as precise measurements when the underlying
information has significant limitations.
Where data gaps exist, they should be identified and addressed through an appropriate
improvement process.
Connecting ESG With Business Risk
ESG should not operate independently from the company’s wider risk-management process.
Businesses can examine whether material sustainability issues could affect areas such as:
This approach helps management understand sustainability as a potential business consideration
rather than simply a reporting exercise.
For example, a company dependent on energy-intensive operations may examine how energy
efficiency could influence future operating costs. A business relying heavily on international
suppliers may assess whether climate-related disruption could affect procurement.
ESG Considerations for Financial Institutions
Financial institutions have additional considerations because sustainability-related risks can
extend beyond their own offices and employees.
Lending, investment and financing activities can create exposure to risks associated with
customers, industries and assets.
The UAE Sustainable Finance Working Group has developed principles concerning
sustainability-related disclosures for reporting entities, with emphasis on areas including
governance, materiality, transparency and the quality of sustainability information.
Financial institutions should therefore consider how sustainability information fits within their
existing governance and risk-management structures.
The applicable requirements should always be assessed according to the institution’s regulatory
framework.
Preparing an ESG Report in the UAE
A practical reporting process can be developed in stages.
Step 1: Review the Company’s Regulatory Position
Determine which regulator, listing requirements, sector rules or other obligations apply to the
organisation.
Step 2: Map Relevant ESG Topics
Review the company’s activities and identify the environmental, social and governance issues
that may be significant.
Step 3: Assign Internal Ownership
Give specific teams responsibility for individual ESG data points and related processes.
Step 4: Establish Baseline Data
Collect available information for the selected reporting period and identify areas where reliable
data is not yet available.
Step 5: Define Measurement Methods
Document how each important metric is calculated so that the same approach can be applied
consistently.
Step 6: Set Appropriate Objectives
Where relevant, establish measurable targets related to areas such as energy efficiency, employee
development, waste reduction or governance improvements.
Step 7: Review the Information
Carry out internal checks before ESG information is published or shared with external
stakeholders.
Step 8: Improve the Process Each Year
ESG reporting can become more comprehensive as the organisation improves its data collection,
controls and internal reporting systems.
Common Problems in ESG Reporting
Businesses can encounter several problems when developing sustainability disclosures.
One issue is making broad sustainability claims without sufficient supporting information.
Another is using different calculation methods from one year to another, which makes
comparisons difficult.
Some organisations also focus heavily on positive achievements while providing limited
information about challenges, risks or areas requiring improvement.
Other problems can include:
A structured internal process can reduce these problems and improve the reliability of published
information.
ESG Reporting and Greenwashing Risks
As sustainability communication becomes more common, companies should be careful about
environmental claims.
Statements such as “green,” “sustainable,” “eco-friendly” or “carbon neutral” can require
appropriate context and evidence depending on how they are used.
Businesses should ensure that their public claims accurately reflect their underlying activities and
available evidence.
Clear wording is particularly important when communicating sustainability achievements to
customers, investors or business partners.
What UAE Businesses Can Do in 2026
Companies that have not yet established an ESG reporting process can begin with a practical
internal assessment.
They can first identify their applicable regulatory requirements and stakeholder expectations.
The next step is to determine which ESG topics are genuinely relevant to the business.
Rather than attempting to build a complicated reporting system immediately, companies can
establish a manageable set of reliable indicators and gradually expand their reporting
capabilities.
This can include creating an ESG responsibility matrix, maintaining supporting documentation,
establishing data-collection procedures and reviewing sustainability information alongside
existing business risks.
Looking Beyond 2026
Sustainability reporting continues to develop internationally, and reporting expectations may
evolve further.
The ISSB is continuing work related to sustainability disclosures, including discussions
concerning additional sustainability topics such as nature-related risks and opportunities.
For UAE businesses, this makes flexibility important.
A reporting system built around reliable data, clear governance and documented methodologies
can be easier to adapt when applicable requirements or stakeholder expectations change.
