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)
- 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
- 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
- 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
- Clear 2030, 2040, and 2050 emission 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 GRI, TCFD)
- Vision 2030: Aligns ESG with development and diversification
- Net Zero Target: 2060 (Rated "Poor" by Climate Action Tracker)
- 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 renewables; 30% land/marine protected
Kuwait
- Boursa Kuwait: Mandatory ESG reporting (30 KPIs) from FY2025
- 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 in Cyprus, Israel, Jordan, Palestine, Turkey
- SSE Initiative signatories with voluntary ESG reporting
Roadmap for ESG Reporting in the Middle East
Whether you're a listed company or private enterprise, here’s how to get started:
- Understand Regional Requirements: Identify exchange rules and national laws (e.g., UAE Climate Law, MSX Guide). Determine if disclosure is mandatory.
- Conduct Materiality Assessment: Use GRI 3 or stakeholder engagement to identify ESG topics.
- Develop a GHG Inventory: Include Scopes 1, 2, 3 to baseline emissions.
- Set Climate Goals: Align with national targets (e.g., UAE’s 2050 goal, Oman’s sector cuts).
- Build a Mitigation Plan: Consider energy efficiency, renewables, offsets.
- Compile ESG Report: Follow frameworks (GRI, TCFD, SASB, CDP); include KPIs per country guidance.
- Conduct Assurance: Opt for limited/reasonable assurance for emissions/KPIs.
- Publish Report: Use website and/or exchange portals (e.g., MSX ESG Platform).
Case Study: UAE Public Bank (Hypothetical)
- Regulation: Must follow ADX ESG Guide + SCA report
- Materiality: Use GRI 3 to prioritize emissions, governance, data privacy
- GHG Inventory: Scope 1 (branches), Scope 2 (power), Scope 3 (commute, vendors)
- Mitigation: Green branches, solar procurement, carbon offsets
- Reporting: Limited assurance, publish on corporate site
How Sustainium Can Help
- Automated carbon accounting (Scopes 1, 2, 3)
- Disclosure-ready reports for UAE, KSA, Oman, Kuwait
- Regional emission factor libraries (Arabic/English)
- Multi-site, multi-subsidiary dashboards
- Expert help for ESG strategy, materiality, and assurance