The UAE has entered a decisive phase in its sustainability agenda, shifting from voluntary reporting to regulated emissions disclosure.
By 30 May 2026, companies subject to the country’s climate reporting framework – including listed entities, large corporates and other organisations meeting regulatory thresholds – must comply fully with mandatory greenhouse gas measurement and disclosure requirements.
The challenge is building systems capable of standing up to review
The requirements mean affected businesses must quantify their Scope 1 emissions (direct emissions from their own operations, such as company vehicles) and Scope 2 emissions (indirect emissions from purchased electricity and energy). They must also document methodologies and implement monitoring and verification processes capable of regulatory scrutiny.
For many organisations, the challenge is no longer setting targets but building systems capable of standing up to review.
Readiness gap
Companies are at markedly different stages of readiness. ‘At this stage, the larger listed and multinational corporates are materially more prepared than the small and mid-sized segment,’ says Anand Balasubramanian, partner, business risk services at Grant Thornton UAE. Larger organisations have already been reporting emissions and have built sustainability governance frameworks. ‘Their readiness on governance, data and systems is much higher,’ he explains.
Smaller and mid-sized companies often face greater challenges. ‘There are still gaps, including no baseline emissions data, fragmented utility and operational records, and a lack of internal ESG roles,’ Balasubramanian says. Emissions tracking was often seen as ‘good to have’ rather than a core compliance requirement.
That gap is translating into immediate advisory work for accountancy firms ahead of the May 2026 deadline. Practitioners will be establishing emissions baselines, defining boundaries, documenting methodologies and preparing evidence suitable for verification.
‘A significant challenge lies in the reliance on proxy data’
Reliable data
While Scope 3 emissions – those arising across the value chain, including suppliers, customers and financed activities – are not currently mandated for reporting, they remain a growing area of focus and may present challenges if regulatory expectations evolve.
Most organisations can build credible Scope 1 and Scope 2 inventories within the timeframe. Even so, data quality and documentation remain significant hurdles. ‘Companies primarily struggle with accurately measuring and collecting emissions data,’ says Daniel Gribbin, director and sustainability leader at Deloitte Middle East. ‘A significant challenge lies in the reliance on proxy data, which can compromise data accuracy and retention over time, making it difficult to maintain consistent and reliable emissions records.’
‘Most readiness assessments highlight gaps in data quality and coverage’
Balasubramanian sees similar patterns in readiness reviews. ‘Most readiness assessments highlight gaps in data quality and coverage, including incomplete data, missing historical records and documentation gaps that would hamper effective third-party verification.’
Financial institutions face distinctive pressures. ‘When financing a car, you now need to understand the size and type of engine and the expected annual mileage. For a housing loan, you need to know whether it is an apartment or a house and what kind of building code applies,’ points out Fadi Al-Shihabi, head of sustainability solutions at KPMG in the Middle East. ‘If you rely on too many proxies, it impacts the accuracy of the data.’
For practitioners, these requirements translate into clearly defined near-term priorities: defensible methodologies, documented assumptions, internal controls and verification readiness before May 2026.
Regional momentum
The UAE’s framework reflects a broader regional shift. Gribbin points to Deloitte’s 2025 Middle East C-suite Sustainability Report, which found that 21% of executives cite measurement difficulties as a key barrier, while 60% report pressure from boards to enhance sustainability performance. ‘Organisations are at different stages in their sustainability journeys,’ he says. ‘For many, sustainability reporting and management is primarily driven by compliance requirements. However, more advanced companies are integrating sustainability into broader transformation and risk management frameworks.’
Gouban Gopal, executive director for business consulting at Grant Thornton UAE, adds that oversight structures are strengthening. ‘Boards and senior management are increasingly taking formal oversight of climate and ESG,’ he explains. Embedding climate risk into decisions such as capital allocation, however, remain patchy. ‘Many companies still treat climate as a reporting project rather than embedding it into budgeting, strategy and investment decisions,’ says Al-Shihabi.
Mandatory emissions reporting is reshaping the assurance landscape
Reliance on assurance
For accountants in practice, mandatory emissions reporting is reshaping the assurance landscape. ‘Before the law, reporting was voluntary for many organisations,’ says Al-Shihabi. ‘We need verification. Assurance must become the second level of defence. You can still undergo third-party assurance while presenting proxies, but assumptions must be clearly disclosed.’ Expectations are likely to tighten as reporting matures.
Gribbin describes advisory support as increasingly comprehensive. ‘We provide end-to-end services starting from greenhouse gas inventories and baselining, through to developing decarbonisation strategies, transition plans and assurance readiness assessments.’
That breadth requires investment in capability. Firms are expanding specialist sustainability teams, strengthening data analytics expertise and supporting clients with training and upskilling. Many organisations lack in-house emissions accounting experience, increasing reliance on external advisers in the near term.
Stimulus
The May 2026 deadline is a catalyst rather than an endpoint. Gopal describes the regulation as ‘the start of a structural and permanent shift in how finance functions operate in the UAE, rather than a discrete compliance exercise’.
For accountants in practice, the implications are clear. The immediate priority is helping clients meet the implementation deadline. Beyond that, evolving regulatory expectations are likely to expand both the scope and sophistication of climate reporting.
