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      The United Arab Emirates (UAE) has long been on a forward-thinking path toward carbon neutrality, steadily advancing its climate agenda. Indeed, its progress goes beyond carbon neutrality: it is on the path to achieve Net Zero by 2050. Evidentially, this has been accelerated with the UAE being host to COP28 in 2023, which drove the climate finance, renewable energy and green hydrogen agenda.

      On a global level, the UAE is continuing to take the lead role for climate action negotiations, by forming a partnership with COP29 and COP30 hosts, Azerbaijan and Brazil, called Mission 1.5C. This aims to maintain momentum across successive COP conferences, enhance international collaboration and ensure the fulfilment of climate agreements.

      On a national front, the UAE's climate commitment is equally ambitious. Ahead of COP28, the UAE issued the third update of its second Nationally Determined Contribution (NDCs), committing to cut greenhouse gas (GHG) emissions by 19% by 2030, compared to 2019 levels. This translates to a reduction of 182 MtCO2e by 20301.

      Accelerating decarbonization is one of the key goals for the UAE, and the UAE has recognized that to achieve this ambition, collective action and shared accountability by all responsible stakeholders will be required. By issuing this decree, the UAE took further steps to align policy frameworks with its decarbonization goals. The decree is designed to foster a sense of shared responsibility and accelerate the implementation of necessary climate actions across all sectors. It sets out robust legislation to ensure both public and private sectors are held accountable for managing GHG emissions and driving collective climate action.

      Federal Decree-Law No. 11 of 2024—a closer look

      The UAE introduced Federal Decree-Law No. 11 of 2024 on the Reduction of Climate Change Effects2 , which will take effect on 30th May 2025. This decree mandates that competent local authorities—including municipalities, free zones, and other—to develop and implement climate change mitigation and adaptation plans, including identifying opportunities and mitigating climate risks. It is expected that plans will apply to all emission sources—including public, private, and individual enterprises—expected starting 30th August 2025.

      Key highlights of the Decree

      The Ministry of Climate Change and Environment will, in collaboration with local authorities, develop climate change mitigation and adaptation plans aiming to assess key climate-related risks in each sector, establish response measures and early warning systems, and ensure the implementation of necessary adaptation actions.

      The decree sets annual GHG reduction targets for various sectors, effectively cascading NDCs down to the local level.

      Local authorities across the UAE, including those within free zones, will implement stringent standards for emission monitoring, reporting, and verification (MRV). A centralized electronic system will track emissions data, ensuring transparency and accountability.

      Companies adopting innovative technologies to reduce emissions, such as carbon offsetting and emission trading systems, will benefit from government incentives. This is aimed at accelerating the adoption of low-carbon solutions across all sectors.

      What’s next

      The private sector in the UAE is already stepping up, with companies increasingly adopting sustainability strategies, climate action plans, and decarbonization roadmaps. Investments in environmental, social, and governance (ESG) initiatives are on the rise. According to KPMG's UAE CEO outlook 20243 , local leaders are optimistic, with many expecting significant returns on their ESG investments within three to five years.

      What to expect in the coming months

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      Guidance on emission monitoring and reporting

      In the next 3-5 months and no later by 30 May 2025, we anticipate the release of further guidelines for emission MRV and sector-specific reduction targets as part of the UAE's national climate action plan. Municipalities and free zones authorities will likely follow with their localized climate plans. New entities, like the recently established Dubai Environment and Climate Change Authority (DECCA)4 , may also emerge to oversee the regulatory framework and provide tools for compliance.

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      Expected compliance timeline

      As per the decree, all businesses will need to comply with the decree and any provisions issued, within one year from entry into force of its provision. This timeframe may be extended, but it could also conclude as early as the last quarter of 2025. Non-compliance could result in penalties ranging from AED 50,000 to AED 2,000,000, and this can be doubled in case of repeated non-compliance within two years. The fines will be doubled in the case of repeated non-compliance within a two-year period.

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      Decarbonization incentives

      Beyond compliance, companies can benefit from decarbonization incentives, including participation in emission trading schemes, internal carbon pricing, and other mechanisms that reward proactive GHG reduction efforts.

      At a minimum, businesses will need to align with national and local climate action plans, particularly in terms of emission accounting—monitoring, verification, and reporting and adherence for sector emission reduction targets. Companies that have already integrated sustainability frameworks and decarbonization strategies will be well-positioned to transition smoothly to the new regulations.

      How KPMG can help

      KPMG is well-equipped to help businesses navigate the evolving legislative landscape. Our expertise in sustainability, ESG, and climate change will not only assist companies in complying with the new laws but also accelerate their journey toward becoming sustainable enterprises. Whether you are just starting your sustainability journey or are further along, we are committed to supporting your sustainability efforts and being a reliable partner throughout this process.

      Our services include

      • Understanding the sustainability landscape: We analyse sustainability trends and compare your business with peers and industry leaders to identify where to focus your efforts.
      • Assessing sustainability maturity: Our tools evaluate your current sustainability status, strengths, and areas for improvement, benchmarking against market best practices.
      • Materiality assessments: We identify key sustainability risks and opportunities, including climate risks, using tailored assessments that incorporate feedback from internal and external stakeholders.
      • Developing sustainability strategy and strategic options: We craft strategies to unlock long-term value and competitive advantages while addressing critical sustainability risks and opportunities.
      • Adopting circular economy practices: We assess your circular economy goals, helping you reduce waste and costs across the supply chain.
      • Communicating your sustainability story: Through sustainability reporting and other communication platforms, we ensure your ESG messaging resonates with customers, investors, and other stakeholders, enhancing your brand’s reputation, especially during key business milestones like IPOs or bond issues.

      Contact us

      Fadi shihabi
      Fadi Shihabi

      Sustainability Solutions Leader

      KPMG Lower Gulf