ESG Disclosure Requirements for UAE Listed Companies
Examine the mandatory ESG disclosure requirements imposed by the UAE Securities and Commodities Authority for listed companies.
A practical guide to the SCA's mandatory ESG disclosure requirements for UAE listed companies and how to prepare for them.
Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant
ESG Disclosure Requirements in the UAE: A Guide for Listed Companies
In a move that aligns the UAE with global best practice, the Securities and Commodities Authority (SCA) has introduced new mandatory ESG (Environmental, Social and Governance) disclosure requirements for all listed companies in the UAE. This is a major development. It will provide greater transparency on the ESG performance of UAE companies and help promote more sustainable and responsible investment. This guide explains what the new ESG disclosure requirements are and what they mean for your listed company.
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The Challenge: Growing Demand for ESG Information
Investors, consumers and other stakeholders are asking for more information on the ESG performance of companies. Investors increasingly use ESG information to inform their investment decisions. Consumers increasingly choose to buy from companies with a strong ESG track record.
The new mandatory ESG disclosure requirements are designed to meet this growing demand for information.
The Legal Framework: A Comprehensive, Standardised ESG Reporting Framework
The new SCA rules establish a comprehensive and standardised ESG reporting framework for all listed companies in the UAE. The framework is based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the standards of the Global Reporting Initiative (GRI), which are the two leading global frameworks for ESG reporting.
Related: Explore our labour and employment law advisory services in the UAE.
Key Aspects of the New ESG Disclosure Requirements
1. A "Comply or Explain" Approach
The new ESG disclosure requirements follow a "comply or explain" approach. Listed companies are required either to comply with the disclosure requirements or to explain why they have not done so.
This gives companies a degree of flexibility, while still ensuring a high level of transparency.
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2. A Broad Range of ESG Topics
The new rules require listed companies to disclose information on a broad range of ESG topics, including:
- Environmental: Greenhouse gas emissions, energy consumption, water consumption and waste management.
- Social: Employee health and safety, diversity and inclusion, and human rights.
- Governance: Board composition, executive remuneration and anti-corruption.
Related: Explore our UAE labour law advisory services.
3. A Focus on Materiality
The new rules require listed companies to focus their ESG disclosures on the topics that are most material to their business.
In practice, companies should identify the ESG issues most likely to have a significant impact on their financial performance. They should then provide detailed information on how they are managing those issues.
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Conclusion: Preparing for ESG Disclosure in the UAE
The new mandatory ESG disclosure requirements are a major step towards a more transparent and responsible corporate sector in the UAE. They will give investors the information they need to make better-informed investment decisions and will help promote more sustainable and responsible business practices.
All listed companies in the UAE should start preparing now for the new reporting requirements to ensure that they are ready to comply.
At Nour Attorneys Law Firm, our corporate governance and sustainability specialists advise on all aspects of the new ESG disclosure requirements. We can help you understand your obligations under the new rules and assist you in developing a robust and effective ESG reporting programme. Contact us to strengthen your company's ESG credentials.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.
Nour Attorneys Team
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