Sustainability is a journey that demands timely actions, robust measurement, and forward-thinking legislation. In a year marked by landmark climate initiatives, following COP28, the UAE’s Federal Decree-Law (21 articles introduced) on the Reduction of Climate Change Effects further underscores the nation’s dedication to driving enduring change and enabling businesses to embrace sustainability. The law, which is set to take effect on May 30, 2025, sets a clear path for businesses to actively contribute to climate mitigation. As it takes effect next year, it’s vital for companies to understand its requirements, align their operations accordingly, and seize the opportunities that emerge from climate action.
Introduction to the Climate Change Law
The Federal Decree-Law aims to tackle the multifaceted impacts of climate change, which threaten both natural ecosystems and human systems, including economies, health, infrastructure, among others. According to Article (1), this law applies to both public and private entities, including those operating within free zones. It introduces several critical measures to manage emissions, support climate adaptation, and foster international cooperation. The Ministry of Climate Change and Environment, along with competent local authorities, will oversee its implementation.
Key Actions Businesses Must Take
Businesses in the UAE are required to integrate climate action into their operations. The Decree-Law provides clear guidance on emissions reduction, reporting, and adaptation measures:
1. Achieving Climate Neutrality (Article 5)
The law mandates that annual emission reduction targets will be set at the national level. The Ministry, in coordination with relevant authorities, will periodically review these targets to align them with the UAE’s economic priorities. Companies must regularly update their strategies to meet these targets and contribute to the UAE’s climate neutrality goals.
2. Mitigation Measures (Article 4)
To reduce emissions, businesses are encouraged to implement several measures, such as improving energy efficiency, adopting clean energy solutions, enhancing natural carbon sinks, and leveraging technologies for emissions reduction and capture. Companies may also participate in carbon offsetting programs to balance their emissions. These actions are essential to minimize the environmental impact of operations and help businesses stay compliant with the law.
3. Monitoring, Reporting, and Verification (Article 6)
Regular tracking of emissions is mandatory. Businesses must prepare emissions inventories, submit periodic reports, and maintain records for at least five years. The Ministry will verify the accuracy of the data, and non-compliance could result in fines ranging from AED 50,000 to AED 2 million (Article 15). This emphasizes the need for businesses to adopt transparent and efficient monitoring systems.
4. Adaptation Plans (Article 7)
Key sectors like energy, infrastructure, and health must develop climate adaptation strategies. These plans should assess the climate risks specific to each sector and outline necessary mitigation measures. The Ministry, in collaboration with local authorities, will ensure that adaptation efforts are incorporated into broader national and international climate commitments.
5. Incentives for Innovation (Article 10)
The law incentivizes businesses to adopt innovative technologies and sustainable practices. Incentive policies will support carbon offsetting activities, emissions trading, and the use of advanced technologies to reduce emissions. The establishment of the National Carbon Credit Registry will further help businesses participate in carbon markets, opening new opportunities for growth while contributing to global climate goals.
Conclusion
The UAE’s Federal Decree-Law on the Reduction of Climate Change Effects sets a comprehensive framework for managing emissions, enhancing both mitigation and adaptation efforts, and fostering innovation in the private sector. As the law will come into force, businesses across all sectors must take proactive steps to align with national climate goals and international best practices.
By reducing emissions, implementing climate adaptation strategies, and leveraging technology for sustainability, companies in the UAE can not only remain compliant but also position themselves as leaders in the global shift towards a low-carbon economy. The future of business is sustainable, and the time to act is now.
At Olive Gaea, we are committed to helping organizations navigate these changes, offering cutting-edge solutions for carbon management, decarbonization, and sustainability leadership.
To book a consultation with our sustainability expert, click here: https://lnkd.in/dtNbjKVX
#Sustainability #ClimateAction #UAEClimateLaw #CarbonNeutrality #GreenBusiness #Decarbonization #OliveGaea
