Introduction
The GCC’s ESG moment arrived faster than most boards prepared for it.
On 30 May 2025, the United Arab Emirates became the country in the Middle East and North Africa region to make companies accountable for climate change through laws. The government made a law called Federal Decree-Law No. 11 Of 2024 to reduce the effects of climate change. This law says that every company working in the United Arab Emirates has to measure how much greenhouse gas they are emitting, report it and make a plan to reduce it. This includes companies that work in areas where they do not have to follow all the rules. All companies have to do this by 30 May 2026. If they do not do it, they will have to pay a fine. The fine can be from 50,000 to 2 million United Arab Emirates dirhams for the time they do not follow the rules. If they do it again within two years, they will have to pay double, which is 4 million United Arab Emirates dirhams.
There is another rule for companies that are listed on the Abu Dhabi stock market and the Dubai stock market. These companies have to make a report every year that says what they are doing to be sustainable. They have to do this under a rule called Article 76 of the SCA Governance Code. They have to give this report within 90 days of the end of their year or before they have their annual general meeting.
The UAE, Qatar, and Kuwait all require board or senior management sign-off on sustainability disclosures. That sign-off is not a formality. It is the accountability mechanism through which the board takes legal and regulatory ownership of what is disclosed.
The governance implication is direct: a GCC board that still treats ESG as a management function – delegated to a CSR team or a sustainability consultant – is not meeting the governance standard the regulatory environment now requires.
What Changed and Why It Matters for Boards
Until recently, most GCC boards operated on the assumption that ESG was a disclosure exercise. Management prepared the sustainability report, the board reviewed it briefly, and the company published it. That model is no longer adequate – and in several jurisdictions, no longer compliant.
The Directors Institute’s analysis of UAE governance restructuring in 2026 confirmed the shift: pre-2025, most UAE boards delegated ESG to a CSR manager or sustainability consultant. In 2026, boards are forming dedicated ESG committees or expanding existing audit committees to include climate oversight. The Chair of the Audit Committee is now expected to understand greenhouse gas accounting at a working level. The board signs off. The board is accountable. The board cannot say it left it to the team.
EY’s Six Boardroom Priorities Shaping MENA in 2026 identified sustainability oversight as a priority that is evolving from risk management toward value creation and operational resilience – and specifically noted that boards must align Internal Controls over Financial Reporting with Internal Controls over Sustainability Reporting as ESG disclosure becomes more complex. This is not a soft governance expectation. It requires the same rigour the audit committee applies to financial reporting to be applied to non-financial reporting – including verification, data governance, and assurance.
The Corporate Governance Institute’s 2026 analysis of the biggest changes in GCC corporate governance confirmed that unlike global trends in some markets where ESG is retreating, the GCC is moving firmly in the opposite direction – closer to the EU model, with boards now needing verifiable expertise in climate-related risks, greenhouse gas emissions, disclosure, data verification, and supply chain management. MEIoD’s 5 ESG trends that should be on your radar captures how rapidly this expectation has accelerated in the region, and what boards need to be tracking across each ESG dimension.
The Regulatory Landscape Every GCC Director Needs to Know
The ESG compliance picture across the GCC is genuinely complex – and that complexity is itself a board governance issue. Different jurisdictions have different frameworks, timelines, and enforcement mechanisms. A board that assumes one jurisdiction’s compliance covers the group is exposed.
In the UAE, Federal Decree-Law No. 11 of 2024 requires all entities to measure and report Scope 1 and Scope 2 GHG emissions, with large emitters above 500,000 tCO₂e required to register with the National Carbon Credit Registry. Listed companies must additionally file sustainability reports aligned with GRI, IFRS S1/S2, and TCFD within 90 days of financial year-end. ADGM companies exceeding USD 68 million turnover or USD 6 billion AUM must publish ESG disclosures using globally recognised standards.
In Saudi Arabia, the Tadawul’s ESG disclosure guidelines – aligned with Vision 2030 and moving toward mandatory ISSB expectations – apply to listed companies. The OECD Corporate Governance Factbook 2025 confirmed that 65 percent of top 100 Tadawul issuers disclosed sustainability practices in 2024, a figure that reflects momentum but also the significant disclosure gap among the remaining 35 percent.
In Qatar, the Central Bank and the Qatar Financial Centre Regulatory Authority have mandated IFRS S1 and S2 for banks and regulated financial institutions from January 2026, with first reports submitted in 2027. Bahrain’s Central Bank ESG reporting module is operational. S&P Global reported that sustainable bond issuance in the Middle East increased approximately 3 percent in 2025, even as global volumes fell 21 percent – the GCC is tracking USD 20-25 billion in sustainable bond issuance in 2026. Capital market access in this environment increasingly depends on credible, board-owned ESG disclosure.
For directors seeking to understand how these jurisdictional requirements interact with the broader governance framework, MEIoD’s analysis of how governance legislation in Abu Dhabi has affected family-owned businesses provides the contextual framework – and the same legislative dynamic now applies to ESG across the wider region.
What Board-Level ESG Governance Actually Requires
The accountability gap in most GCC boards is not ambition. Most directors understand that ESG matters. The gap is structural – the board has not built the oversight architecture that turns ESG commitment into ESG accountability.
Four structural elements distinguish boards that are genuinely governing ESG from boards that are reviewing management’s ESG report:
Committee mandate. The board must designate which committee owns ESG oversight – either a dedicated ESG committee or an expanded audit committee with an explicit climate and sustainability mandate. Without designation, the accountability is diffuse and therefore not real.
Management reporting framework. The board must receive regular, structured reporting from management on ESG performance – against defined metrics, against regulatory requirements, and against the commitments the organisation has made publicly. MEIoD’s analysis confirms that if ESG targets are not tied to leadership KPIs, they remain aspirational rather than operational.
Data verification. The UAE Climate Law requires accuracy, completeness, and verifiability. Records must be retained for five years. Large emitters need third-party assurance. The board is responsible for ensuring the verification infrastructure exists – not for conducting the verification itself, but for demanding that it happens and reviewing the output.
Director fluency. Every board member benefits from ESG fluency because ESG considerations cut across strategy, risk, finance, and operations. It cannot be fully delegated to a single committee or officer. A board where only the sustainability committee understands ESG is a board where the governance protection is concentrated in one place and absent everywhere else.
MEIoD’s ESG in the Boardroom programme is built precisely for this gap – equipping board members, executives, corporate secretaries, and governance professionals with practical ESG frameworks covering the definitions, scope, and strategic integration that current regulatory requirements demand. Delivered virtually over two consecutive days, it is designed for board schedules without compromising on depth.
For investors seeking to assess whether portfolio companies have built this governance architecture, MEIoD’s CG Assessment reviews ESG governance structures as part of its broader governance diagnostic – identifying whether the ESG accountability chain from the board to management is functional or aspirational.
Strengthen Your Board with MEIoD
ESG governance in the GCC is no longer a future agenda item. The deadlines have arrived, the penalties are live, and the sign-off obligations are in place. Boards that have not built the oversight architecture are carrying a compliance and reputational risk they have formally accepted by signing off on disclosures they cannot fully verify.
- ESG in the Boardroom – MEIoD’s dedicated programme equipping board members and executives with the practical ESG frameworks the current regulatory environment demands
- CG Assessment – structured governance diagnostic reviewing ESG oversight structures against current GCC regulatory requirements
- Board Evaluations – independent assessment of whether the board’s composition and committee structure are adequate for the ESG mandate the organisation now carries
- Corporate Directors Program – broader governance development covering strategy, oversight, and the regulatory literacy that directors need across all governance dimensions including ESG. July cohort: 12 July; September cohort: 13 September
- Audit & Risk Committee Webinar – 14 October 2026, covering ESG assurance alongside technology risk as the expanded committee mandate
Delegation is no longer a governance strategy for ESG. Contact MEIoD to build the board-level accountability architecture that the regulatory environment now requires.
FAQ
What are the board's ESG responsibilities under UAE law in 2026?
Under UAE Federal Decree-Law No. 11 of 2024, every entity operating in the UAE must measure, report, and plan to reduce GHG emissions, with full compliance required by 30 May 2026. Listed companies must additionally file annual sustainability reports signed off by the board under Article 76 of the SCA Governance Code. Penalties for non-compliance reach AED 2 million for first offences.
What ESG disclosure requirements apply to GCC listed companies in 2026?
The UAE, Qatar, and Kuwait all require board or senior management sign-off on sustainability disclosures. UAE listed companies must file ESG reports aligned with GRI, IFRS S1/S2, and TCFD within 90 days of financial year-end. Qatar mandates IFRS S1/S2 for banks and regulated financial institutions from January 2026. Saudi Arabia’s Tadawul is moving toward mandatory ISSB-aligned expectations.
How should a GCC board structure its ESG oversight?
The board must designate a committee with explicit ESG oversight responsibility, establish a management reporting framework against defined metrics and regulatory requirements, ensure data verification infrastructure is in place, and build sufficient ESG fluency across the full board – not just the sustainability committee. Without these four elements, the board’s ESG sign-off carries regulatory and reputational risk it cannot substantiate.
Why is ESG accountability growing in the GCC while retreating elsewhere?
Unlike some global markets where ESG is retreating politically, the GCC is aligned with the EU’s direction – moving toward more accountability, not less. National visions including Saudi Vision 2030 and UAE Net Zero 2050 have embedded sustainability at the heart of economic strategy. Regulators have followed with binding disclosure requirements and live penalty regimes. GCC sustainable bond issuance is tracking USD 20-25 billion in 2026 – capital market access increasingly depends on credible, board-owned ESG disclosure.
What is the ESG in the Boardroom programme and who is it for?
MEIoD’s ESG in the Boardroom programme equips board members, executives, corporate secretaries, and governance professionals with practical ESG frameworks – covering the definitions, scope, and strategic integration of environmental, social, and governance issues in the GCC regulatory context. It is delivered virtually over two consecutive days, designed for board schedules, and directly addresses the governance fluency gap that most GCC boards have not yet closed.
