UNITED ARAB EMIRATES Law and Practice Contributed by: Francesco Bulleri, Beshoy Mounir, Sultan Bahriddini and Noora Al Doseri, ADG Legal
The UAE Central Bank describes targeted financial sanctions implementation as requiring awareness of sanctions lists, screening, freezing without delay and reporting. Board-level oversight of sanctions compliance is therefore expected where the company has material sanctions exposure or operates in a regulated sector. This includes: • approving sanctions policies; • ensuring that screening systems are effective; • assigning clear responsibility to compliance per - sonnel; • reviewing high-risk relationships; • monitoring remediation of breaches; and • ensuring that sanctions compliance is integrated into AML/CFT and counterparty due diligence procedures. Where sanctions or AML breaches occur because directors or managers failed to implement adequate controls or ignored known risks, personal regulatory or criminal liability may arise. ESG reporting requirements in the UAE are not gov - erned by a single unified framework. Rather, ESG reporting obligations depend on the type of entity, the jurisdiction in which it operates, and sector. The entities which are required to report on ESG issues, and the key requirements for ESG reporting for such entities, are as follows: Public joint stock companies listed on the ADX and DFM, as per the Public Joint Stock Companies Gov - ernance Manual introduced by the SCA (the “Gov - ernance Manual”) – now the CMA, Decision No 3/ RM/2020 – are required to publish an integrated report, which must include a sustainability report alongside financial, management feedback, and gov - ernance reports within the first three months of the financial year, or at least ten days before the annual general assembly, whichever comes first. 7. Environmental, Social and Governance 7.1 ESG Requirements
Companies operating in the ADGM, provided they meet particular financial threshold conditions that are based on turnover (more than USD68 million in a financial year) or assets under management (more than USD6 billion at any time during a financial year), are subject to ESG disclosures on a “comply or explain” basis. Such entities are required to disclose information necessary to understand the company’s development, strategy, performance and position by reference to ESG matters. The disclosure must be pre - pared by reference to an internationally recognised ESG framework (Carbon Disclosure Project, Global Reporting Initiative, etc) and is encouraged by the ADGM to be publicly available. Entities that have not complied with the necessary ESG disclosures must provide an explanation for any non-compliance. In the DIFC, sustainability and ESG considerations are increasingly reflected through policy initiatives, sustainable finance frameworks and regulatory developments, particularly in relation to DFSA-regulated entities and investment products. The DIFC has publicly emphasised sustainability as a strategic priority and has adopted initiatives aligned with broader UAE and Dubai government programmes relating to climate action, renewable energy, sustain - able development and net zero objectives. These ini - tiatives are generally framed around ESG principles and are intended to encourage alignment with inter - nationally recognised ESG standards and sustainable business practices. Entities whose activities result in greenhouse gas emissions, pursuant to Federal Decree-Law No 11 of 2024, are obligated to measure, retain emissions data, and submit periodic reports to the Ministry of Climate The UAE is moving towards a more structured and enforceable ESG framework with legislative changes focused on all the components of ESG. On the environmental component of ESG, a material shift is reflected in the introduction of climate-related obligations under Federal Decree-Law No 11 of 2024 (as discussed previously; see 7.1 ESG Requirements ). While the framework itself introduces structured emis - Change and Environment. 7.2 ESG Developments
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