Sustainability disclosures under IFRS S1 and S2 provide the global foundation for investment-level ESG reporting.
For private companies in the UAE, early adoption ensures reliable data, integrates climate risks into strategy, and prepares for certification by 2026.
This roadmap describes the UAE context, explains the regulations, and provides an audit-proof path to compliance.
The finish line in 2026
The ISSB issued IFRS S1 (General Requirements for Sustainability Disclosures) and IFRS S2 (Climate) in June 2023, which are effective for reporting periods beginning on or after 1 January 2024.
IOSCO has endorsed the standards and encouraged regulators to consider their implementation to accelerate global adoption and raise investor expectations.
In the UAE, listed markets already require sustainability reporting, and free zone regulations are evolving into globally recognized frameworks.
Private companies are increasingly under pressure from banks and counterparties to provide comparable and verifiable information. They can expect external audits to become the norm by 2026.
Where IFRS S1 and S2 fit into the UAE regulatory framework (and what it means for private companies)
The UAE stock exchanges and regulators have established an ESG foundation, primarily through SCA-related guidelines and ADX/DFM programs, while the UAE Sustainability Reporting Working Group (SFWG) has published principles for sustainability reporting by entities in the financial sector.
IFRS S1 and S2 provide a preferred perspective on financial materiality and foresee a link to the financial sector.
Context for the following table: Companies are considering moving from GRI reporting to ISSB. In practice, most companies in the UAE structure their reporting in tiers, retaining impact-oriented disclosures where required (e.g. stock exchange guidelines), while supplementing the investor-oriented, financially relevant content of the ISSB.
| Area |
Rules for listed companies in the United Arab Emirates (onshore and stock exchanges) |
IFRS S1 and S2 (ISSB) |
What this means for private companies in the UAE |
| Who is in focus today? |
Onshore PJSCs must publish sustainability reports; ADX provides guidelines and indicators for mandatory reporting; DFM provides reporting manuals. |
Voluntary unless/until required; generally expected by investors and lenders. |
Although not listed on the stock exchange, banks and partners expect packages tailored for ISSB to be available from 2026. |
| Materiality lens |
The focus is traditionally on GRI/Impact with stock market indicators. |
Financial materiality (enterprise value) with TCFD-style pillars. |
Maintain impact reporting as needed and add investor-friendly and financially relevant ISSB content. |
| Investment |
Stock market-oriented sustainability reports. Procedures vary depending on the issuer. |
Information about financial reporting and decision-making that is useful to investors. |
Create a schedule for integrated timelines with finances and cross-references. |
| Insurance |
There is currently no universal statutory audit of sustainability reports. |
To ensure safety, temporary “climate first” support will be available during the first year. |
Create audit-ready data, control and evidence packages for 2026. |
Comparison of UAE listed company rules, IFRS S1/S2 (ISSB) and implications for private companies.
2026 Warranty: What it means and when you need to act
Assurance means that an independent provider verifies your sustainability data and reports. ISSB designed S1/S2 for verifiability, and the Foundation has published a transitional arrangement.
You can submit climate reporting (IFRS S2) in the first year while continuing to meet the corresponding S1 requirements. Plan your schedule now so that 2025 is the “test” and the assurance statement is available in 2026.
Why a milestone table? Teams need a single page to compile budgets, owners, and audit logs . The following table is intentionally short to help CFOs and CFOs plan together.
Milestones for the UAE’s readiness to achieve security by 2026
| Quarterly and available |
Responsible owner |
Evidence that an auditor expects |
| Q4-2024: Gap analysis compared to S1/S2; planning of climate-oriented support if needed |
CFO + Sustainability Manager |
Written gap report; materiality memorandum; reporting plan with scope, limitations and exceptions |
| H1-2025: Computer systems and control design; scenario analysis method for S2 |
Financial Controls + Risk |
Data line charts; control matrices; scenario methodology documents |
| Q3-2025: Information on concept pilot S1/S2; internal evaluation |
Disclosure Committee |
Concept notes on materiality; cross-references to financial data |
| Q4-2025: Integration into the annual report; management approval |
CFO + Management |
Consistency checks (MD&A/Notes); Management’s presentation of ESG data |
| H1-2026: Preparatory rounds for commitments; closing gaps |
Internal Audit + Process Owner |
Review test results, correction logs, and updated working papers. |
| Q4-2026: Launch of S1/S2 with limited warranty |
External audit provider |
Final evidence package; signed audit report; management response, if required |
Implementation timeline and expected audit evidence for IFRS S1/S2 readiness.
Materiality, scope and limitations
IFRS S1 requires you to disclose sustainability-related risks and opportunities that can reasonably be expected to affect the value of the company.
These can include climate risks, but also issues such as water risks in production or data protection in services, provided they are economically relevant.
Define the justification: criteria, thresholds and evidence supporting your assessment, as these will be reviewed by the auditors. When setting limits, consider significant joint ventures and material risks in the value chain. Expect to collect data from suppliers where Scope 3 categories are likely to be relevant.
Governance, Strategy and Risk
Investors want to know who is responsible, how climate/ ESG risks are integrated into the risk register and how the strategy evolves under different scenarios.
IFRS S2 requires disclosures on governance, strategy, risk management and metrics and targets, including scenario analyses to test resilience (e.g. 1.5°C and 2°C). Explicitly disclose oversight (board/committee), management responsibilities and escalation paths to enterprise-wide risk management.
Key figures and targets according to IFRS S1 and S2 Sustainability disclosures
In the climate area, Scope 1, 2 and, where applicable, Scope 3 are expected. If you use carbon credits, explain the nature and basis of your reliance.
The ISSB refers companies in all sectors to industry-specific guidelines (SASB) so that comparable data can be published (e.g. energy intensity of buildings in the real estate sector; financed emissions in the financial sector). Establish baselines and interim checkpoints, and link climate targets to the UAE’s broader transformation policy where appropriate.
Why a short list? Readers always ask themselves, “What are we really supposed to measure?” This short list reduces ambiguity.
- Climate statistics: Scope 1–3 (where relevant), energy intensity and indicators of the progress of the transition plan.
- Industry-specific measures: Use SASB/industry-specific guidelines to select useful decision measures by industry.
Objective: Provide baseline values, interim data and methodologies. Demonstrate whether the objectives meet UAE legal/market requirements.
Data systems and controls for IFRS S1 and S2: from source to audit
Treat sustainability data like financial data. Map the chain from source to reporting, assign data owners and integrate control activities (validations, reconciliations, accountability).
Maintain a methodology book that explains emission factors, thresholds, estimation procedures and materiality decisions. This is the “evidence package” that your audit provider will review, along with consistency checks between sustainability reports and annual accounts.
Evidence package – intentionally brief so teams can use it:
- Method notes for each measurement value
- Calculation workbooks with change logs
- Data extracts and signatures
- Control test data
- Compliance with MD&A/financial reports
Two team manuals that work in companies in the UAE
Finance team: Responsible for planning, extending internal controls to non-financial data, quantifying financial impacts (e.g. impact of climate risks on impairments/operating costs) and coordinating with the external auditor to ensure sustainability audits are in line with year-end.
Sustainability Team: Conduct materiality assessments, lead supplier engagement for Scope 3, manage scenario analyses and reporting, and train data owners in all operational activities. Together they create a single, coherent report rather than two separate documents.
Closing the loopholes plaguing UAE taxpayers (and how to close them fast)
Blind spots in Scope 3. Many tracks lie upstream. Start with the most important categories, be transparent about the estimation methods and then improve data quality by engaging vendors in 2025–2026.
Framework fatigue. UAE bourses set indicator expectations, while ISSB incorporates the investor perspective. Create a single core dataset and link it to both bourse guidelines and ISSB to avoid duplication.
Capital expenditure targets. Link net-zero emissions and efficiency targets to budgets and timelines. Explain their dependency on UAE policy instruments, such as the national carbon credit registry (where applicable).
Brief scenarios to consider by the United Arab Emirates
An industry group found in a pilot project in 2025 that approximately 70% of emissions come from raw material suppliers.
It prioritizes purchased goods and logistics, combines primary data with leading suppliers, and documents estimation factors. The 2026 report demonstrates improved coverage and a credible reduction plan, as described in S2.
A regional service provider creates industry-specific policies for employee safety and data protection, and complements them with figures and incident statistics that investors can compare with those of their competitors.
The security work focuses on definitions, data source, and consistency between risk factors and sustainability aspects.
An SME registered withADGM will use the free trade zone’s “Comply or Explain” framework to initially publish a compact S2 disclosure in 2025.
This will then be expanded in 2026 to include S1 subjects with a limited level of security. These are all in line with the recognised global standards that ADGM emphasises.
IFRS S1 and S2 Sustainability Disclosures: How UAE Policy is Evolving Around You
Two federal instruments set the direction of the market: Federal Law No. 11 of 2024 on mitigating the Impact of Climate Change lays the foundation for climate policy, while Cabinet Resolution No. 67 of 2024 establishes the National Emissions Registry (effective from 28 December 2024).
While these instruments do not replace corporate reporting standards, they create a governance and market infrastructure to which reporting, in particular transition plans and carbon market accounting, will refer.
At the regulatory level, the UAE Sustainable Finance Working Group published disclosure principles for reporting entities in the financial sector in 2024. This is another sign of the UAE authorities’ commitment to transparent, investor-relevant disclosures in line with global benchmarks.
How G12 will support private businesses in the UAE with property insurance by 2026
At G12, we work with businesses of all sizes in the UAE to make travel manageable and future-proof. Whether you are just starting to explore IFRS S1 and S2 or are already preparing for the exam, our team can guide you through the key steps.
Want to understand what these changes mean for your company and how you can prepare for 2026? Contact us. Together we will develop the right approach for your company and ensure that your reporting meets the requirements of investors and regulators. Contact us today for more information.
Frequently Asked Questions
Are sustainability disclosures according to IFRS S1 and S2 mandatory for private companies in the UAE?
Not yet a general requirement. However, exchanges already require listed issuers to disclose sustainability information.
The ADGM framework recognises globally recognised standards, and its endorsement by IOSCO has raised market expectations. Banks and investors are now looking for ISSB-compliant packages.
Can we continue with an S2-first strategy in 2025?
Yes. Thanks to ISSB’s climate-focused transition program, companies only need to report climate information under S2 in the first year, while meeting the corresponding S1 requirements. They can expand this in the second year.
Do we still need GRI-style content?
If your exchange or stakeholder expects impact publications, store them and use ISSB for the investor perspective. Use a single dataset and link it to both to avoid duplication.
What is the minimum proof of safety in 2026?
Methodological documents, calculation books with change logs, primary data extracts and approvals, tested controls and documented links to financial data and risk factors.
Do the UAE’s policy actions affect transition plans or the accounting of carbon credits?
Yes. If you plan to use emission allowances, please indicate how and why. The National Carbon Credit Registry provides a local market infrastructure that you can leverage in your plan.