The UAE’s new competitive edge is carbon intelligence

When the UAE hosted COP28 in 2023, it signaled its ambition to lead the Middle East on climate action. By May 2026, that ambition became law. 

With the enactment of the landmark Federal Climate Law, the UAE is now the first MENA nation to enforce binding climate legislation, requiring companies to track, disclose, and steadily reduce their greenhouse gas emissions.

But while the law represents a regulatory milestone, it also exposes an uncomfortable reality: many businesses have no idea where their emissions records are stored.

“The common challenge is still the same starting point,” says Arooshi Dahiya, CEO of climate-risk technology platform Oren. “We know we should be measuring our carbon footprint… we just have no idea where our data lives.”

That information is typically scattered across utility bills, procurement systems, fuel logs, supplier invoices, and departmental spreadsheets. Bringing it together requires unprecedented collaboration between finance, procurement, operations, facilities, and sustainability teams.

“Getting accurate numbers is genuinely tricky—not because the math is hard, but because the data is inconsistent and lives everywhere. Most companies begin with estimates and get more precise over time,” Dahiya explains.

As a result, greenhouse gas reporting is no longer just an environmental initiative; it’s a company-wide data hurdle.

CARBON: THE NEW BUSINESS KPI

Perhaps the most significant outcome triggered by the new legislation is organizational. Sustainability is becoming part of mainstream business strategy.

“Honestly, the biggest change isn’t technical—it’s who’s in the room,” says Sumit Agarwal, founder and CEO of sustainability consultancy ESGweise. “A year ago, sustainability was a side conversation. Now it’s on the board agenda because there’s a law behind it. It’s become a cost of doing business and a compliance matter, so people treat it far more seriously.”

Investors expect climate disclosures more frequently. Banks are incorporating sustainability into lending decisions. Multinationals want emissions records from suppliers, while governments are placing greater weight on environmental performance in public procurement.

What’s particularly striking, however, is that many UAE firms continued to invest in emissions measurement even as geopolitical developments delayed aspects of the law’s implementation.

Dahiya says, “Regional tensions meant the government eased off the accelerator on implementation… What’s genuinely impressive is that the UAE’s businesses largely didn’t.”

Rather than waiting for enforcement deadlines, organizations kept building emissions inventories, improving governance, and digitizing data collection.

“That tells you something important,” she adds. “This stopped being a box-ticking exercise and became a business one.”

WHY AI IS BECOMING INDISPENSABLE

If carbon accounting begins with data, AI is making that data usable.

Carbon management platforms automate much of the process. They classify invoices, extract information from utility bills, and consolidate operational data from multiple systems. At the same time, they apply internationally recognized emissions factors, flag inconsistencies, and generate real-time dashboards.

“It’s the difference between counting your emissions once a year in a panic and actually managing them,” Dahiya says.

David Provenzani, CEO of ESG Report Builder, believes automation is dramatically lowering the barrier to entry, particularly for smaller enterprises.

“Before, it used to take teams of consultants weeks or months,” he says. “Today, you can generate a professional report for an SME in less than an hour if you have the required assumptions.”

The benefits extend well beyond efficiency.

“Platforms force SME decision-makers to dig into their own data,” Provenzani points out. “In the process, they discover things about their own company they’d never bothered to notice before.”

The technology, however, is only as good as the information it receives.

“AI isn’t magic,” says Provenzani. “It can speed up the process 1000 times, but the responsibility of the data input remains human.”

Agarwal echoes this sentiment, warning against blind trust in digital platforms: “[AI] tools can’t fix bad data. If what goes in is patchy, the software just hands you a confident-looking wrong answer, and that’s more dangerous than a blank page. There’s a huge efficiency gain, no question. But it’s a great tool in the hands of a qualified person, not a replacement for one.”

COMPLIANCE BECOMES A DIFFERENTIATOR 

Large industrial organizations entered this new regulatory environment with an advantage. Many had already invested in sustainability teams, emissions monitoring, and international reporting frameworks long before the UAE’s legislation took effect.

Holcim is one example. “We weren’t starting from zero,” says Ali Said, CEO of Holcim UAE and Oman. “Our global emissions reduction targets are independently validated against the Science Based Targets initiative, so when the UAE’s law came into effect, it was more about adapting our existing systems.”

The sustainable building materials company is now expanding AI across operations, from quarry management and environmental inspections to predictive carbon accounting.

“Automation reduces manual error and speeds up reporting,” says Said. “That matters more as regulators expect greater precision and, increasingly, independent verification.”

THE SME OPPORTUNITY

Some of the most interesting progress is happening among mid-sized businesses, says Agarwal. “They treated it as an excuse to finally look at their energy and fuel use finally, and they found real cost savings that basically paid for the compliance work.”

For SMEs, the challenge is a lack of dedicated sustainability teams, leaving emissions reporting to finance departments or operations managers already responsible for multiple functions.

“What SMEs actually need is a right-sized approach,” says Dahiya. “Focus on the material stuff, automate the heavy lifting, and don’t drown them in a 200-page methodology.”

Digital tools are making that possible. “The good news is this is exactly where technology levels the playing field — an SME today can get to a credible carbon number for a fraction of what it cost even three years ago,” adds Dahiya.

Provenzani notes that many smaller companies are pursuing sustainability reporting not because regulators demand it, but because customers, lenders, and supply-chain partners expect it.

“For an SME, ESG is often about survival,” he says. “A multinational customer, a government tender, or a green loan increasingly requires credible sustainability reporting.”

THE RISE OF CARBON INTELLIGENCE

Every major regulatory shift eventually creates new business capabilities. Financial reporting gave us ERP systems; cybersecurity compliance forced the rise of digital risk management. Now, the UAE’s climate legislation appears poised to do something similar for carbon intelligence.

The early adopters are transforming compliance into a distinctive strength, using cleaner data infrastructure to generate insights that inform procurement, investments, and supply chains.

Crucially, they have the benefit of looking at global precedents. “The EU and UK spent years chasing precision before realizing an imperfect number you act on beats a perfect number that arrives too late,” Dahiya says. “Progress over purity. Standardize early.”

That international trial and error gives the UAE a valuable head start. “We’re not the first to walk this road, which means we get to skip the potholes everyone else fell into—and frankly, do it faster and smarter,” adds Dahiya.