Section 1: MENA Region Mandatory Sustainability Reporting Requirements
1.1 United Arab Emirates Federal Decree-Law No. 11 (Effective May 30, 2025)
The UAE implemented Federal Decree-Law No. 11 of 2024 on the Reduction of Climate Change Effects, which came into force on May 30, 2025, establishing mandatory greenhouse gas emissions reporting for all sectors. This landmark legislation shares responsibility for the country’s GHG emissions with companies in both the public and private sectors, including those in free zones, marking a comprehensive shift to mandatory sustainability reporting.
Reporting Requirements and Timeline:
Local authorities are collaborating with the Ministry of Climate Change and Environment to plan GHG reduction targets for various sectors, with companies potentially required to begin sustainability reporting, including GHG emissions as early as August 30, 2025. Local authorities will subsequently establish standards for emissions monitoring, reporting, and verification (MRV). Non-compliance carries substantial penalties ranging from AED 50,000 to AED 2 million.
1.2 Kuwait: Boursa Kuwait Sustainability Reporting Mandate (CMA Circular No. 4 of 2025)
Kuwait’s Capital Markets Authority implemented Circular No. 4 of 2025, mandating that all companies listed on the Premier (First) Market of Boursa Kuwait publish a sustainability report for 2025, with reports due by Q2 2026. This represents Kuwait’s formal entry into the global mandatory sustainability reporting ecosystem, requiring listed companies to align with international standards.
1.3 Jordan: Amman Stock Exchange Climate Disclosure Requirements (2027)
The Amman Stock Exchange has mandated IFRS S1 and S2 climate-related disclosures for ASE20 firms (the top 20 listed companies) beginning January 2027. Non-compliance carries significant fines, establishing a clear enforcement mechanism. This requirement aligns Jordan’s capital markets framework with global standards while providing a reasonable implementation window.
1.4 Oman: Muscat Stock Exchange ESG Reporting (January 2025+)
The Muscat Stock Exchange requires listed companies to publish ESG reports aligned with GRI standards and GCC unified metrics beginning January 2025. This dual-framework approach ensures international comparability while accommodating regional harmonization priorities through the GCC Exchange Committee’s unified metrics (29 standards: 10 Environmental, 10 Social, and 9 Governance).
1.5 Qatar: QFC Proposed ISSB-Aligned Reporting (2026)
The Qatar Financial Centre has proposed ISSB-aligned reporting requirements beginning January 2026, with phased guidance and transitional relief to facilitate implementation. This proactive approach positions Qatar as an early adopter of global sustainability standards.
1.6 Saudi Arabia: Vision 2030 ESG Integration
While Saudi Arabia has not yet mandated ESG reporting for all listed companies, the Kingdom is strongly encouraging adoption guided by Vision 2030 commitments and the Saudi Green Initiative. The Capital Market Authority and Tadawul encourage ESG disclosures aligned with ISSB and TCFD guidance, with expectation of eventual mandatory adoption. The GCC Exchange Committee introduced unified ESG metrics in January 2023 (29 standards), creating a regional baseline while companies await formal mandatory requirements.
Saudi Arabia is expected to transition from voluntary to mandatory ESG reporting for listed companies in the near future, aligning with global trends and attracting international investment. The government is supporting this transition through financial incentives, including tax breaks and subsidies for sustainable technology investments, capacity-building partnerships with international ESG firms, and the development of unified national ESG guidelines.
1.7 Egypt: Central Bank Mandatory Sustainable Finance Framework
Egypt’s Central Bank issued mandatory regulations requiring banks to integrate sustainable finance into lending and investment policies, with implementation requirements beginning in 2023 and ongoing reporting mandates. Banks must submit quarterly reports on sustainable financing activities and annual sustainability reports prepared in accordance with GRI standards by March 31 of each year, beginning in 2024. This framework directly drives ESG integration across Egypt’s financial sector, influencing lending patterns and investment allocation toward sustainable projects.
1.8 Bahrain: Central Bank Regulatory Guidance
The Central Bank of Bahrain requires banks to report in line with TCFD and ISSB guidance, though broader adoption across non-financial sectors remains voluntary. This sectoral approach focuses initial regulatory attention on the financial industry while creating space for voluntary corporate adoption across other sectors.
Section 2: ISSB Standards and Nature-Related Disclosure Framework
2.1 Nature-Related Disclosure Standard-Setting Decision (December 2025)
The ISSB reached a landmark decision in December 2025, formally advancing its nature-related disclosures project from research to standard-setting phase. On December 10, 2025, eleven of twelve ISSB members agreed to move the project forward, with the board deciding to publish an exposure draft as the next due process step, notably forgoing an intermediary discussion paper stage. This accelerated approach reflects the urgency and clarity around investor demand for standardized nature-related financial disclosures.
The ISSB determined that the incremental disclosure requirements will supplement existing IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) standards. Rather than creating standards of standalone nature, this approach ensures seamless integration with the foundational climate and general sustainability frameworks while addressing specific nature-related risks and opportunities that fall outside explicit current requirements.
2.2 Leveraging TNFD Framework (November 2025)
In November 2025, the ISSB decided to draw on the Taskforce on Nature-related Financial Disclosures (TNFD) framework to meet primary users’ common information needs about nature-related risks and opportunities, with all eleven ISSB members present in agreement. This decision represents strategic alignment rather than competition between the two frameworks. The TNFD, in response, announced on November 6, 2025, that it would complete all technical work in progress by the third quarter of 2026 and pause the commencement of further technical guidance work, effectively ceding standard-setting authority to the ISSB.
The ISSB will adopt the TNFD’s comprehensive, non-siloed approach to nature, the Locate, Evaluate, Assess, Prepare (LEAP) approach, and TNFD’s recommendations, metrics, and guidance where appropriate. ISSB Chair Emmanuel Faber stated: “Drawing on the TNFD framework enables us to meet this need efficiently, reducing fragmentation and building on leading practice.” The board is targeting publication of an exposure draft of incremental disclosure requirements by the Convention onBiological Diversity COP17 in October 2026.
2.3 Educational Materials Development
The ISSB also decided to consider developing educational materials to support application of IFRS Sustainability Disclosure Standards in the context of providing nature-specific information after standard-setting, with ten of eleven members present in agreement. This commitment reflects recognition that implementation of new disclosure requirements requires substantial guidance and organizational capacity-building, particularly for companies unfamiliar with nature-related financial materiality assessment.
Section 3: European Union Sustainability Reporting and Due Diligence Directive Reforms
3.1 December 2025 Provisional Agreement on CSRD/CSDDD Simplification
On December 9, 2025, European Parliament and EU member state negotiators reached a historic provisional agreement on revised sustainability reporting and due diligence requirements, fundamentally reshaping the compliance landscape for companies operating in or serving the EU. On December 16, 2025, the European Parliament formally approved this provisional agreement with overwhelming support. The final legislative act is expected to be published in the EU Official Journal in early 2026, with final Council approval anticipated to follow shortly.
CSDDD Application Timeline (Final):
A critical change unified previously fragmented timeline. All in-scope CSDDD companies will have a single application deadline of July 26, 2029, with Member States required to transpose the rules by July 26, 2028. This represents postponement from the original July 26, 2028 date and provides companies with extended preparation windows, though enforcement remains non-negotiable.
3.2 ESRS Simplification (December 2025)
Reflecting the omnibus simplification mandate, EFRAG published draft simplified European Sustainability Reporting Standards on December 4, 2025, representing a comprehensive overhaul of reporting requirements. The simplified ESRS reduces the number of mandatorily disclosable datapoints by 61% and eliminates all voluntary disclosures, introducing “usefulness of information” as a general filter while emphasizing fair presentation and simplifying materiality assessment. These standards are expected to apply for reporting on financial year 2027 onwards, providing companies with a reasonable transition period.
The distinct double materiality assessment, requiring companies to assess both how external sustainability factors impact company financial performance and how the company’s operations impact sustainability factors, is preserved within the simplified framework, though streamlined from the original complex structure.
3.3 Climate Transition Plans (CTPs)
The provisional agreement introduces flexibility regarding climate transition plans, removing the mandatory CTP requirement that appeared in earlier versions of the CSDDD. While companies will no longer be obligated to develop formal transition plans as a CSDDD requirement, companies subject to other regulations (such as those in certain MENA jurisdictions) may still face transition plan obligations through parallel frameworks.
Section 4: Carbon Border Adjustment Mechanism (CBAM) Evolution
4.1 CBAM Transition to Definitive Phase (January 2026)
The European Commission has proposed significant changes to the Carbon Border Adjustment Mechanism regulating the transition from the transitional phase (2023-2025) to the final application phase beginning January 1, 2026. The transitional phase, during which importers reported embedded emissions without purchasing CBAM certificates, will conclude, and regular CBAM obligations will apply, including mandatory determination and reporting of embedded emissions and purchase of CBAM certificates.
Simplified Calculation Methods for Electricity Imports:
From January 1, 2026, simplified calculation methods for electricity imports will apply, marking a significant departure from previous methodologies. Under the new approach, standard emission values for electricity will be based on the entire electricity mix of the exporting country rather than facility-specific data, expected to result in lower reference values and increased feasibility for reporting entities. Requirements for verifying actual emissions will also be simplified to facilitate practical implementation.
4.2 Future CBAM Scope Expansion (2028)
The European Commission has proposed extending CBAM scope to approximately 180 additional industrial and consumer goods beginning in 2028, provided these goods contain a high average proportion of steel or aluminum. This expansion would affect sectors including mechanical engineering, manufacturing equipment, vehicle components, hardware, household appliances, and construction machinery. Complex products comprising multiple CBAM raw materials will also be covered.
Section 5: SASB Standards Amendments and ISSB Alignment
5.1 SASB Standards Enhancement Consultation (July 2025 – November 30, 2025)
The ISSB published Exposure Drafts proposing amendments to the SASB Standards on July 3, 2025, with the public consultation period closing on November 30, 2025. These amendments are integral to the ISSB’s 2024-2026 work plan, designed to support high-quality application of IFRS S1 and IFRS S2.
The proposed amendments encompass wholesale changes to disclosure requirements for nine industries, including all eight industries within the Extractives & Minerals Processing sector and the Processed Foods industry, alongside targeted amendments to 41 additional SASB standards. Key topics addressed include greenhouse gas emissions, energy management, water management, labour practices, and workforce health and safety.
Section 6: UK and International Sustainability Assurance Standards
6.1 UK Financial Reporting Council Sustainability Assurance Standard (November 2025)
The UK Financial Reporting Council issued the International Standard on Sustainability Assurance (UK) 5000 on November 12, 2025, establishing assurance requirements for UK companies, investors, and assurance providers. The standard applies to both limited and reasonable assurance, establishing a consistent framework for sustainability assurance aligned with global benchmarks developed by the International Auditing and Assurance Standards Board.
The FRC indicated that UK assurance providers can apply the standard on a voluntary basis during an initial phase, with potential future mandatory application as the framework matures. This approach enables market learning and capacity-building before enforcement becomes mandatory.
6.2 UK Sustainability Reporting Standards Development
The UK is developing sustainability disclosure standards substantially based on ISSB standards (IFRS S1 and S2), with draft standards published in June 2025 for consultation through September 2025, and final standards expected in late 2025. Initial implementation would begin from January 2026, with the standards initially optional but potentially becoming mandatory under future Companies Act amendments.
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