Global ESG Regulatory Watch: Important Developments in China, the UAE and Brazil

Most coverage of sustainability regulation still treats it as a story about Europe, with California and the UK as supporting characters. That framing is now badly out of date. Some of the most consequential moves of the past year have come from China, the UAE and Brazil, and they have not moved in the same direction.

China has switched on mandatory sustainability reporting for its largest listed companies, with the first reports already filed. The UAE has passed a binding federal climate law that reaches every entity in the country, including free zones, with a compliance deadline that fell two months ago. Brazil, which in 2023 became the first country in the world to write the ISSB standards into binding regulation, reversed course in May and made reporting voluntary again.

For a multinational, that combination is harder to manage than a single strict regime would be. Here is what changed in each, and what it means operationally.

China: The Regime is Live, and it Uses Double Materiality

China's framework arrived in two layers, and it helps to keep them separate.

The first layer is exchange rules. In April 2024, the Shanghai, Shenzhen and Beijing stock exchanges each issued guidelines on sustainability reporting under CSRC guidance, effective from 1 May 2024. These apply to constituents of the SSE 180, STAR 50, SZSE 100 and ChiNext indices, plus companies listed both domestically and overseas. That is roughly 450 companies. Everyone else is encouraged to report voluntarily.

The critical point for planning: those rules required covered companies to publish a sustainability report for calendar year 2025 by 30 April 2026. That deadline has passed. China's mandatory regime is not approaching, it is operating, and the first cohort of reports is already public. The coverage is narrow by company count but wide by impact: the 457 companies caught are estimated to account for around two thirds of national emissions.

The second layer is national standards. On 17 December 2024, the Ministry of Finance, together with nine other government departments, released the Basic Standard of the Corporate Sustainability Disclosure Standards, known as CSDS. This is the foundation of a unified national system rather than an exchange listing requirement. It runs to six chapters and 31 articles, builds on an exposure draft issued in May 2024, and is explicitly grounded in the ISSB standards while drawing on the European framework as well. A draft climate standard followed in 2025, and the roadmap runs to full implementation around 2030, with climate disclosure expected to become mandatory in the intervening years.

Two design features matter for anyone comparing China to other regimes.

China uses double materiality. Covered companies report both how sustainability issues affect the business and how the business affects the environment and society. That aligns China conceptually with the EU rather than with the ISSB's single, investor focused lens used in the UK, Singapore, Australia and elsewhere in Asia. Companies running a group wide ISSB aligned process will find the Chinese requirement asks for something their existing materiality assessment may not capture.

The structure will also look familiar. Reporting covers four core areas: governance, strategy, impact and risk and opportunity management, and indicators and goals. That is the TCFD architecture with an impact dimension added.

There is a separate compliance track worth noting. China's carbon market obligations are expanding beyond the power sector, which means industrial emitters face rising costs and operational constraints under a regime distinct from disclosure. Disclosure discipline and enforceable environmental oversight are being built as connected systems, not parallel ones.

The UAE: A Federal Climate Law that Catches Everyone

The UAE has taken a different route, and one that reaches far beyond listed companies.

Federal Decree-Law No. 11 of 2024 on the Reduction of Climate Change Effects came into force on 30 May 2025, making the UAE the first country in the MENA region with a binding federal climate law. Full compliance was due by 30 May 2026, a deadline that has now passed.

The scope is the part that surprises people. The law applies to public and private entities whose activities generate greenhouse gas emissions, across the Emirates, including free zones. This is not a listing rule or a large company threshold. It creates an obligation to measure, report and reduce emissions, with reporting running through the national Monitoring, Reporting and Verification system operated by the Ministry of Climate Change and Environment.

Penalties have teeth. Fines run from AED 50,000 to AED 2 million per violation, doubling to a maximum of AED 4 million for repeat offences within two years.

Layered on top, listed companies face separate obligations. Public joint stock companies on the Abu Dhabi Securities Exchange and Dubai Financial Market must publish an annual sustainability report under Securities and Commodities Authority rules, filed within 90 days of financial year end or before the annual general meeting, whichever comes first. For a December year end, that means a report due at the end of March.

Then there are the financial free zones. ADGM operates its own ESG Disclosures Framework, which applies from the third year following incorporation to companies with turnover above US$68 million in a financial year, and to FSRA licensed fund and asset management companies with assets under management above US$6 billion at any point in the year. Disclosures are filed with annual accounts. Importantly, ADGM runs a comply or explain model: an in scope company that chooses not to comply must submit a clear explanation to the Registrar. A number of entity types sit outside scope altogether, including foundations, limited liability partnerships, partnerships, restricted scope companies, investment companies, branches of foreign companies, and listed entities already making equivalent disclosures, though any of them may comply voluntarily. DIFC has its own arrangements, and the Central Bank has issued sustainability disclosure principles for financial institutions.

The practical consequence is that a group operating across mainland UAE, ADGM and DIFC can be running three overlapping but non identical reporting frameworks at once. They are not mutually satisfying. Mapping which entity sits under which regime is the first piece of work, and it is the one most often done badly.

Brazil: The World's First ISSB Mandate, Reversed

Brazil is the most striking development of the three, because it runs against the global current.

In October 2023, CVM Resolution 193 made Brazil the first country to embed the ISSB standards in binding capital markets regulation. The design was a voluntary phase for 2024 and 2025, followed by mandatory reporting for financial years beginning on or after 1 January 2026. The standards themselves were issued locally by the Brazilian Sustainability Pronouncements Committee, known as CBPS, as CBPS 01 for general sustainability disclosure and CBPS 02 for climate, both based on IFRS S1 and S2.

On 29 May 2026, CVM issued Resolution 244, published in the Official Gazette on 1 June. It removes the mandatory phase entirely.

What replaces it is a comply or explain model. A listed company that chooses not to publish a sustainability report must issue a formal market announcement explaining that decision, by the time it files its annual financial statements in 2027. Companies that do report must still follow CBPS and ISSB standards, must commit to reporting for at least three consecutive years, and if they later stop must announce that decision in the fiscal year before they stop.

CVM framed the change as refining the voluntary adoption model, preserving transparency and comparability through the accounting standards while restoring companies' freedom to weigh the costs and benefits of how they use investor resources.

Two things worth being clear about.

First, the technical framework survived. Brazil did not dismantle its ISSB implementation. CBPS 01 and CBPS 02 remain in place, and anyone reporting uses them. Assurance requirements also remain part of the opt in route, performed by an auditor registered with CVM under standards from the Federal Accounting Council.

Second, the timing is awkward for Brazil's positioning. The reversal came shortly after the country hosted COP30 and while its Ecological Transformation Plan continues to promote green investment. It also came as Japan, the UK, Canada, Mexico and Chile move toward making the same standards mandatory. Brazil went first and has now stepped back while others step forward.

The uncomfortable context is that low take up during the voluntary phase had already exposed a readiness gap. Research cited before the reversal suggested a large majority of Brazilian companies were not ready to implement IFRS S1 and S2, and by April 2025 only a handful had opted to report early. The mandate was removed against a backdrop of companies visibly not being prepared to meet it.

What This Means for Multinational Companies

Four practical conclusions.

Regulatory direction is no longer one way, so build for capability rather than for mandates. Brazil's reversal, alongside the EU's Omnibus simplification and CARB's phased Scope 3 proposal, shows that requirements can loosen as well as tighten. A compliance programme scoped to the minimum legally required on a given date will be rebuilt repeatedly. A programme built around a clean, auditable emissions and sustainability dataset serves whatever the rules turn out to be.

Voluntary does not mean irrelevant. Brazil's comply or explain model still forces a public decision, announced to the market, and companies that opt out will be explaining that choice to investors who increasingly expect the data regardless. In the UAE, private companies with no listing obligation are already receiving ESG questionnaires as part of vendor due diligence from listed customers. The regulatory floor and the commercial floor are not the same thing, and the commercial one is rising steadily.

Materiality frameworks do not port cleanly. China's double materiality requirement asks for impact assessment that an ISSB aligned group process may not produce. If you are consolidating a global reporting approach around IFRS S1 and S2, the Chinese subsidiary's obligation is genuinely additional rather than a subset. Plan for that rather than discovering it late.

Entity level mapping is the recurring failure point. All three jurisdictions apply obligations by entity type, listing venue, jurisdiction of incorporation or emissions profile rather than at group level. UAE mainland, ADGM and DIFC differ. Chinese index constituency determines coverage. Brazilian obligations attach to listed entities. A group cannot answer the question "are we in scope" once and be finished.

The broader pattern across all three is convergence on architecture and divergence on force. Everyone is using some version of the TCFD four pillar structure, and most are anchoring on the ISSB standards. What varies is whether reporting is compelled, who is compelled, and what happens if you do not. That means the data work transfers across borders even when the legal obligations do not, which is the strongest argument for building once and building properly.

Regional Watch Checklist

1. For Chinese operations, confirm whether any group entity sits in the SSE 180, STAR 50, SZSE 100 or ChiNext indices, or is dual listed, and note that the first mandatory reports were due by 30 April 2026.

2. Assess whether your existing materiality process meets China's double materiality expectation, not just the ISSB single materiality lens.

3. Track the CSDS climate standard as it moves from draft toward implementation ahead of the 2030 full rollout.

4. For UAE operations, treat Federal Decree-Law No. 11 of 2024 as applying to every entity including free zone companies, and confirm your registration and reporting position under the national MRV system.

5. Map UAE obligations separately for mainland, ADGM and DIFC entities, since the three frameworks overlap without being identical.

6. Diarise the SCA filing window for listed UAE entities: 90 days after financial year end, or before the AGM, whichever is earlier.

7. For Brazil, decide deliberately whether to report under the new comply or explain regime, and remember that opting out requires a public market announcement with reasons.

8. If reporting voluntarily in Brazil, note the three consecutive year commitment and the advance announcement required before stopping.

9. Assume investor and customer expectations will outrun the legal minimum in all three markets, particularly where mandates have been relaxed.

10. Build one auditable sustainability dataset that can serve double materiality, single materiality and national GHG reporting rather than maintaining separate regional processes.

Position as of July 2026. All three regimes are still developing, and China's national standards in particular remain on a phased path toward 2030. Confirm current requirements against the relevant regulators and take professional advice for your own circumstances.

Sources

China Securities Regulatory Commission, Shanghai Stock Exchange, Ministry of Finance of the People's Republic of China, Clifford Chance, China Briefing, Business and Human Rights Resource Centre, Sino-German Cooperation on Climate Change, Abu Dhabi Global Market, Comissão de Valores Mobiliários, Brazilian Federal Accounting Council, Demarest, ESG Today, Verdantix, IFRS Foundation, Deloitte IAS Plus

This article is intended for general professional information and does not constitute legal, financial, or investment advice.