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Common ESG Reporting Mistakes UAE Companies Should Avoid

Common-ESG-Reporting

The most common ESG reporting mistakes made by UAE companies include starting with report design, using an unclear reporting boundary, selecting irrelevant metrics, publishing unsupported environmental claims and failing to reconcile ESG information with financial and operational records. Companies also weaken reports by presenting only positive achievements, using inconsistent calculation methods and setting targets without reliable baselines.

A credible ESG report should identify material issues, explain governance, disclose methodologies and allow every significant metric to be traced to supporting evidence. Preparation should therefore begin with regulatory scope, materiality and data controls—not writing, branding or report layout.

Key Takeaways

  • A polished report cannot compensate for weak data, unclear boundaries or unsupported claims. 
  • Materiality should determine what is reported, rather than the information that is easiest to collect. 
  • Environmental, workforce and governance metrics need defined methodologies and evidence. 
  • ESG disclosures should remain consistent with financial statements, governance reports and public commitments. 
  • Assurance readiness should begin during data collection, not after report design. 

ESG Reporting Mistakes at a Glance

Common mistake Why it creates a problem Better approach
Starting with design The report structure is created before material topics and data are confirmed Complete scope, materiality and data collection first
Using an unclear boundary Subsidiaries, sites or leased assets may be omitted or counted inconsistently Define entities, facilities and value-chain coverage
Reporting easy metrics The report may ignore the company’s most significant risks and impacts Use a documented materiality process
Publishing unsupported data Metrics cannot be reviewed, repeated or assured Maintain methodologies and evidence registers
Reporting only positive information The report becomes unbalanced and promotional Disclose challenges, limitations and missed targets
Misclassifying emissions Scope 1, Scope 2 and Scope 3 totals may be inaccurate Establish the organisational boundary before calculation
Setting targets without baselines Progress cannot be measured reliably Define the base year, scope and calculation method
Claiming framework compliance too early The company may not satisfy all requirements of the selected standard Complete a formal compliance mapping
Disconnecting ESG and finance Public disclosures may contradict annual reports or budgets Reconcile ESG information with financial records
Starting assurance too late Errors are identified when there is little time to correct them Build assurance readiness during data collection

Common ESG Reporting Mistakes

1. Starting With the Report Design

One of the most frequent mistakes is appointing a designer or communications team before the company has determined:
  • Why the report is being prepared. 
  • Which requirements apply. 
  • What the reporting boundary covers. 
  • Which ESG issues are material. 
  • What data is available. 
  • Which reporting framework will be used. 
This often produces an attractive draft containing empty performance tables, generic commitments and case studies that do not address the company’s material risks. The current DFM reporting roadmap places planning, stakeholder engagement, materiality and data collection before content development and design. ADX guidance follows a similar sequence, beginning with framework selection and reporting boundaries before moving to data collection and report preparation.  Better approach: Approve a technical report outline only after the materiality assessment and initial data-gap review have been completed.

2. Failing to Define the Reporting Boundary

The reporting boundary identifies which legal entities, sites, operations and value-chain activities are covered. Common boundary problems include:
  • Including the parent company but excluding major subsidiaries. 
  • Reporting electricity for some sites but not others. 
  • Combining landlord-controlled and tenant-controlled consumption. 
  • Omitting overseas operations. 
  • Changing the entities covered without restating comparative information. 
  • Using a financial boundary for some metrics and an operational-control boundary for others without explanation. 
ADX guidance states that companies should determine their reporting boundaries during the planning stage. GRI also requires organisations to explain the entities included and their approach to consolidating sustainability information. 

UAE Example

A UAE property group may own, manage and lease different buildings under different contractual arrangements. Electricity, district cooling and refrigerant emissions cannot be classified reliably until the company establishes which assets it controls and which consumption belongs to tenants. Better approach: Prepare a reporting-boundary memorandum covering entities, sites, ownership, operational control, exclusions and changes from the previous year.

3. Reporting What Is Easy Instead of What Is Material

Companies sometimes report electricity, training hours and donations simply because those figures are readily available. Meanwhile, commercially important matters such as supply-chain labour, climate exposure, cybersecurity, worker safety or product impacts receive little attention. Materiality should determine reporting priorities. IFRS S1 focuses on sustainability-related risks and opportunities that could reasonably affect cash flows, access to finance or cost of capital. GRI focuses on an organisation’s significant impacts on the economy, environment and people. 

UAE Examples

A logistics company may need to prioritise fleet emissions, subcontracted transport, driver safety and workforce turnover. A real estate company may need to address building efficiency, district cooling, construction materials, worker welfare and physical climate risk. A bank may need to focus on financed emissions, climate-related credit risk, customer protection and cybersecurity. Companies that need to establish strategic priorities before reporting should begin by developing an ESG strategy and materiality framework.

4. Publishing Metrics Without Supporting Evidence

A reported figure should be traceable to its original source. Evidence may include:
  • Utility bills. 
  • Fuel invoices. 
  • Refrigerant-maintenance records. 
  • Waste-contractor reports. 
  • Payroll and HR extracts. 
  • Safety registers. 
  • Supplier records. 
  • Board minutes. 
  • Compliance registers. 
  • Calculation workbooks. 
DFM’s current guidance emphasises integrating ESG data collection into existing internal processes, applying internal-audit oversight and explaining assumptions, limitations and uncertainties. GRI’s verifiability principle similarly requires information to be recorded and organised so that someone other than the preparer can examine it. 

Consulting Observation

During readiness reviews, IFRSLAB consultants commonly encounter summary spreadsheets that contain annual totals but no direct link to invoices, system reports or calculation files. The number may appear reasonable, yet it cannot be independently reproduced. Better approach: Create an evidence register showing the KPI, data owner, source document, methodology, reviewer and approval date. Financial systems often contain initial data for energy, fuel, travel, payroll, procurement and capital expenditure. A controlled Accounting and Bookkeeping process can improve the traceability of these records.

5. Applying Inconsistent KPI Definitions

A company may report the same metric differently across subsidiaries or reporting periods. Common examples include:
  • Employee turnover calculated differently by each business unit. 
  • Training hours excluding contractors in one year but including them in the next. 
  • Safety incidents reported by event date at one site and closure date at another. 
  • Electricity reported in kWh by one entity and MWh by another. 
  • Waste figures combining tonnes, kilograms and number of collections. 
  • Headcount reported as year-end employees in one table and annual average employees elsewhere. 
GRI’s comparability principle requires consistent methods, assumptions and presentation so users can assess performance over time. It also expects changes and restatements to be explained.  Better approach: Develop a KPI methodology sheet for every material indicator, including its definition, unit, boundary, formula, exclusions and evidence source.

6. Misclassifying Scope 1, Scope 2 and Scope 3 Emissions

Carbon-accounting errors can materially affect an ESG report. Common mistakes include:
  • Recording outsourced transport as Scope 1. 
  • Ignoring refrigerant leakage. 
  • Treating all building electricity as Scope 2 without reviewing leases. 
  • Omitting purchased district cooling. 
  • Reporting a single general estimate for all Scope 3 emissions. 
  • Double counting electricity across landlords, tenants and subsidiaries. 
  • Changing emission factors without explaining the effect. 
The classification depends on the company’s organisational boundary and control over the source. It does not depend only on who receives the invoice.

Consulting Observation

A recurring issue in first-time inventories is that finance records identify the expense but not the underlying physical activity. A diesel cost, for example, may not show litres consumed, the vehicle involved or whether the activity was company-controlled or outsourced. The emissions baseline should connect with a wider Climate Risk & Decarbonization Strategy, allowing management to move from calculation towards reduction priorities, investment and target setting.

7. Making Renewable Energy Claims Without Complete Evidence

A company should not claim that its operations are renewable-powered merely because it has purchased an energy attribute certificate. A credible certificate-backed claim should address:
  • Electricity consumption covered. 
  • Beneficiary entity and sites. 
  • Generation technology. 
  • Production period. 
  • Certificate quantity. 
  • Registry transfer and redemption. 
  • Market-based Scope 2 methodology. 
  • Limitations of the claim. 
Certificates do not prove that particular renewable electrons were delivered directly to the facility. They establish ownership of specified electricity attributes through a tracking system. Better approach: Use precise language, retain formal redemption evidence and distinguish renewable electricity procurement from energy-efficiency improvements and wider carbon reductions.

8. Reporting Only Positive Information

An ESG report should provide a balanced picture. Weak reports frequently highlight:
  • Awards. 
  • Community events. 
  • Employee celebrations. 
  • Renewable projects. 
  • New policies. 
  • Training programmes. 
Yet they omit:
  • Missed targets. 
  • Environmental incidents. 
  • Data limitations. 
  • Increased emissions. 
  • Safety weaknesses. 
  • Regulatory breaches. 
  • Incomplete Scope 3 data. 
  • Delayed improvement projects. 
GRI requires both positive and negative impacts to be reported in an unbiased manner. DFM guidance also warns against overemphasising positive information or omitting negative matters, as this can reduce stakeholder trust. 

Consulting Observation

Management teams sometimes worry that acknowledging a data gap will weaken the report. In practice, a clearly explained limitation with an improvement plan is often more credible than an unsupported claim of completeness.

9. Setting Targets Without a Reliable Baseline

Targets such as “net zero by 2050,” “100% renewable electricity” or “zero waste” require technical foundations. A credible target should define:
  • The base year. 
  • Organisational boundary. 
  • Emissions scopes or activities covered. 
  • Target year. 
  • Interim milestones. 
  • Calculation methodology. 
  • Planned operational measures. 
  • Required capital and operating expenditure. 
  • Treatment of acquisitions and disposals. 
  • Governance and progress review. 
Without these elements, the target may operate as a public ambition rather than a measurable management commitment. Better approach: Establish the baseline and delivery plan before announcing the target.

10. Claiming GRI or IFRS Alignment Without Completing the Requirements

Using selected GRI indicators does not automatically mean that a report has been prepared “in accordance with” GRI Standards. GRI requires organisations claiming full accordance to satisfy nine requirements, including applying reporting principles, determining material topics, reporting the relevant disclosures and providing a GRI content index. Organisations that cannot meet all requirements may be able to report “with reference to” the GRI Standards instead.  Similarly, using the four headings of governance, strategy, risk management, and metrics and targets does not by itself establish compliance with IFRS S1 or IFRS S2. IFRS S1 requires material information about sustainability-related risks and opportunities that may affect the company’s prospects.  Better approach: Complete a disclosure-by-disclosure framework mapping before making a compliance or alignment statement.

11. Disconnecting ESG Information From Financial Reporting

ESG disclosures may affect or relate to:
  • Energy and fuel expenditure. 
  • Capital projects. 
  • Asset impairment. 
  • Provisions. 
  • Insurance. 
  • Supply-chain costs. 
  • Revenue assumptions. 
  • Financing arrangements. 
  • Acquisitions and disposals. 
A company may create credibility concerns where its ESG report describes a material climate risk or major transition plan, but its budget, financial statements and capital expenditure contain no corresponding information. GRI recommends aligning sustainability reporting with financial reporting, including the reporting period and group of entities covered where possible.  Better approach: Include finance, risk and accounting functions in ESG review and complete a formal consistency check before approval.

12. Waiting Until the End to Consider Assurance

Assurance should not be treated as a final check performed after the report has been written and designed. Late assurance frequently identifies:
  • Missing invoices. 
  • Inconsistent KPI definitions. 
  • Unapproved estimates. 
  • Incorrect units. 
  • Boundary differences. 
  • Unsupported claims. 
  • Weak review controls. 
ADX guidance notes that assurance may cover the full report or selected KPIs and can expand as reporting maturity improves. It also explains that assurance can reduce data-quality risk and strengthen stakeholder confidence.  Companies preparing material disclosures for independent review should establish ESG Linked Financial Assurance readiness during the data-collection stage.

IFRSLAB Observations: Recurring Issues Behind the Report

Without identifying individual organisations, the following patterns frequently appear during ESG readiness and reporting reviews:
Consulting observation Underlying cause Recommended response
Utility totals do not match the reporting period Bills are collected by payment date rather than consumption period Prepare a site-level consumption schedule
Subsidiaries use different KPI definitions No central reporting manual exists Issue group-wide KPI methodologies
ESG claims are approved by communications only Technical and legal review is absent Establish cross-functional approval
Scope 3 is reported as one estimated figure Categories have not been screened separately Assess all relevant Scope 3 categories
Targets are copied from peers No baseline or feasibility assessment exists Develop company-specific targets
Materiality produces a long list of equal priorities No scoring or senior-management validation Rank issues and approve priorities
Evidence is stored in individual email accounts No central evidence register exists Establish controlled reporting files
Assurance begins after design Assurance planning was excluded from the timetable Agree scope and evidence needs early
These weaknesses are usually process issues rather than writing issues. Correcting the report text alone will not resolve them.

ESG Reporting Quality Checklist

Before publication, confirm that:
  • Applicable regulatory and market requirements have been reviewed. 
  • The reporting boundary is documented. 
  • Material topics have been assessed and approved. 
  • The selected framework has been mapped requirement by requirement. 
  • Every material KPI has a defined methodology. 
  • Source evidence is retained. 
  • Scope 1, Scope 2 and relevant Scope 3 emissions have been reviewed. 
  • Estimates and limitations are disclosed. 
  • Positive and negative performance is presented fairly. 
  • Comparative figures use consistent methods. 
  • ESG information agrees with financial and governance reports. 
  • Targets have baselines, owners and delivery plans. 
  • Technical, legal and management reviews are complete. 
  • Assurance requirements have been considered. 
  • Final claims can be supported if challenged. 

IFRSLAB Expertise: Correcting Reporting Weaknesses Before Publication

IFRSLAB recommends beginning each ESG reporting engagement with a structured diagnostic rather than an immediate request for report content. The diagnostic should confirm regulatory applicability, reporting boundaries, material topics, framework requirements and the maturity of the company’s data systems. This establishes which disclosures are ready, which require technical calculation and which should be supported by a documented improvement plan. IFRSLAB works with finance, operations, HR, procurement, risk, compliance and governance functions to define KPI methodologies and establish evidence trails. Carbon data, workforce indicators, climate information and governance disclosures are assessed for consistency with operational records, financial reporting and approved corporate commitments. The report is then developed through a controlled technical-review process. Claims are tested against evidence, framework mappings are completed and limitations are explained transparently. Where assurance is intended, readiness is built into the timetable before publication. This approach helps UAE companies produce reporting that is balanced, traceable and capable of supporting regulatory, investor, lender and customer review. Discuss an ESG reporting readiness or quality review with IFRSLAB.

Author Details

Rania Khalid Senior ESG Reporting Consultant, IFRSLAB Rania advises organisations on ESG reporting, disclosure frameworks, materiality, carbon information and reporting controls. Her work focuses on developing evidence-based reports that connect sustainability information with governance, operations and financial reporting.

References

  • Dubai Financial Market — Guide to ESG Reporting 2025. 
  • Abu Dhabi Securities Exchange — ESG Disclosure Guidance for Listed Companies. 
  • IFRS Foundation — IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. 
  • Global Reporting Initiative — GRI 1: Foundation 2021. 

Frequently Asked Questions (FAQs)

What is the biggest ESG reporting mistake?

The most damaging mistake is publishing information that cannot be supported or reproduced. This can result from unclear boundaries, inconsistent definitions, missing evidence or unreviewed estimates.

Should a UAE company report every ESG metric?

No. The company should first identify applicable regulatory indicators and material topics. Additional metrics should be included where they provide useful information to investors, customers, employees or other stakeholders.

Can a company publish an ESG report with incomplete data?

Yes, provided the report clearly explains what is missing, why it is unavailable, which estimates have been used and how the gap will be addressed. The company should avoid claiming full framework compliance where the relevant requirements have not been met.

Does an ESG report need external assurance?

External assurance is not universally mandatory for every UAE company. It may be required by a regulator, financing arrangement or stakeholder. Independent assurance can strengthen confidence in material metrics and reporting systems.

How can a company avoid greenwashing in its ESG report?

Use precise language, define the scope of every claim, retain supporting evidence, disclose limitations and distinguish between completed performance, future targets and general ambitions.

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