PwC: How Quiet Climate Action is Boosting Supply Chain Value
Most companies aren’t just keeping commitments, they're turning sustainability into a value creation engine, according to the latest PwC State of Decarbonization report.
Drawing from more than 4,000 company disclosures, PwC finds that climate ambition remains strong, particularly in decarbonisation efforts tied to long-term growth and value creation.
As companies increasingly focus on Scope 3 emissions and product sustainability, a clear path is emerging for climate leadership and competitive advantage.
Climate commitments on the rise
The number of companies making climate-related commitments continues to increase.
In 2024, more than 4,000 organisations disclosed climate targets to CDP, a nine-fold jump in just five years.
Notably, 37% are raising their ambitions while only 16% have scaled back.
What’s more, sustainability goals appear to endure leadership transitions, with no climate targets being reversed after CEO changes in the sample studied.
There’s also been a noticeable shift toward smaller businesses adopting targets.
The median revenue of companies making commitments fell from US$3.6bn in 2020 to US$1.3bn in 2024, largely driven by supply chain pressure from larger corporations pushing Scope 3 accountability downstream.
“Sustainability is an untapped frontier of competitive advantage,” says Pragya Jain, Partner at PwC UK.
“Shifting the narrative from managing climate threats to creating value from sustainability is critical to future growth strategies.”
Decarbonising Scope 1 and 2
Progress on Scope 1 and 2 emissions has improved year-on-year.
In 2024, 67% of companies were on track to meet their reduction targets, up from 64% in 2023.
However, this progress leans heavily on Scope 2 reductions via renewable energy procurement.
Sectors such as financial services, tech and IT benefit most due to lower operational emissions, whereas hard-to-abate sectors like mining and construction face higher barriers.
“Technology alone can't solve the climate crisis, but it remains one of the most critical drivers of progress,” explains James Pincus, Corporate Finance Partner, PwC UK.
“While the recent growth in UK climate tech investment is encouraging, we must continue to identify and invest in innovative solutions, push for increased government support and focus investor attention across a broader range of sectors, especially where decarbonisation is more challenging.”
Overreliance on renewable energy could become problematic as supply lags behind demand, potentially raising costs and forcing companies to pivot towards deeper operational changes such as electrification, energy efficiency upgrades and capital investment in green fuels like hydrogen and SAF (sustainable aviation fuel).
Tackling Scope 3
Scope 3 emissions, which are on average 11 times larger than Scope 1 and 2 combined, remain the most complex and under-addressed area.
According to the report, only 54% of companies are on track to meet their Scope 3 targets, but this is a slight improvement from 50% the year prior.
Reductions are most commonly achieved through improvements in "Use of Sold Products", particularly in industrial and automotive sectors.
Yet supplier engagement remains immature.
Just 22% of companies have mature supplier engagement programmes, suggesting significant opportunity for acceleration, particularly in reducing emissions from purchased goods and services.
“By uncovering hidden vulnerabilities across supply chains and operations, businesses can proactively shape resilience strategies that protect value at risk, whether financial, operational or reputational,” says Lynne Baber, Global Deputy Sustainability Leader, PwC.
“Smarter climate adaptation unlocks agility, inspires innovation, and positions companies to lead in a more volatile world.”
Four factors for effective decarbonisation
PwC identifies four differentiators separating climate leaders from laggards:
- Strong governance: Companies with higher governance maturity scores are more likely to be on track, particularly in Scope 1 and 2 efforts. Clear responsibility, capital allocation and board involvement are critical.
- Capital investment: Companies expect to increase CapEx and OpEx allocations for climate action by 18% and 21% respectively by 2030. PwC recommends using internal carbon pricing and marginal abatement cost curves to optimise ROI on climate spend.
- Stakeholder engagement: 72% of companies engage suppliers, and 67% engage customers, yet few have advanced strategies. Sector-specific strategies, engaging customers in energy and automotive, or suppliers in manufacturing, are crucial.
- Product sustainability: Product design is emerging as the leading lever for Scope 3 impact. Companies that embed sustainability from cradle to grave, through material choices, energy use and circular design, can command revenue uplifts between 6% and 25%.
The case for climate
PwC’s analysis forecasts that, by 2030, more than one-third of company revenues will be tied to the climate transition.
Key growth sectors include construction, chemicals, automotive and agri-food, all poised for over 40% revenue exposure to decarbonisation efforts such as EVs, low-carbon cement and plant-based alternatives.
In short, sustainability is not a cost centre, it is a value driver.
Companies that combine rigorous governance, strategic capital investment, deep stakeholder collaboration and product-level innovation are not only futureproofing their operations but also capturing market leadership.
Far from the headlines of climate retreat, PwC’s report paints a picture of transformation in motion.
