PwC: The State of Decarbonisation for Sustainable Businesses

More companies are increasing their sustainability and decarbonisation ambitions (23%) compared to those that are decreasing (18%), according to PwC.

PwC has released its Third Annual State of Decarbonization Report, highlighting that the business case for decarbonisation is strengthening.

The company says that "82% of companies held steady or accelerated the timeline they needed for achieving sustainability ambitions".

Sustainability and decarbonisation results 

Sustainability and decarbonisation efforts remain resilient, with 69% on track to meet Scope 1 and 2 targets. 

Energy has become a key component of these strategies, as electricity prices increased by 7% to 25% and global industrial energy efficiency investment rose by 45% between 2020 and 2025, reaching approximately US$30bn. 

At the same time, companies are achieving stronger financial outcomes, with 15%–59% valuation premiums observed in sectors investing more heavily in climate transition activities.

However challenges persist, particularly in Scope 3 emissions, where PwC calculates that only 56% of companies are on track.

Overall, sustainability is now firmly linked to cost efficiency, growth and resilience, with companies prioritising high-impact actions such as energy optimisation, supplier engagement and product-level decarbonisation to deliver measurable business value. 

“What the data shows is that the business case for decarbonization is getting stronger, not weaker," says David Linich, Decarbonization and Sustainable Operations Consultant and Partner at PwC.

"Even in a tougher environment, most companies are staying the course and the leaders are shifting from broad ambition to disciplined execution that supports resilience, growth and long-term value.”

Across industrial manufacturing and related sectors, decarbonisation is increasingly tied to disciplined execution and capital efficiency. 

Companies are spending less overall on decarbonisation but achieving better results by prioritising high-return initiatives such as energy demand reduction and operational optimisation.

Procurement and supplier engagement

According to the report, supply chain visibility remains a critical weakness, with 25% of companies lacking visibility beyond tier 1 suppliers and only 18% consistently tracking supplier activities and emissions across multiple tiers.

 At the same time, 58% of companies report only partial visibility into tier 2 suppliers, limiting their ability to address high-impact emissions sources . 

“One of the clearest findings in the report is that supply chain visibility is still a major gap," says David.

"Only 18% of companies consistently track supplier activities and emissions past their direct suppliers, which means many businesses still lack line of sight into key upstream risks and where the biggest pockets of Scope 3 emissions exist. 

"The companies making stronger progress are the ones treating supplier engagement as an operational priority — improving visibility, setting clearer expectations and building more accountability into procurement.” 

According to PwC, supplier engagement is improving, with 64% of companies now operating structured and scaled decarbonisation programmes.

However, data shows that only 7% have fully incentivised supplier action across their base.

Similarly, while 63% of companies have implemented supplier requirements at scale, just 13% consistently verify and enforce them .

These gaps highlight the need for stronger procurement integration, as companies that improve supplier visibility, engagement and accountability are seeing faster Scope 3 emissions reductions. 

Manufacturing emissions

Manufacturing sectors are making steady progress on decarbonisation, particularly in Scope 1 and 2 emissions, where 69% of companies are on track to meet their targets, up from 67% the previous year.

However, PwC's data shows that "only 46% of companies are on track for Scope 1, unchanged from the prior year, which represents more than 80% of operational emissions across the organisations we analysed."

“In manufacturing and other operationally intensive sectors, the story is increasingly about disciplined execution," says David.

"We’re seeing companies make steady progress on Scope 1 and 2 targets, but the harder work now is reducing on-site emissions, where changes are capital-intensive and operationally complex.

"The leaders are tying decarbonization to asset replacement cycles, process efficiency and smarter capital planning so they can improve resilience and performance at the same time.” 

Progress is being driven by targeted actions such as production process efficiency improvements (−6%), renewable energy generation (−6%) and procurement (−4%).

Manufacturers are increasingly aligning emissions reductions with asset replacement cycles to manage the high cost and complexity of transitioning fuels and equipment.

While ambition varies across sectors, most manufacturing-related industries remain broadly on track, though continued progress will require more capital-intensive and sophisticated strategies. 

Construction and mining

Mining and construction are among the most capital-intensive and hard-to-abate sectors, where transition-aligned investment is closely linked to financial performance.

Companies in these sectors that allocate higher shares of capital expenditure to climate transition activities are achieving valuation premiums ranging from 15% to 59%.

These industries also face slower emissions reduction progress due to the need for large-scale, asset-heavy transformations and reliance on energy-intensive processes.

As a result, decarbonisation strategies are increasingly focused on process efficiency, electrification and long-term capital planning.

Despite these challenges, sectors such as construction and real estate remain broadly on track against their emissions targets, though maintaining progress will require continued investment and innovation. 

AI use for decarbonisation

Rising demand for AI and data centre capacity is reshaping the energy and sustainability landscape, making Scope 2 decarbonisation more complex to track and reduce, highlights PwC.

As hyper-scalers expand to support AI workloads, electricity demand is surging faster than clean energy supply can scale, especially in contexts where policy support has weakened and infrastructure investment has lagged.

This imbalance is already contributing to higher power prices and a greater reliance on fossil fuels, with projections suggesting that much of the growth in data centre electricity demand through 2030 may be met by natural gas, slowing overall grid decarbonisation.

In the US, the International Energy Agency projects that most of the increase in data centre electricity demand through 2030 will be largely met by natural gas, potentially slowing the pace of grid decarbonisation.

At the same time, AI itself can present a powerful opportunity.

While AI drives up energy consumption, it can also significantly reduce emissions by optimising industrial processes, improving energy efficiency in buildings and enhancing logistics.

"Our analysis sets a clear baseline: 60% report using AI for operational decarbonisation, but most applications remain first-generation machine learning, such as process optimisation, energy monitoring and predictive maintenance, rather than the more advanced capabilities now possible," says PwC.