PwC: Decarbonisation Ambitions Rise Despite Challenges

More companies are increasing their sustainability and decarbonisation ambitions compared to those that are decreasing them, according to research from PwC. The consultancy's findings suggest that 23% of organisations are raising their targets, while 18% are scaling back their commitments.

PwC released its Third Annual State of Decarbonisation Report, highlighting that the business case for decarbonisation could be strengthening across industrial sectors. The company says that "82% of companies held steady or accelerated the timeline they needed for achieving sustainability ambitions".

Sustainability and decarbonisation efforts remain resilient, with 69% of organisations 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% from 2020 to 2025, reaching approximately US$30bn.

Companies are also 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.

Supply chain visibility gaps

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.

"What the data shows is that the business case for decarbonisation is getting stronger, not weaker," says David Linich, Decarbonisation 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.

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.

Progress in manufacturing sectors

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."

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.

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

AI's dual role

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.

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. However, 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.

“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 decarbonisation to asset replacement cycles, process efficiency and smarter capital planning so they can improve resilience and performance at the same time.”