Procurement’s Role in Climate Ambition Growth
According to the latest PwC State of Decarbonisation report, businesses are transforming sustainability efforts into significant value creation engines.
The report draws from over 4,000 company disclosures, revealing strong climate ambition, particularly in long-term growth and value initiatives tied to decarbonisation.
As companies intensify their focus on Scope 3 emissions and product sustainability, a path emerges for both climate leadership and competitive advantage within procurement operations.
Enhanced climate commitments
Growing climate-related commitments reflect the evolving role of procurement. More than 4,000 organisations disclosed climate targets to CDP in 2024—a notable increase from five years ago. Remarkably, 37% of these companies are expanding their ambitions.
Sustainability goals are proving robust even through leadership changes, with no climate targets being reversed after CEO transitions. Importantly, smaller businesses are increasingly committing, primarily due to supply chain pressures from larger entities. The median revenue of companies making commitments decreased from US$3.6bn in 2020 to US$1.3bn in 2024.
Pragya Jain from PwC UK says: “Sustainability is an untapped frontier of competitive advantage.
“Shifting the narrative from managing climate threats to creating value from sustainability is critical to future growth strategies.”
Advancements in Scope 1 & 2
Regarding Scope 1 and 2 emissions, procurement is positioned to influence improvements.
In 2024, 67% of companies aligned with their reduction targets, up from 64% in the previous year. However, this success heavily depends on Scope 2 reductions via renewable energy procurement.
Sectors like financial services and tech benefit due to inherently lower operational emissions.
Conversely, sectors such as mining and construction face more substantial barriers.
James Pincus from PwC UK, adds: “Technology alone can't solve the climate crisis, but it remains one of the most critical drivers of progress.”
“While the growth in UK climate tech investment is encouraging, identifying and investing in innovative solutions, urging government support and focusing investor attention is key, especially where decarbonisation is challenging.”
He warns that overreliance on renewable energy could eventually induce supply-demand imbalances, potentially elevating costs and compelling shifts towards electrification and energy efficiency enhancements.
Addressing Scope 3 challenges
Scope 3 emissions represent the most complex area for procurement, with averages often being 11 times larger than Scope 1 and 2 combined.
According to PwC, only 54% of companies are on track to meet their Scope 3 targets, a slight upturn from 50% the previous year.
Sector-specific reductions in industrial and automotive sectors are achieved primarily through improvements in the "Use of Sold Products".
Still, supplier engagement is nascent, with just 22% of companies maintaining mature supplier engagement programs.
Lynne Baber from PwC, says: “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.
“Smarter climate adaptation unlocks agility, inspires innovation and positions companies to lead in a more volatile world.”
Strategic factors for decarbonisation
PwC identifies crucial differentiators for effective decarbonisation: strong governance, capital investment, stakeholder engagement and product sustainability.
Governance is imperative, as companies with higher maturity in this domain tend to remain aligned with their targets.
Capital investment sees companies increasing their climate-action allocations significantly by 2030, with PwC recommending internal carbon pricing strategies.
Stakeholder engagement is essential, with the report indicating that 72% of companies engage suppliers.
However, few employ advanced strategies, underlining the need for sector-specific approaches. Product sustainability emerges as a critical lever, offering potential revenue enhancements between 6% and 25% through strategic design considerations.
PwC’s report predicts that by 2030, over one-third of company revenues will be connected to climate transition opportunities, reshaping procurement roles and positioning the sector as pivotal to future market leadership.
