PwC Report: Decarbonisation Drives Energy Strategy Shift

More companies are increasing their sustainability and decarbonisation ambitions than reducing them, according to PwC’s Third Annual State of Decarbonization Report, with energy now core to how businesses deliver on those goals.

The findings show that 23% of companies are stepping up their commitments compared to 18% scaling back, while 82% are maintaining or accelerating timelines.

At the same time, rising electricity prices and growing demand are pushing energy strategy to the forefront of corporate decision-making.

How do energy pressures reshape decarbonisation?

Energy has become a defining factor in decarbonisation performance.

Electricity prices have risen by between 7% and 25%, while global investment in industrial energy efficiency has surged by 45% between 2020 and 2025 to around US$30bn.

Despite these pressures, 69% of companies are still on track to meet Scope 1 and 2 emissions targets.

Businesses are increasingly focusing on energy optimisation and operational efficiency to deliver both emissions cuts and cost savings.

“What the data shows is that the business case for decarbonisation is getting stronger, not weaker,” writes David Linich, Decarbonization and Sustainable Operations Consultant and Partner at PwC, announcing the release of the report.

“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.” 

Companies investing more heavily in climate transition activities are also seeing valuation premiums ranging from 15% to 59%.

Supply chains remain a critical energy gap

While operational emissions are improving, supply chain emissions continue to present a major challenge. Scope 3 progress is lagging behind, with only 56% of companies on track.

Energy use across supply chains is difficult to measure and manage due to limited visibility beyond tier 1 suppliers.

Just 18% of companies consistently track supplier emissions across multiple tiers, while a quarter have no visibility beyond their immediate suppliers.

“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.”

Although 64% of companies now run structured supplier decarbonisation programmes, only 7% fully incentivise supplier action and just 13% consistently verify compliance.

This limits the ability to address energy-intensive activities embedded across value chains.

Manufacturing focuses on energy efficiency

In manufacturing, progress is being driven by energy-focused interventions. Companies are prioritising renewable energy adoption and procurement changes to reduce emissions.

PwC reports that 69% of manufacturers are on track for Scope 1 and 2 targets. However, Scope 1 emissions, often linked to direct fuel use and industrial energy consumption, are a sticking point, with only 46% on track.

“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.”

Energy-intensive industries are aligning decarbonisation with equipment upgrades and long-term investment cycles, helping to manage the cost and complexity of transitioning fuels and infrastructure.

Capital-intensive sectors link energy to value

In construction and mining sectors, where operations rely heavily on energy-intensive processes, decarbonisation is closely tied to financial performance.

Companies allocating more capital to transition activities are achieving higher valuations, ranging from 15% to 59%.

However, progress is slower due to the scale of infrastructure changes required and ongoing reliance on fossil fuels.

As a result, strategies in these sectors are centred on electrification, process efficiency and long-term energy planning.

AI growth adds new energy challenges

The rapid expansion of AI and data centre capacity is adding further complexity to energy systems. Electricity demand is rising, often outpacing the growth of clean energy supply.

This imbalance is contributing to higher power prices and increased reliance on fossil fuels including natural gas, which is expected to meet a significant share of new data centre demand through 2030.

At the same time, AI is emerging as a tool for energy optimisation. PwC notes that 60% of companies are already using AI for operational decarbonisation, primarily through applications such as energy monitoring and predictive maintenance.

While these remain early-stage deployments, they point to a growing role for digital tools in managing energy consumption and improving efficiency across industrial systems.