Despite conversations over the past year that question how committed companies are to sustainability, the recent PwC’s 2025 State of Decarbonization report shows there remains a strong commitment.
The authors say that most companies are focused on addressing this issue for a number of reasons including rising energy demands, protecting value at risk, responding to evolving customer expectations and designing their operations to secure long-term growth and resilience.
Of the 6,895 companies who responded to the Carbon Disclosure Project (CDP) in 2024, over 4,000 have indicated climate commitments. That’s a nine-fold increase from five years ago. Additionally, 37% of companies are increasing their ambitions while only 16% are decelerating their goals.
Companies noted that they are turning sustainability into a value creation engine. By 2020, companies said that more than a third of their revenue will be derived from the climate transition. To achieve this goal over the next five years they will allocate a much higher portion of capital expenditures to climate mitigation. Customer demand for more sustainably produced goods is a driving force in the re-evaluation of product lines.
Scope 3 Emissions
Among the topics the report discussed is that of Scope 3 emissions.
The 2025 report shows that many companies are struggling to execute and make progress on their commitments. Just 54% are on track to hit Scope 3 targets. However, that number is up from 50% last year.
Also up was the total number of reporting companies increasing from around 2000 in 2023 to over 3600 companies in 2024. This resulted in the total reported Scope 3 GHG emissions more than doubling. Downstream emissions accounted for more than two- thirds of value chain emissions.
Reporting Scope 3 is difficult as its emission requirements are 11 times larger than Scope 1 and 2 emissions combined. Also, upstream and downstream value chains are much harder to measure, influence and abate.
The report explained the situation this way. "While the relative proportion of Scope 3 target coverage is lower than that of Scope 1 and 2, Scope 3 targets are much larger and further reaching: 24 billion metric tons of emissions are covered under Scope 3 targets, versus 6 billion metric tons of Scope 1 and 2 emissions. Scope 3 targets and action remain an important focus area with the potential to unlock a lot of value for companies and their customers. When the Scope 3 embodied carbon is lowered in a product, that often means there is also less energy and materials needed for that product which can translate to lower costs and improved margins."
For those companies on track, more than 80% of achieved reductions originated from the use of sold products. However, even in sectors where upstream emissions are more substantial, reductions in purchased goods and services emissions are low relative to their share of base year emissions. The report concludes that supplier engagement programs are still maturing and will need to develop further to accelerate supply chain emissions reductions.