2025 State of Decarbonization: PwC

Click on any major news site and you’ll probably encounter headlines about companies scaling back — or even dropping — their sustainability initiatives. These headlines create the impression that corporate sustainability efforts are buckling under unrelenting economic, political and regulatory pressures. But look closer — you will find a different reality, one that’s been quietly unfolding behind the scenes.

PwC’s 2025 State of Decarbonization report shows there remains a strong commitment to sustainability as a source of business value. Companies may be talking less about their climate pledges, but most are focused on addressing rising energy demands, protecting value at risk, responding to evolving customer expectations and designing their operations to secure long-term growth and resilience.

Of note:

The number of companies making climate commitments continues to grow. More than 4,000 reported through CDP in 2024, up nine-fold over the last five years.
37% of companies are increasing their ambitions while only 16% are getting less aggressive.
More small companies are making commitments as supplier engagement efforts take hold. The median revenue of companies making commitments decreased from $3.6 billion in 2020 to $1.3 billion in 2024.
83% of companies report R&D investment in low-carbon products and services. And it pays off: products featuring sustainability attributes can achieve a revenue increase of 6% to 25%+ over products without such emphasis.
The commitments are durable through leadership transitions: Companies stand by their commitments even after a departing CEO’s successor is hired.

Download the full report

PwC’s unique approach leveraging AI to reveal actionable insights

We used GenAI to analyze more than one million entries of long form free text responses along with quantitative responses from 4,163 companies. Unlike reports that measure decarbonization against scientific targets for saving the planet — goals that may not be practical for many companies — we focus on each company's own ambitions and progress.

By focusing on company-specific targets, this report surfaces insights into how well companies are executing on their unique decarbonization journeys. These tailored insights reveal specific strategy, governance and execution variables that make the difference in whether companies are on or off track to succeed.

The research shows that supplier engagement efforts are on the rise, and as the large companies start to address Scope 3 emissions, they are leaning on their suppliers to set targets as well. Over time, this should cause a ripple effect as those suppliers lean on their suppliers to set targets and so on. We see this already coming to life in 2024, with more smaller companies setting emissions reduction targets.

Sustainability pays off: The moves helping companies turn climate action into competitive advantage

Most companies aren’t just keeping commitments — they’re turning sustainability into a value creation engine. Organizations anticipate that by 2030 more than a third of their revenue will be derived from the climate transition. To get there, they plan to allocate a much higher portion of capital expenditures and operating expenses over the next five years to climate mitigation and adaptation as they reimagine their product lineups to capture the evolving customer demand for more sustainably produced goods.

The companies that effectively combine climate targets, product sustainability, and operational and financial commitments are positioned to realize the revenue and margin upside from addressing Scope 3 emissions that occur across a product’s lifecycle.

Our findings point to a recipe for how companies can help drive the outcomes that can create industry winners and losers. Four themes separate the leaders from the laggards:

How an organization governs sustainability,
How it funds these initiatives,
The level of engagement and collaboration with suppliers and customers,
The ability to reduce Scope 3 emissions through product sustainability.

Like last year’s report, our 2025 report shows that many companies are struggling to execute and make progress on their commitments. While there is good progress being made on Scope 2, only 46% are on track to hit Scope 1 targets and only 54% are on track to hit Scope 3 targets. But the real story isn’t one of retreat — it’s one of quiet, consistent action. While progress remains challenging, we see many executives doubling down on decarbonization as a strategic imperative, driving innovation, resilience and long-term competitive advantage.

Examining relative ambition against progress by industry sector against Scope 1 and 2 emissions reveals an interesting pattern. Companies with relatively more ambitious targets tend to be on track, while those that are taking a more conservative approach with targets also seem to be approaching their programs cautiously and are behind compared to their targets. This indicates that companies who have set more aggressive, often climate-aligned, targets are also establishing the governance, programs, and roadmaps needed to implement effectively.

Scope 3 remains an area of great opportunity, with relatively lower progress and ambition compared to Scope 1 and 2. Less correlation between ambition and performance suggests companies are earlier on their decarbonization journey.

Analyzing trends and testing various hypotheses revealed four key takeaways

Commitments and ambitions remain high
Despite persistent headlines about companies retreating from their sustainability initiatives, our research tells a different story: More companies than ever are committed to decarbonization.
Setting the table for shared value
The data tells an interesting story about what companies are learning as they execute against Scope 1, 2 and 3 emissions. While strides are being made, the greatest remaining opportunities are related to engaging and innovating with value chain partners to address Scope 3 emissions.
The recipe for success is becoming clearer
Successful decarbonization hinges on four differentiators: how an organization governs its approach to climate, how it funds climate initiatives, the effectiveness of its stakeholder engagement, and the ability to reduce Scope 3 emissions through product sustainability.
The greatest value unlock is yet to come
A key motivator for Scope 3 decarbonization is the revenue and margin growth opportunities that companies are identifying related to meeting demand for more sustainable products and services. Many companies are at the beginning of this journey, and the evolution will yield clear winners and losers.

A look at how climate commitments and ambitions have evolved over time

Of the 6,895 companies who responded to CDP in 2024, over 4,000 have indicated climate commitments. That’s a nine-fold increase from five years ago. What stands out is that 37% of companies are increasing their ambitions while only 16% are decelerating their goals.

37%

of companies are increasing their ambitions while 16% are decelerating their goals.

Source: PwC analysis, CDP (2024)

Those findings may be surprising given the headlines that amplify news of companies retreating on their climate commitments. But we are entering an era of quiet progress, where companies avoid publicizing climate pledges that can open them up to unwanted scrutiny and instead focus on making progress far from the spotlight.

A full 84% of companies we studied are standing by their climate commitments. We found a similar trend in our 2024 study, and it persists even when companies undergo a leadership change. We sampled 47 companies with Net Zero targets that experienced a CEO transition. None of those companies backed off their commitments.

Even among companies that have extended the time required to achieve their targets, there is typically a more nuanced explanation beneath the surface. A little over half are “recalibrating lower” their expectations and resetting lofty targets made in the absence of a detailed plan. Coinciding with the increase in CFO involvement which has brought greater rigor to the planning efforts, these companies are now equipped with a detailed climate transition plan and a clear-eyed view of what is achievable. For these companies, a lower ambition doesn’t mean they have deprioritized climate, and in fact, these companies may be allocating substantial resources against their climate goals, as seen in these case studies from Microsoft, Crocs and Unilever.

The quiet momentum turning climate commitments into competitive advantage

PwC's 2025 State of Decarbonization report shows that corporate sustainability initiatives aren’t slowing down — rather they’re quietly progressing and becoming more rigorous. Despite the noise about corporate backpedaling, more companies than ever, from industry giants to small suppliers, are making climate commitments and holding firm to their goals. And for good reason — there is business value available from climate and decarbonization efforts. While our report shows progress is being made on reducing Scope 1 and 2 emissions, the real breakthrough is still ahead with Scope 3, where addressing supply chain emissions and prioritizing product and supply chain sustainability can help define a wave of business transformation.

Success in this new era won't be left to chance — it will likely turn on execution. Our findings suggest the recipe for success is coming into focus and that the coming years will separate industry winners and losers. The ingredients? Strong governance that integrates sustainability into decision-making and corporate strategy, consistent financing to turn climate commitments into climate action, extensive engagement with suppliers and customers to drive continuous improvements across the value chain, and a focus on product innovation to meet rising customer demand for more sustainable solutions. Companies that get this recipe right can reap the rewards: enhancing resilience, strengthening margins, expanding market share, and securing long-term competitive advantage. Those that embrace this approach can position themselves to not only meet their climate goals but create opportunities to redefine their industries, drive innovation, and position themselves as the market leaders of a more sustainable future.