PwC’s Second Annual State of Decarbonization - Sector Insights

PwC’s Second Annual State of Decarbonization report highlights an era of quiet, but consistent progress on climate action. The report — which used GenAI to analyze responses from over 4,000 companies who submitted responses to CDP in 2024 — reveals a telling split: 37% of companies are raising their climate ambition, while just 16% are scaling back. But not all organizations are decarbonizing at the same rate.

To unpack that, we dove deeper into the data. In our State of Decarbonization – Sector Insights report, we take a closer look at 12 sectors to uncover what motivates climate action and what drivers, barriers, and opportunities companies can expect as they look to deliver on their goals. One immediate takeaway: from energy to electronics manufacturing, each sector is staring down unique pathways to decarbonization.

These pathways — and how companies navigate them — can be largely shaped by the sources of emissions within their operations and whether value chain emissions aggregate upstream or downstream. The sector differences aren't superficial — they’re structural, technological, and often financial. For example, wide adoption of electric arc furnaces can decarbonize steel production but this infrastructure also significantly increases electricity demand. Airlines have begun using alternative fuels, yet scaling alternatives is difficult. Industrial and consumer products companies are employing technology — AI, digital twins, robotics — to help them rethink manufacturing processes and product design and to identify operational efficiencies. At every step, though, the success of such initiatives can depend on collaboration across supply chains and the allocation of the necessary capital.

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Take the automotive sector, which spans original equipment manufacturers (OEMs), heavy-duty vehicle makers, engine producers, interior system designers, and component suppliers. While 69% of automotive companies are on track to meet Scope 1 and 2 targets, only 28% are on pace with Scope 3 goals. Why? A whopping 85% of Scope 3 emissions are downstream and occur once a vehicle leaves the factory floor. While the sector has leveraged process improvements and renewable energy to reduce its direct emissions, full-sector decarbonization hinges on customer adoption of electric vehicles (which has slowed since many companies set their targets), and OEM-led investment and innovation requiring transformation across technology, infrastructure, and supply chains.

In the agriculture, food, and beverage sector, 81% of Scope 3 emissions are generated from the upstream sourcing of forestry and agricultural ingredients and materials. Nearly half the companies (48%) are on track to meet Scope 3 targets, while 61% are on pace for Scope 1 and 2. They've been addressing indirect emissions with certified lower-impact ingredients, investing in practices that restore soil health and carbon stocks, and optimizing packaging and distribution systems. The sector also has multiple opportunities to reduce direct emissions by making process improvements related to food preparation, cooking, refrigeration, and storage. At the farm level, where granular data is often limited but necessary to inform effective action and track progress, strong supplier engagement can facilitate innovation and collaboration on low-carbon practices.

The report's message is clear: The path to decarbonization is different for each sector, and progress requires leadership, financial resources, and collaboration with others. Companies have multiple levers to pull, but the selection, sequencing, and outcomes will likely depend on a company's own operations and value chain. Our research offers a unique chance for companies to learn how their peers have overcome challenges while also exploring ideas for reducing emissions from other sectors. By leveraging these aggregated insights from peer disclosures, companies can discern and account for key determinants of successful decarbonization.