More than four out of five companies are maintaining or accelerating their climate goals, and more companies are on track to achieve their operational and value chain decarbonization targets, challenging the narrative that sustainability efforts have peaked with increased political scrutiny, according to a new study released by professional services firm PwC.

The study also indicated that sustainability efforts are increasingly focused on the supply chain, with companies ramping and maturing their engagement strategies with suppliers, and increasing transparency on Scope 3 emissions.

For the report, PwC’s third annual State of Decarbonization, PwC analyzed data from 3,547 companies across multiple industries, geographies and company sizes, including CDP disclosures, company sustainability, CSRD, and 10-K reports, in addition to drawing on information from S&P Capital IQ, the Science-Based Targets initiative, and various public sources of information.

The report found that 82% of companies either kept their climate commitments steady or accelerated them over the past year, similar to 84% in the prior year. While fewer companies – 23% – increased their commitments compared with last year’s report (36%), the proportion of companies adding or accelerating decarbonization goals still significantly outweighs those pulling back on their targets, at 18%, up slightly from 16% in the prior year.

Additionally, while the growth rate in the number of companies setting new decarbonization targets over the past year slowed to 7%, the report indicated that the targets being announced are increasingly rigorous, with most companies now setting science-aligned or externally validated science-based targets.

The study also found that companies are steadily improving on their emissions reduction initiatives, with 69% of companies now assessed as being on track to meet their Scope 1 and 2 targets. Progress on operational and purchases energy-related emissions comes as companies have been faced with a series of energy price shocks and reliability concerns, with the report noting that global investment in industrial sector energy​ efficiency​ rose ​45%​ between ​2020 ​and​ 2025, reaching approximately $30 billion.

The report also highlighted a series of challenges that may impact future progress on Scope 2 emissions reduction, including increasing competition for energy resources from growing AI and data center capacity, proposed changes to GHG Protocol Scope 2 rules placing more stringent requirements on renewable energy procurement, and a less accommodative policy environment for clean energy purchasing, marked by a 19% decline in 2025 in contracted power purchase agreement (PPA) volumes in the U.S. and Europe.

Progress on addressing wider value chain emissions is also steadily improving, but remains behind Scope 1 and 2, according to the report, with 56% of companies on track against their Scope 3 emissions pathways in 2025, up from 54% in the prior year, and 50% in 2023.

The improving progress on Scope 3 emissions comes as companies increasingly focus their decarbonization efforts on the supply chain, according to the report, which found that companies have improved in areas including supplier visibility, engagement and transparency.

Examining a cross-sector sample of Fortune 500 companies, for example, the report found that 75% of companies now have visibility into their supply chains beyond tier 1 suppliers, up significantly from only 50% in 2023.

Engagement has also improved substantially, according to the report, which found that 64% of companies now have structured and scaled decarbonization programs in place – compared with only 35% in 2023 – with another 7% having put in place incentives for decarbonization across the supplier base (not present in 2023). Additionally, more than three quarters of companies (76%) have set broad supplier decarbonization requirements, up from only half (51%) two years ago.

Supply chain emissions visibility is also rapidly increasing, according to the report, with the number of companies disclosing Scope 3 emissions or expanding the reporting scope to include additional emissions categories increasing by 30% over the previous year.

Notably, as the data indicates that large companies are increasingly engaging, incentivizing and pressuring their suppliers on decarbonization, new climate target setting appears to be increasingly common in smaller companies, with the median revenue of companies setting Scope 1 and 2 goals in 2025 at $1.1 billion, compared with $4.1 billion in 2020, according to PwC.

The report also examined the emerging use of artificial intelligence by companies in their sustainability initiatives, finding that while 60% of companies now report using AI for operational decarbonization, efforts remain early-stage, with less than 1% actually quantifying emissions reductions from their AI initiatives. PwC highlighted the addressing of sustainability data challenges as a key near-term opportunity for the use of AI by companies, noting that only 14% of companies publicly report using AI to improve sustainability or emissions reporting.

Click here to access the report.