PwC: How Construction is Helping in Decarbonisation Efforts

Construction and mining sectors could be leading the way in decarbonisation efforts despite facing some of the industry's most significant challenges, according to new research from PwC.

The consultancy's Third Annual State of Decarbonisation Report reveals that more companies are increasing their sustainability and decarbonisation ambitions (23%) compared to those that are decreasing (18%). The findings suggest that 82% of companies held steady or accelerated the timeline they needed for achieving sustainability ambitions, indicating a strengthening business case for climate action across industrial sectors.

For construction businesses, the research highlights a complex picture where substantial investment requirements are being balanced against measurable financial returns. Companies in construction and mining that allocate higher shares of capital expenditure to climate transition activities are achieving valuation premiums ranging from 15% to 59%, demonstrating the potential commercial benefits of sustainability strategies. This correlation between climate investment and market valuation represents a significant shift in how investors are assessing construction sector performance, with sustainability metrics increasingly influencing capital allocation decisions.

Capital efficiency driving results

Across industrial manufacturing and related sectors, decarbonisation is increasingly tied to disciplined execution and capital efficiency. Companies are spending less overall on decarbonisation but achieving better results by prioritising high-return initiatives such as energy demand reduction and operational optimisation.

The report shows that sustainability and decarbonisation efforts remain resilient, with 69% on track to meet Scope 1 and 2 targets. Energy has become a key component of these strategies, as electricity prices increased by 7% to 25% and global industrial energy efficiency investment rose by 45% between 2020 and 2025, reaching approximately US$30bn. For construction firms operating energy-intensive equipment and facilities, these price increases have created additional urgency around efficiency improvements and renewable energy adoption.

“What the data shows is that the business case for decarbonization is getting stronger, not weaker," says David Linich, Decarbonization and Sustainable Operations Consultant and Partner at PwC.

"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.” 

However, challenges persist, particularly in Scope 3 emissions, where PwC calculates that only 56% of companies are on track. Overall, sustainability is now firmly linked to cost efficiency, growth and resilience, with companies prioritising high-impact actions such as energy optimisation, supplier engagement and product-level decarbonisation to deliver measurable business value.

Supply chain visibility challenges

According to the report, supply chain visibility remains a critical weakness for construction sector companies, with 25% of companies lacking visibility beyond tier 1 suppliers and only 18% consistently tracking supplier activities and emissions across multiple tiers. At the same time, 58% of companies report only partial visibility into tier 2 suppliers, limiting their ability to address high-impact emissions sources. This challenge is particularly acute in construction, where complex supply chains involving materials manufacturers, logistics providers and subcontractors create multiple layers of emissions that are difficult to monitor and manage effectively.

“One of the clearest findings in the report is that supply chain visibility is still a major gap. 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," says David.

"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.”

According to PwC, supplier engagement is improving, with 64% of companies now operating structured and scaled decarbonisation programmes. However, data shows that only 7% have fully incentivised supplier action across their base. Similarly, while 63% of companies have implemented supplier requirements at scale, just 13% consistently verify and enforce them. These gaps highlight the need for stronger procurement integration, as companies that improve supplier visibility, engagement and accountability are seeing faster Scope 3 emissions reductions.

Hard-to-abate sector progress

Mining and construction are among the most capital-intensive and hard-to-abate sectors, where transition-aligned investment is closely linked to financial performance. These industries also face slower emissions reduction progress due to the need for large-scale, asset-heavy transformations and reliance on energy-intensive processes. As a result, decarbonisation strategies are increasingly focused on process efficiency, electrification and long-term capital planning. The construction sector's unique challenge lies in balancing the emissions from both operational activities and the embodied carbon in materials and built assets, requiring coordinated action across the entire value chain.

Despite these challenges, sectors such as construction and real estate remain broadly on track against their emissions targets, though maintaining progress will require continued investment and innovation. Manufacturing sectors are making steady progress on decarbonisation, particularly in Scope 1 and 2 emissions, where 69% of companies are on track to meet their targets, up from 67% the previous year. However, PwC's data shows that "only 46% of companies are on track for Scope 1, unchanged from the prior year, which represents more than 80% of operational emissions across the organisations we analysed."

Progress is being driven by targeted actions such as production process efficiency improvements (−6%), renewable energy generation (−6%) and procurement (−4%). Manufacturers are increasingly aligning emissions reductions with asset replacement cycles to manage the high cost and complexity of transitioning fuels and equipment.

“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 decarbonization to asset replacement cycles, process efficiency and smarter capital planning so they can improve resilience and performance at the same time.”

Rising demand for AI and data centre capacity is reshaping the energy and sustainability landscape, making Scope 2 decarbonisation more complex to track and reduce, highlights PwC. While AI drives up energy consumption, it can also significantly reduce emissions by optimising industrial processes, improving energy efficiency in buildings and enhancing logistics. For construction companies, AI applications are emerging as powerful tools for project planning, material optimisation and predictive maintenance of equipment, potentially offsetting the technology's energy demands through operational efficiencies.

"Our analysis sets a clear baseline: 60% report using AI for operational decarbonisation, but most applications remain first-generation machine learning, such as process optimisation, energy monitoring and predictive maintenance, rather than the more advanced capabilities now possible," says PwC. The construction sector has significant opportunity to advance beyond these basic applications, deploying AI for design optimisation, waste reduction and supply chain coordination to achieve deeper emissions reductions.