Leveraging Transition Pathways

Transition pathways are an essential tool for financial institutions conducting corporate transition assessments. Such pathways can contextualize the ambition and feasibility of corporate plans, identify key technologies, and more. No single pathway can answer every question a financial institution has about a client or investee. Ultimately, approaches that deploy a diverse range of complementary pathways will provide the most granular and actionable results for a corporate assessment.

Despite their value, pathways remain underutilized, due to both the complexity of selecting one from the wide range available and the resource demands of working with existing options. This paper offers a structured approach for selecting and interpreting transition pathways, recognizing that no pathway is best for every application. The approach involves five core steps:

Although this process is intended to simplify the identification of suitable pathways, it may still prove to be resource-intensive when evaluating a large number of pathways in a sector and/or region that is new to the financial institution. However, this is largely a one-time investment, and it builds a deep understanding of a specific sector and/or region that can be applied to many assessments. Additionally, RMI is developing a transition pathway repository that will further streamline steps 2–5, allowing users to simply look up what pathways and benchmarks are available for a given application in a sector and/or region. This will further reduce the resource intensity and lower barriers to expanded adoption of pathways in transition assessments.

Acknowledgements

We would like to thank our colleagues at RMI who have contributed to this work. In particular, Hannah Barton, Elizabeth Harnett, Matthias Kensbock, Antoine Lalechere, Mitchell Luti, Estefania Marchan, and Christina Pastoria each played a vital role in shaping the research and ideas presented in this report.

We also thank our strategic partners and other financial institutions and experts for their ongoing support and thoughtful review. Their guidance and engagement throughout the development of this work have been invaluable, ensuring its relevance and impact.