The transition to net zero looks different for each country and region. From policy and regulatory environments, shape of the economy, access to natural resources, technology advantages, geographical constraints and more, each country faces unique challenges and opportunities in the transition. The same factors influence the companies that operate in those countries.
To date, global net zero pathways have been the default lens for understanding corporate transition alignment. However, investors, corporates, and policymakers are increasingly seeking more nuanced insights that better reflect regional- and country-specific challenges and priorities a company will face. This is essential for decision makers considering how to allocate capital in line with climate goals.
Throughout 2026, Arc and our partners have been working to better reflect these local contexts in our understanding of corporate transitions. We have engaged with investors, policymakers, and the wider ecosystem on use cases and challenges with localised assessments to explore how this work could be developed at scale.
We are pleased to publish a report detailing the state of play in this area, alongside a prototype of localised corporate transition assessments on TransitionArc, which showcases how local pathways can be applied in practice.
Arc would like to thank its partners for their input into this report and the work that has informed it, including the Investor Group on Climate Change, Centro Climate, Climateworks Centre, Carbon Budget Tracker, Climate Finance Hub Brasil, Institute for Sustainable Futures, RMI, and World Benchmarking Alliance.
Summary of key messages
Localisation is the use of regional, national, or sub-national sector transition pathway(s) to assess whether a company’s emissions and targets trajectory is aligned with that transition. Pathways may include 1.5˚C, well below-2˚C, policy trajectories, or other narratives.
To best understand how a company is positioned for the transition, we need to use a pathway that most closely aligns to the realities it will face.
- The goal of localised assessments is not to replace the current global approach, but to create an ecosystem where the two can be used together to produce an enhanced understanding of corporate transitions:
- Global pathway assessments provide a comparable reference point for transition ambition across companies.
- Localised assessments provide insight into how credible and achievable those transitions are within the specific national contexts those companies operate in.
- Local assessments can be used alongside global assessments to enable:
- Investors to compare companies across a portfolio and understand alignment with long-term climate goals, as well as transition credibility, implementation challenges, and investment opportunities within specific markets.
- Policymakers to monitor their country’s transition progress against pathways that reflect the local context. This supports effective identification of potential bottlenecks and enablers of corporate action, and where further policy action could unlock investments.
- Key challenges remain in scaling localised assessments:
- Suitability: Localised assessments are only useful when a company’s transition is materially shaped by the conditions in a country. A standardised approach to deciding which pathway to apply to which company is needed.
- Interpretation of outcomes: The landscape of corporate transition data is already complex without this additional layer of localised assessments. Users need transparent methodologies so they can best interpret and make use of assessment outcomes.
- Longevity / relevance risk: Ongoing provision of up-to-date local pathways will be essential to maintain confidence in the pathways and assessments performed against them. However, this remains a challenge in a constrained funding and capacity landscape.
- Demand for better integration of local context into corporate transition assessment is predicted to grow among both investors and policymakers, particularly as sophistication grows and new use cases are unlocked. This includes interest in multi-pathway narratives beyond 1.5°C.
To best understand how a company is positioned for the transition, we need to use a pathway that most closely aligns to the realities it will face. This is where localised corporate assessments can add value.
What’s next?
Localised assessments can play a critical role in guiding capital flows in line with climate goals. What’s needed now is to increase their use and availability, as well as tackling the challenges to scaling them.
Promising developments in asset-level data accuracy and AI-enabled analysis have the potential to resolve some of these issues. Applying a local lens to other corporate transition metrics, such as capital expenditure and technology adoption, could also expand the range of use cases for localised assessments.
Focus should also be on increasing user uptake and understanding of why such assessments are relevant, what insights they provide, and how they enable better decision-making for financial institutions and policymakers.
If your organisation is working on or using local pathways, corporate transition assessments, asset-level data, investor use cases, or policy applications, we would welcome your input as we continue to progress this important initiative. Get in touch.
Read the report
One size doesn't fit all: Localising corporate transition assessments
