GAR? Green Asset Ratio
- EcoVision
- Feb 11
- 2 min read
Green Asset Ratio (GAR) is a key performance indicator used mainly by banks (and other credit institutions) to show what share of their assets are financing activities that qualify as environmentally sustainable under the EU Taxonomy.
In plain terms: it answers, “How much of this institution’s lending and investments are actually funding ‘green’ economic activity as the EU defines it?”
(again as finance guys, we need and like ratios for measurement and monitoring..)
What GAR is (clear definition)
GAR = (Taxonomy-aligned green assets) ÷ (total covered assets)
Numerator (green part): Loans, advances, debt securities, and some equity exposures that finance EU Taxonomy-aligned activities (e.g., certain renewable energy, low-carbon transport, energy-efficient buildings).
Denominator (the covered total): A defined set of assets on the balance sheet (with some exclusions), often focusing on exposures to companies that are required to publish EU Taxonomy information (large EU-listed firms, large public-interest entities, etc.).
Important nuance: A company or project can be “green-ish” in common language but still not count in GAR unless it meets the EU Taxonomy’s technical screening criteria and “Do No Significant Harm” tests, plus minimum safeguards.
additional readings:
DNSH? How to measure?
Why GAR matters (why firms report it)
Comparability: Investors and supervisors can compare how “green” different banks’ balance sheets are using a shared rulebook.
Transition signal: A rising GAR can suggest a bank is increasing financing for Taxonomy-aligned activities. (trend analysis again..)
Data pressure: It pushes banks to request better sustainability and Taxonomy data from clients.
Corporate examples
GAR is reported by banks (rather than typical non-financial corporates).
Here are strong examples you can look up in annual reports / Pillar 3 / EU Taxonomy disclosures:
1) BNP Paribas
Why it’s a good example: Large EU bank with extensive sustainable finance reporting.
What you’ll see in their disclosure: GAR / taxonomy alignment discussion, plus breakdowns of green financing categories and methodology notes.
How it shows up in practice: Financing for renewable energy projects, green buildings, and eligible corporate capex can contribute to GAR when Taxonomy criteria are met.
2) Deutsche Bank
Why it’s a good example: Detailed ESG and regulatory reporting and a wide corporate lending book.
What you’ll learn: How data gaps affect GAR, and how much of the denominator is “in scope” due to client reporting requirements.
3) Société Générale
Why it’s a good example: Strong sustainable finance franchise (e.g., green bonds, project finance).
What to look for: Their EU Taxonomy templates and narrative around alignment vs. eligibility (a common confusion point).
4) ING Group
Why it’s a good example: Known for climate strategy and sector steering (energy, real estate).
What’s useful: How they connect portfolio steering with regulatory metrics like GAR, and how client taxonomy reporting affects results.
5) UniCredit
Why it’s a good example: Clear EU Taxonomy reporting templates and explanations; illustrates the challenge of building GAR from client-level data.
References & additional readings
#GreenAssetRatio #GAR #EUTaxonomy #SustainableFinance #ESGReporting #BankingRegulation #ClimateRisk #TransitionFinance #Pillar3 #GreenFinance
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