From 2024, banks will have to disclose the proportion of their business that meets sustainability criteria. This disclosure will be made using a new key figure, the Green Asset Ratio (GAR). The GAR puts the sustainably financed business volume and the sustainable investments of banks in relation to the total business volume. Disclosure is made as aggregated GAR for recognized on-balance sheet assets and as part of a breakdown by environmental objectives (note: in accordance with the EU taxonomy) and by type of counterparty. The EU taxonomy has created a working basis for the calculation and reporting of GAR, as only those assets are included in the GAR that were previously qualified as taxonomy-compliant. Details on the GAR calculation for credit institutions can be found in Annex V ("KPIs of credit institutions"), Chapter 1.2.1 of Delegated Regulation (EU) 2021/2178.
The availability of the required data will be just as essential for the actual comparability of the proportion of sustainable business of banks as the clarification of outstanding issues from the Delegated Regulation. There is also no quota that has to be met or even a ban on certain transactions. Nevertheless, the GAR will be an important indicator in the future and, in conjunction with the respective sustainability targets, will help to make transparent and comparable how the institutions are progressing along the planned path.
