The Green Asset Ratio (GAR): a new key performance indicator for credit institutions

Abstract The financial sector plays an important role in financing the green transformation. Various regulatory initiatives EU aim to improve transparency relation sustainability of products and economic activities non-financial undertakings. For credit institutions, Green Asset Ratio (GAR) has been established by European authorities as a key performance indicator (KPI) for measuring proportion Taxonomy-aligned on-balance-sheet exposure total assets. breakdown GAR type counterparty, environmental objective asset provides in-depth information about profile institution. This information, which not available date, may also initiate discussions between management shareholders or other stakeholders regarding future strategy institutions. paper overview background method calculating along different dimensions. Finally, potential benefits limitations are discussed.