Green Asset Ratio (GAR)

The Green Asset Ratio (GAR) is a regulatory indicator that measures the percentage of a financial institution’s assets that are aligned with the EU Taxonomy.

In practical terms, it reflects what portion of a bank’s loans and investments finance economic activities considered environmentally sustainable according to the technical criteria established by the European Union.

‍

How is it calculated?

In simplified terms:

GAR = (EU Taxonomy-aligned assets / Total eligible assets) × 100

Only exposures to companies subject to reporting obligations under the EU Taxonomy Regulation and frameworks such as the CSRD are included in the calculation.

Let’s imagine a bank with:

• €1 billion in eligible assets
• €250 million financing activities that meet the Taxonomy’s technical criteria (renewable energy, building energy renovation, electric mobility, etc.)

The calculation would be:

GAR = (250 / 1,000) × 100 = 25%

This means that 25% of the bank’s assets are considered “green” under European regulation.

‍

Why is it relevant?

• It is a mandatory indicator for large financial institutions in the EU.
• It helps assess the degree of alignment of the financial system with European climate objectives.
• It indirectly influences companies’ access to sustainable finance.
• It has become a key transparency and ESG positioning metric in the banking sector.

In the context of corporate sustainability, the GAR connects companies’ environmental reporting with financial institutions’ ability to classify their assets as “green” under standardized regulatory criteria.

Want to understand how GAR can impact your financing?

Discover how to structure your environmental reporting with methodological rigor and regulatory alignment.

Discover the Manglai platform

‍