The Green Asset Ratio (GAR) is intended to serve as a key metric within European taxonomy regulation, providing insight into the progress of transformation in the banking sector. In its current design, however, it often says more about a bank’s business areas and customer structure than about its sustainability performance or ESG risks.
This paper explains the objectives of the GAR, its integration into European sustainability reporting, and its calculation. In doing so, it highlights several “blind spots” of the metric, such as the limited taxonomy eligibility of large parts of the economy as well as data gaps relating to SMEs and non-EU companies. These issues are compounded by a high bureaucratic burden, limited steering effect, and restricted usefulness as a risk indicator. As a result, the GAR only partially fulfils its role as a transparent, comparable, and easily understandable sustainability metric.
The Omnibus package and Delegated Regulation (EU) 2026/73 introduce initial simplifications. Nevertheless, further reform remains necessary: the GAR should be contextualised more clearly, methodologically harmonised, and complemented by additional metrics.
