Green Asset Ratio (GAR)
The GreenAsset Ratio (GAR) is a financial tool designed to help companies measure and reduce their environmental footprint. It measures how much of a company's assets are invested in "green" assets that promote sustainable and environmentally friendly corporate governance and practices. Companies can use it to monitor their investments in green assets against other investments and compare the results to track their progress toward achieving their sustainability goals.
The GAR is calculated as follows: The sustainable investments and sustainably financed business volumes are added together, this sum is then divided by the total business volume.
The GAR is mainly used within the EU taxonomy. This is because, from the beginning of 2024, banks in the EU will have to demonstrate what proportion of their business activities meet sustainable criteria. Thus, the GAR indicator is intended to enable a comparison across all banks.