EU Taxonomy GAR and financial undertaking KPIs

The Disclosures Delegated Act defines a financial undertaking as an undertaking subject to the Article 19a or 29a Accounting Directive sustainability reporting obligations that is an asset manager, credit institution, investment firm, insurance undertaking, or reinsurance undertaking.

Article 8(2) names turnover, CapEx, and OpEx KPIs for non-financial undertakings, while the delegated act provides separate KPIs and calculation methods for financial undertakings. A bank, asset manager, investment firm, insurer, or reinsurer should identify its undertaking type before choosing a template or formula.

The delegated act describes the GAR as the main KPI for credit institutions. At a high level, the numerator is the covered-asset amount financing or invested in Taxonomy-aligned activities, after the required activity or counterparty KPI weighting; the denominator is the covered on-balance-sheet asset population after the Article 7 exclusions. The ratio reflects lending and investment business such as loans, advances, debt securities, and equity holdings.

For on-balance-sheet exposures, Annex V says the GAR covers specified accounting categories of financial assets, including loans and advances, debt securities, equity holdings, investments in subsidiaries, joint ventures and associates, certain non-trading fair-value assets, and repossessed real estate collateral. The GAR is disclosed with stock and flow information, environmental-objective breakdowns, and relevant enabling or transitional activity breakdowns.

Financial undertaking KPI calculations depend heavily on counterparty and investee disclosures. The Article 8 rules require separate turnover-based and CapEx-based calculations where general-purpose exposures are weighted by an issuer or counterparty Taxonomy KPI.

For known-use-of-proceeds exposures that finance specific identified Taxonomy-aligned activities, include only the amount supported by activity or asset evidence under the applicable method. For general-purpose exposures, use the counterparty KPI and basis required for the reporting undertaking. Keep turnover-based and CapEx-based results separate.

The amended Article 7 exclusions affect how GAR and other financial-undertaking KPIs should be read. Exposures to central governments, central banks, and supranational issuers remain outside numerator and denominator calculations. From 1 January 2026, derivatives, cash and cash equivalents, on-demand interbank loans, goodwill, commodities, and other asset categories not covered by Article 7(6) are also excluded from the denominator.

Exposures to undertakings outside Articles 19a and 29a, and outside groups caught by those provisions, are generally excluded from the denominator. The amended rule has specific treatment for qualifying special-purpose vehicles and permits voluntary inclusion where the counterparty reports the prescribed KPIs voluntarily or where use of proceeds is known. These coverage rules mean GAR is not a measure of every asset on the balance sheet.

Regulation (EU) 2026/73 lets each financial-undertaking type omit assessment of specified known-use-of-proceeds assets, exposures, revenue, premiums, or other KPI inputs when the cumulative omitted amount is below 10% of the relevant defined denominator. The exact denominator differs by undertaking and KPI. Omitted amounts are not erased: they must be reported separately as non-material.

Until 31 December 2027, a financial undertaking may opt out of most detailed Article 8 rules only if it makes no claim under Articles 3 and 9 of the Taxonomy Regulation that its activities are associated with environmentally sustainable activities. It must place the prescribed statement in its management report. The opt-out is a temporary reporting option and does not determine alignment.

The Article 8 transition matters because financial undertaking KPI data depends on information from counterparties and investees. The delegated act limited 2022 reporting to specified elements and qualitative information, with remaining provisions applying from 1 January 2023 for non-financial undertakings and from 1 January 2024 for financial undertakings.

Credit institutions have an additional staged item. The original delegated-act transition placed trading-book and commission-and-fee KPIs for commercial services other than financing in 2026, but Regulation (EU) 2026/73 deferred those sections to 1 January 2028.

For a financial year beginning in 2025, a reporting undertaking may instead use the rules applicable on 31 December 2025. Commission Notice C/2026/2558 says the chosen rule set must be applied in full and identified in contextual information; selected elements of the old and amended rules should not be combined.

Annex XI requires quantitative KPIs to be accompanied by qualitative information for asset managers, credit institutions, investment firms, and insurance or reinsurance undertakings. That qualitative layer is not optional page decoration; it explains scope, data sources, data limitations, changes over time, strategy links, product design, and engagement with clients and counterparties.

The evidence file for GAR or another financial-undertaking KPI should connect each number to its source population, exclusions, counterparty KPI inputs, known-use-of-proceeds evidence, method, and approval trail. Reassess after a counterparty restatement, changed use of proceeds, exposure disposal or acquisition, reporting-scope change, delegated-act amendment, or methodology correction. This record shows whether a ratio moved because financed activities, counterparty data, methodology, or coverage changed.