EU Taxonomy Regulation GAR KPI Workflow

Start with the legal reporting perimeter. Article 8 of Regulation (EU) 2020/852 requires in-scope undertakings to disclose how and to what extent their activities are associated with environmentally sustainable economic activities. For credit institutions, the Disclosures Delegated Act specifies the GAR methodology in Annex V and the tabular presentation in Annex VI.

The delegated act describes GAR as the proportion of a credit institution's assets financing and invested in Taxonomy-aligned economic activities relative to total covered assets. Begin by identifying the credit institution, prudential consolidation basis, reporting year, applicable rule set, and Annex VI templates. For a financial year starting in 2025, the institution may use the rules in force on 31 December 2025 instead of the amendments applying from 1 January 2026. Commission Notice C/2026/2558 says that choice applies to the complete rule set and must be identified in contextual information.

Build the exposure inventory around Annex V categories rather than a generic loan list. GAR covers on-balance-sheet financial assets such as loans and advances, debt securities, equity holdings, and repossessed collateral. Under the rules applying from 1 January 2026, derivatives, cash and cash equivalents, on-demand interbank loans, goodwill, commodities, and other assets outside Article 7(6) are excluded from financial-undertaking KPI denominators.

For exposures to undertakings, the workflow should capture whether the counterparty publishes Article 8 KPIs and which KPI must be applied. For non-financial undertakings, the delegated act uses their turnover and CapEx Taxonomy KPIs in several weighting steps. For financial undertaking counterparties, the bank should use the relevant counterparty KPI under the delegated act, such as a counterparty credit institution's total GAR.

Keep two GAR evidence paths distinct. Where use of proceeds is known, connect the exposure amount to the financed Taxonomy-aligned activity and the applicable technical screening criteria. Where use of proceeds is unknown, apply the issuer or counterparty KPI weighting required by Annex V rather than treating the full exposure as aligned.

The Annex VI guidance also makes the 'of which Use of Proceeds' column a separate information view. It is used for exposures where proceeds are known and included in the GAR up to the amount financing Taxonomy-aligned activities; it does not simply add together with the 'of which transitional' and 'of which enabling' views.

The calculation workstream should produce stock and flow outputs that can be traced back to gross carrying amounts and Annex VI rows. For flow in template 4, Commission Notice C/2024/6691 explains that credit institutions should use newly incurred exposures during the year prior to the disclosure reference date and should not calculate flow as the difference between exposure at T and exposure at T-1.

Before publication, the review pack should include the quantitative templates and the qualitative information required by Annex XI. That support should explain the scope of assets and activities, data sources and limitations, evolution of Taxonomy-aligned economic activities, and how Taxonomy compliance is reflected in business strategy, product design, and client or counterparty engagement.