---
title: "EU Taxonomy GAR KPI workflow for credit institutions"
canonical_url: "https://www.sorena.io/artifacts/eu/taxonomy-regulation/gar-kpi-workflow"
source_url: "https://www.sorena.io/artifacts/eu/taxonomy-regulation/gar-kpi-workflow"
author: "Sorena AI"
description: "source-linked workflow for preparing EU Taxonomy Green Asset Ratio (GAR) KPI disclosures under Article 8 and the Disclosures Delegated Act."
published_at: "2026-05-09"
updated_at: "2026-05-27"
keywords:
  - "EU Taxonomy GAR workflow"
  - "Green Asset Ratio KPI"
  - "Article 8"
  - "Disclosures Delegated Act"
  - "Annex V"
  - "Annex VI"
  - "credit institutions"
  - "taxonomy aligned exposures"
  - "GAR stock"
  - "GAR flow"
  - "EU Taxonomy"
  - "EU Taxonomy Regulation"
  - "Green Asset Ratio"
  - "GAR"
---
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# EU Taxonomy GAR KPI workflow for credit institutions

source-linked workflow for preparing EU Taxonomy Green Asset Ratio (GAR) KPI disclosures under Article 8 and the Disclosures Delegated Act.

*Taxonomy* *GAR workflow* *EU*

## EU Taxonomy Regulation GAR KPI Workflow

A practical workflow for credit institutions preparing Green Asset Ratio (GAR) disclosures under Article 8 and Commission Delegated Regulation (EU) 2021/2178.

Use it to move from exposure inventory to Annex VI templates, with source-linked checks for coverage, exclusions, counterparty KPIs, use-of-proceeds evidence, stock, and flow.

The Green Asset Ratio is the main EU Taxonomy KPI for credit institutions in the Disclosures Delegated Act. This workflow focuses on the operational steps needed to prepare GAR disclosures: define the reporting scope, classify covered assets and exclusions, gather counterparty or use-of-proceeds evidence, calculate stock and flow KPIs, and keep the qualitative support needed for Article 8 reporting.

## Set the GAR scope before collecting exposure data

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 GAR is not a generic ESG score. The delegated act describes it as the proportion of a credit institution's assets financing and invested in Taxonomy-aligned economic activities as a proportion of total covered assets. The workflow should therefore begin by identifying the credit institution, consolidation basis, reporting year, Annex VI templates in scope, and the Article 10 timing rules that apply.

- Confirm that the entity is a credit institution and that Article 8 reporting is being prepared under the Disclosures Delegated Act.
- Use prudential consolidation and the balance sheet scope required for the GAR exposure types in Annex V.
- Map the required Annex VI outputs before calculations: summary KPIs, covered assets, sector information, GAR KPI stock, GAR KPI flow, and, when applicable, later fees-and-commissions and trading-book templates.
- Separate GAR work from non-financial undertaking turnover, CapEx, and OpEx KPI workflows; those non-financial KPIs feed some counterparty weightings but are not the bank's own GAR.

Sources for this answer:

- [Regulation (EU) 2020/852 (Taxonomy Regulation)](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32020R0852&ref=sorena.io) - Grounds the Article 8 obligation to disclose how and to what extent activities are associated with environmentally sustainable economic activities.
- [Commission Delegated Regulation (EU) 2021/2178 (Disclosures Delegated Act)](https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:02021R2178-20240101&ref=sorena.io) - Specifies the credit institution GAR methodology, Annex V scope, and Annex VI presentation templates.

## Classify covered assets, exclusions, and counterparty data

Build the exposure inventory around Annex V categories rather than around a generic loan list. The GAR calculation covers on-balance sheet financial assets such as loans and advances, debt securities, equity holdings, and repossessed collateral, while Article 7 exclusions affect whether exposures sit outside the GAR denominator, outside the numerator, or outside both.

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.

- Tag each exposure by Annex V type: loans and advances, debt securities, equity holdings, repossessed real estate collateral, retail mortgage or renovation loans, car loans, local-government housing finance, or other specialised lending.
- Record excluded exposure classes separately, including exposures to central governments, central banks, supranational issuers, derivatives, and undertakings outside the relevant non-financial reporting obligation where the delegated act excludes them from the numerator.
- Store the counterparty's latest available Article 8 KPI source, reporting period, KPI type, and whether the exposure uses a turnover-based or CapEx-based weighting.
- For Annex VI sector information, assign the counterparty's main NACE activity; if a holding company, special purpose vehicle, or multi-entity exposure is involved, document the principal activity used for the template row.

Sources for this answer:

- [Commission Delegated Regulation (EU) 2021/2178 (Disclosures Delegated Act)](https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:02021R2178-20240101&ref=sorena.io) - Defines GAR asset categories, exclusions, counterparty KPI weighting, and the requirement to disclose excluded asset percentages.
- [Draft Commission Notice on financial undertaking Taxonomy reporting](https://ec.europa.eu/finance/docs/law/231221-draft-commission-notice-eu-taxonomy-reporting-financials_en.pdf?ref=sorena.io) - Provides implementation guidance on Annex VI entity type rows and NACE-code assignment for GAR template disclosures.

## Separate use-of-proceeds evidence from counterparty KPI weighting

A robust GAR workflow keeps two evidence paths distinct. Where use of proceeds is known, the evidence package should connect the exposure amount to the financed Taxonomy-aligned activity and the relevant technical screening criteria. Where use of proceeds is not known, the workflow should 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.

- For known-use-of-proceeds loans and debt securities, retain the financing purpose, funded activity, financed amount, screening-criteria evidence, and any amount excluded from the aligned numerator.
- For specialised lending, document the use-of-proceeds assessment under the Annex V GAR loans-and-advances component rather than treating specialised lending as project finance only.
- For general-purpose lending or securities without known use of proceeds, apply the relevant counterparty KPI and keep the published counterparty disclosure as evidence.
- Keep separate tags for use-of-proceeds, transitional activity, enabling activity, environmental objective, stock, and flow so Annex VI 'of which' columns can be populated without double counting.

Sources for this answer:

- [Commission Delegated Regulation (EU) 2021/2178 (Disclosures Delegated Act)](https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:02021R2178-20240101&ref=sorena.io) - Grounds known-use-of-proceeds treatment, counterparty KPI weighting, and separate turnover-based and CapEx-based GAR calculations.
- [Draft Commission Notice on financial undertaking Taxonomy reporting](https://ec.europa.eu/finance/docs/law/231221-draft-commission-notice-eu-taxonomy-reporting-financials_en.pdf?ref=sorena.io) - Clarifies the Annex VI 'of which Use of Proceeds' column and that specialised lending is not limited to project finance.

*Recommended next step*

*Placement: after evidence section*

## Turn GAR rules into a reviewable evidence workflow

Use this GAR workflow to connect Article 8 source requirements, exposure data, counterparty KPIs, Annex VI template rows, and reviewer-ready evidence before publication.

- [Open Research Copilot](/solutions/research-copilot.md): Answer EU Taxonomy implementation questions with cited source material.
- [Discuss EU Taxonomy implementation](/contact.md): Review scope, source evidence, and next implementation steps with Sorena.

## Calculate stock, flow, and qualitative support for review

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, the draft Commission notice 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.

- Reconcile each template line to gross carrying amount, exposure type, counterparty KPI source, use-of-proceeds evidence, and exclusion reason.
- Calculate stock and flow separately; for flow, use newly incurred loans and advances, debt securities, and equity instruments during the year prior to the disclosure reference date.
- Document turnover-based and CapEx-based outputs separately where Annex V requires both versions.
- Add qualitative notes on data limitations, excluded assets, counterparty data gaps, and methodology choices before sign-off.

Sources for this answer:

- [Draft Commission Notice on financial undertaking Taxonomy reporting](https://ec.europa.eu/finance/docs/law/231221-draft-commission-notice-eu-taxonomy-reporting-financials_en.pdf?ref=sorena.io) - Clarifies Annex VI timing and that flow should use newly incurred exposures rather than a T minus T-1 net movement.
- [Commission Delegated Regulation (EU) 2021/2178 (Disclosures Delegated Act)](https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:02021R2178-20240101&ref=sorena.io) - Requires qualitative disclosures for financial undertakings in support of quantitative Article 8 KPIs.

## Primary sources

- [Regulation (EU) 2020/852 (Taxonomy Regulation)](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32020R0852&ref=sorena.io) - Article 8 establishes the disclosure obligation for in-scope undertakings and mandates delegated rules for content, presentation, and methodology.
  - Quote: "how and to what extent their activities are associated"
- [Commission Delegated Regulation (EU) 2021/2178 (Disclosures Delegated Act)](https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:02021R2178-20240101&ref=sorena.io) - Specifies the Green Asset Ratio methodology for credit institutions, Annex V asset categories, Annex VI templates, exclusions, timing, and qualitative disclosures.
  - Quote: "the green asset ratio (GAR), which shows the proportion of exposures related to Taxonomy-aligned activities"
- [Commission Notice 2022/C 385/01 on Article 8 Disclosures](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022XC1006%2801%29&ref=sorena.io) - Clarifies early Article 8 eligible-activity and eligible-asset reporting, including template use and the relationship between eligible activities and KPI denominators.
  - Quote: "eligible activities do not equal to the denominator"
- [Draft Commission Notice on financial undertaking Taxonomy reporting](https://ec.europa.eu/finance/docs/law/231221-draft-commission-notice-eu-taxonomy-reporting-financials_en.pdf?ref=sorena.io) - Provides financial-undertaking implementation guidance for Annex VI templates, NACE assignment, use-of-proceeds columns, flow treatment, and specialised lending.
  - Quote: "Credit institutions shall disclose the GAR"

## Related Topic Guides

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