On 1 March 2021, the European Banking Authority published an opinion in response to the European Commission’s call for advice on key performance indicators (KPIs) and related methodology for the disclosure by credit institutions and by investment firms of information on how and to what extent their activities qualify as environmentally sustainable in accordance with the EU Taxonomy.
The main KPI that is proposed by the EBA is the Green Asset Ratio (GAR). This identifies the institutions’ assets financing activities that are environmentally sustainable according to the EU taxonomy, such as those consistent with the European Green Deal and the Paris Agreement goals. Information on the GAR is supplemented by other KPIs that provide information on the taxonomy alignment of institutions’ services other than ending and investing. The EBA has also integrated proportionality measures that should facilitate institutions’ disclosures, including transitional periods where disclosures in terms of estimates and proxies are allowed.
The opinion is consistent with the EBA’s consultation paper on draft implementing technical standards on institutions’ Pillar 3 disclosures on ESG risks, which it published at the same time.