Sustainable financeSustainabilityTaxonomy

Herkenhoff: Informative value of Green Asset Ratio limited

04.09.2023Press release
Kerstin Altendorf
  • Latest study on industry’s taxonomy profile
  • Focus on transformation needed

The Association of German Banks today presented a study on the taxonomy profile of industry. “In order to drive the transformation forward, we need to know where we stand with the rebuilding the economy,” said Heiner Herkenhoff, CEO of the Association of German Banks, at the presentation of the study’s findings. “To do this we need transparent sustainability profiles for businesses.”

For banks, the Green Asset Ratio (GAR) will be used as a key indicator to show the sustainable share of balance sheets from 2024. “Our analysis of the taxonomy ratios of 450 businesses shows that the GAR does not adequately represent the sustainability profiles of banks.” 

The taxonomy only gathers information on around 30 percent of the economy. “That means 70% cannot be sustainable in regulatory terms. However, banks’ balance sheets reflect the entire economy,” said Heiner Herkenhoff. In addition, only around seven percent of the economy included to date meet taxonomy criteria. 

“The Green Asset Ratio is not suitable as a control parameter for the transformation. We are still at the beginning of the transformation and should stop thinking in terms of what’s green and what’s not green,” said the association CEO. 

“The transformation of the economy is a process, not a state,” Herkenhoff continued. And this is why the private banks are not just calling for the taxonomy to be expanded. Rather, they would like to see it aimed more at those businesses that are about to or have just started out on the path to sustainability. “This is precisely where transition finance comes in and to achieve this we need a framework based on principles.”

The study on the industry’s taxonomy profile is available here. The study looked at the taxonomy ratios of 450 businesses. They were chosen from across Europe from the leading indices of the 10 largest EU economies and from businesses in the STOXX Europe 600 listed on EU stock exchanges.

Dr. Kerstin Altendorf
Dr. Kerstin AltendorfDirector, Media Spokeswoman