What is gar in finance? Important, high gar meaning, use
Md. Saifur Rahman
31 Jan, 2024
What is gar?
GAR stands for Green Asset Ratio. It's essentially a sustainability scorecard for European banks, measuring the percentage of their assets invested in activities deemed environmentally friendly by the EU Taxonomy. Think of it as a green thumbs-up or thumbs-down for banks when it comes to supporting the planet.
Why is GAR important?
Transparency: GAR brings much-needed clarity to the often opaque world of sustainable finance. By clearly showcasing how green their investments are, banks empower investors and consumers to make informed choices.
Driving change: As GAR becomes a key performance indicator, it incentivizes banks to direct their resources towards sustainable projects. This shift in the financial landscape can fuel the green transition and combat climate change.
Level playing field: GAR establishes a common standard for measuring green financing across different banks. This promotes fair competition and prevents greenwashing tactics.
What does a high GAR mean?
A high GAR indicates that a bank is heavily invested in sustainable activities like renewable energy, energy efficiency projects, and sustainable transportation. This suggests a strong commitment to environmental responsibility and potentially lower long-term risk exposure.
How can you use GAR?
Compare banks: When choosing a bank, consider their GAR alongside other factors like interest rates and fees.
Hold banks accountable: Ask your bank about their GAR and encourage them to prioritize sustainable investments.
Support the green transition: By choosing a bank with a high GAR, you're actively contributing to a greener future.
While GAR is a significant step forward, it's crucial to remember it's just one piece of the puzzle. A comprehensive evaluation of a bank's sustainability should also consider its social impact and governance practices.
By understanding GAR and its implications, you can become a more informed and environmentally conscious participant in the financial world. Let's work together to build a greener future, one financial decision at a time!