Communiqué on the Calculation of Green Asset Ratio by Banks is Published

The “Communiqué on the Calculation of Green Asset Ratio by Banks” (“Communiqué”), prepared by the Banking Regulation and Supervision Agency (“BRSA”), was published in the Official Gazette on 11 April 2025. The Communiqué entered into force with the aim of establishing the procedures and principles for calculation and reporting of green asset ratio and other key performance indicators for measuring banks’ contributions to the financing of environmentally sustainable economic activities.

Green Asset Ratio

The Communiqué defines the green asset ratio as the primary key performance indicator for environmental sustainability. Accordingly, the banks will be required to calculate and report their green asset ratio, which measures the ratio of environmentally sustainable economic activities in their balance sheets.

Calculation and Methodology

Green asset ratio is calculated by dividing eligible green assets (i.e. those that align with defined environmental objectives and meet social and environmental standards), by total on balance sheet assets within the scope adjusted for specific exclusions (e.g., exposures to central governments, central banks, and trading book assets). Banks shall calculate this ratio based on their non-consolidated balance sheets.

The Communiqué identifies six key environmental objectives which are: Climate change mitigation and adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and biodiversity preservation.

Certification and Compliance Verification

The Communiqué imposes an obligation on banks to verify the eligibility and alignment of relevant assets through third party reports such as emission reports, feasibility studies, energy efficiency audits, certificates, and expenditure documents to ensure ongoing compliance.

Reporting Obligation and Effective Date

The reporting obligation of banks will commence as of 30 June 2025. The frequency and method of reporting shall be determined by the BRSA which, in parallel with the harmonization with the national taxonomy, is authorized to define new key performance indicators for banks, including cash flow data, income-expense accounts, off-balance sheet assets and assets monitored in trading accounts, based on data different than the green asset ratio, and to establish reporting obligations on these indicators.

Conclusion

The Communiqué differs from the Draft Communiqué published for public consultation on 27 September 2023 in several conceptual and structural aspects. Notably, the definition of “greenwashing” included in the draft has been removed in the final version; the technical screening and certification processes have been elaborated.  Yet the banks should initiate necessary preparations for data gathering, classification of assets, and reporting infrastructure to ensure timely compliance with the Communiqué.