The EU Taxonomy Regulation relies on sustainability reporting to channel
financial resources to sustainable activities. Financial institutions are key actors in
the Taxonomy setting because they operate as financial intermediaries and have a
dual role as both users and preparers of sustainability information. This paper
investigates the perceived uncertainty that characterizes the sustainability reporting
regulatory environment of a particular type of financial institution, banks, to
identify the elements that generate that perception. Drawing on literature on
regulatory uncertainty, this paper conducts a case study of the Spanish banking
industry informed by interviews and complemented by other data sources. The
analysis unveils two significant elements driving regulatory uncertainty: the
Taxonomy’s lack of clarity regarding the operationalization of its measures and
rules and the timeline and oversight of its implementation. The study also
documents that the Taxonomy induces uncertainty in the non-regulatory
environment due to its unpredictable impact on banks’ reputation and market
competition, as well as to the changes it provokes in banks’ internal structures and
processes to address regulatory requirements. As the perception of regulatory
uncertainty represents an impediment to compliance, understanding the elements
giving rise to it can help to mitigate such perception and facilitate the fulfillment
of regulatory demands. This investigation offers implications for policy and
practice to facilitate the production of the sustainability information banks must
disclose according to the EU Taxonomy, particularly the green asset ratio
