Commentary on the Sustainability Directives. Simplification Is Not Enough: The Sensible Course Is to Repeal Them

The European Union adopted in 2022 and 2024 two far-reaching directives—the CSRD and the CSDDD—that massively expanded corporate reporting and due-diligence obligations in the field of sustainability. Their application would have quadrupled the number of firms required to report, created additional verification processes, and extended corporate liability to domains that are impossible to monitor in any realistic way. The available evidence, however, shows that these rules rest on weak theoretical foundations, generate information of limited value, and lack the proper incentives to correct market failures.

In 2025, following the Draghi report and in the face of declining competitiveness, business resistance, and growing international divergence—especially vis-à-vis the United States—the European Commission pushed through a substantial course correction via the Omnibus package: thresholds were raised, obligations reduced, and entry into force postponed. But this simplification is late, partial, and inadequate. It eases some visible burdens, yet it does not address the core problems: legal uncertainty, regulatory discretion, perverse incentives, and, above all, the shift of collective decisions toward private bodies lacking democratic legitimacy.

This Commentary argues that neither the CSRD nor the CSDDD achieves its stated goals. ESG metrics are inconsistent; the agencies that produce them face conflicts of interest; “sustainable” funds do not deliver superior returns or verifiable environmental impact; and firms lack both the information and the mandate to resolve complex social trade-offs. These rules also generate sizable rents for consultants, auditors, and specialized activists, while weakening corporate governance mechanisms and diluting managerial accountability.

The logic behind their adoption is not economic but political. A minority with intense sustainability preferences uses the firm as a channel to impose costs that it would fail to secure through ordinary democratic processes. Reporting obligations thus operate as an indirect transfer mechanism, obscuring the underlying distributive conflict and shifting burdens onto consumers, workers, and shareholders without explicit public debate.

In light of the Commission’s retreat and the political exhaustion of the project, merely “simplifying” these directives is not enough. The responsible option is to repeal them or, at a minimum, freeze them. Corporate sustainability requires correct prices, clear rules, and effective legal liability for real harm—not an expansive and opaque bureaucratic apparatus. In Spain, prudence calls for halting transposition until the final outcome of the Omnibus package is known, to avoid subjecting Spanish firms to a more demanding framework than that faced by their European competitors.

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