New report on overhauling investment governance for a just zero-carbon future

The Columbia Center on Sustainable Investment (CCSI) recently released a briefing titled “International Investment Governance and Achieving a Just Zero-Carbon Future,” available in both English and French. The briefing discusses how the current international investment regime is hostile to states’ ability to address the climate crisis and will deter, delay or water down states’ climate-related measures and increase their costs for states.

As developing countries continue to be the most negatively affected by climate change and the energy transition, it is increasingly critical that they receive foreign direct investment and financial support to build climate resilience, adapt to climate impacts, avoid carbon lock-in and fossil fuel dependence, and leverage their rich endowments of renewable and extractive resources to prepare for the zero-carbon future.

There is a disconnect and fundamental misalignment between international investment law and the international climate change regime, comprising the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement. Existing investment treaties—including their centerpiece, investor–state dispute settlement (ISDS)—are hostile to states’ ability to address the climate crisis and build a zero-carbon future. Investment treaties and ISDS will deter, delay or water down states’ climate-related measures, and increase their costs for states.

CCSI’s briefing International Investment Governance and Achieving a Just Zero-Carbon Future (also available in French), published in November 2022, details how attempts to “re-balance” the international investment regime by refining investment protection and arbitration provisions do not address the fundamental misalignment of investment treaties with both climate goals and the broader sustainable development agenda. States can design treaties that support their national and global goals, reinforcing investment governance in treaties that can:

• Promote specific climate-aligned investment, by identifying the barriers to such investment and fostering international support;
• Strengthen governance of investment to minimize harms and leverage potential benefits; and
• Encourage and facilitate cooperation.

In the blog Climate Action Needs Investment Governance, Not Investment Protection and Arbitration, as well as its submission to the public consultation on investment treaties and climate change held by the Organisation for Economic Co-operation and Development (OECD), CCSI argues that, for international investment law to support climate goals, we need a wholly new regime for investment governance, not investment protection and arbitration.

CCSI is also working on outlining a framework to build cohesion among various areas of international law relevant to investment in climate mitigation and adaptation.

Related to their research on the need for investment governance to achieve climate goals is their work on the Energy Charter Treaty (ECT). See “The Energy Charter Treaty: Assessing Amendment, Withdrawal, and Termination” drop-down menu on our Climate Change page.

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