8th Annual Conference on Investment Treaties - Investment Treaties, the Paris Agreement and Net Zero: Towards Alignment?

Investment treaties, the Paris Agreement and Net Zero: Towards alignment?

11 April 2023

OECD Conference Centre, Paris

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Introduction

Governments at the OECD have initiated the first major multilateral effort to consider climate policies for investment treaties. This responds to growing demands to take action on the climate impacts of the investment treaty regime. The 2022 OECD Investment Treaty Conference considered the question of how to align investment treaties with the Paris Agreement and Net Zero. The 2023 Conference returned to consider those issues one year later, against a backdrop of growing climate action, new challenges and increasing public attention.

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Conference Sessions

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Apr 11, 2023
9:30 AM CEST - 10:00 AM CEST
CC1

Opening session

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Speakers

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HF

Helen Finlay

CDP
Associate Director of Global Policy
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Background

Climate change is a defining challenge for government policy makers and our societies. What was once mainly considered an environmental issue now has existential economic and security implications. 

Over 190 countries have signed the 2015 Paris Agreement, which establishes a global framework for combating climate change. The Agreement sets out two fundamental and innovative goals for government climate policies. First, governments set for the first time the clear objective of less than 2 degrees Celsius warming, with the stretch objective of 1.5 degrees. In the years since the Paris Agreement was signed, the need to limit warming to 1.5 degrees has become even stronger. In recent years, more than 130 countries have announced their ambitions to reduce emissions to net zero with many setting legally binding targets. 

Second, governments expressly agreed on the objective to make “finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”. Paris Agreement, art. 2.1(c). This core objective, set out in the same article as the temperature goals, has two elements – a focus on finance flows and the aim to align them to low emissions. Art. 2.1(c) is the orienting goal for a concerted effort to align “all forms of finance – public and private, domestic and international – and all instruments”, as underlined by the recent Report of the Independent High-Level Expert Group on Climate Finance.
Investment treaties are government policies that promote very substantial fossil fuel and other high-carbon finance flows. The treaties typically make ad hoc arbitration in investor-state dispute settlement (ISDS) available to investors claiming injury from discriminatory or “unfair” government action; as of May 2022, over 230 ISDS cases involved fossil fuel-related investors – constituting close to 20% of the total known number of cases. Seven of the ten largest ISDS damages awards against governments under investment treaties have involved fossil fuel investor claimants, each for over USD 1 billion and all in the last 15 years. 

 In this context, Paris alignment of investment treaties may require urgent priority attention to alignment of the scope of covered investment and associated finance flows. Attention to coverage is important not only to align covered investment with low-carbon taking account of art. 2.1(c) , but also for climate “policy space”; continuing high levels of uncertainty about interpretation characterise the substantive protection provisions in many investment treaties – whether in long-standing formulations or untested new ones. 

Learn more about
Investment treaties and the Paris Agreement

2015 Paris Agreement

Article 2 of the Paris Agreement notably sets out temperature goals and the aim to align finance flows with a low-carbon pathway.
Read the Agreement

Investment treaties and climate change: The Alignment of finance flows under the Paris Agreement

The 2022 OECD Investment Treaty Conference engaged in initial consideration of how to align investment treaties with the Paris Agreement and Net Zero, with particular regard to art. 2.1c of the Paris Agreement. 

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2022 Annual Conference on Investment Treaties

The seventh annual OECD Investment Treaty Conference addressed investment treaties and the climate crisis, a defining challenge for government policy makers and our societies.
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Public Consultation on Investment Treaties and Climate Change 

Read the 40+ contributions to the OECD public consultation with analysis and policy recommendations for investment treaty policies to help address climate change.    
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Survey of climate policies for investment treaties

Read the questions in the first ever survey of the climate-related policies and practices that have been implemented or are under consideration by governments with regard to their investment treaties and related policies. 
Read the questions

Secretariat background note to the survey of climate policies for investment treaties

This OECD Secretariat note provides background information for the Survey of Climate policies for investment treaties. 

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Background note on investment treaties: Market access for climate-friendly investment and recent climate policies on the sectoral scope of investment protection

This paper first considers the potential role of investment treaties in maintaining and improving market access for foreign investment and in particular climate-friendly investment, and second, recent climate policy developments on the sectoral scope of investment treaty coverage and alignment with the Paris Agreement in relation to the Energy Charter Treaty.
More information