2023 Reports

Investor–State Dispute Settlements: A Hidden Handbrake on Climate Action

Di Salvatore, Lea; Cotula, Lorenzo; Nanda, Anirudh; Yuqing Wang, Chloe

To achieve the Paris Agreement’s climate goals, states must move away from fossil fuels. But investor–state dispute settlement (ISDS) — a system that enables companies to take states to international arbitration — can increase the cost of this transition.

Our research shows that fossil fuel companies have historically secured at least US$82.8 billion in damages and large sums continue to be invested in fossil fuels worldwide. To address this problem, investment governance must be harmonised with global climate goals.