It’s Time for a Green Investment Treaty to Incentivize Climate-Aligned Foreign Direct Investment
This project considers potential reforms to the international investment law system such that international investment agreements can promote—rather than stand in the way of—climate-aligned investment flows. Three distinct categories of reform are needed:
- Existing international legal agreements protecting foreign investment must not hold countries liable for discriminatory or protectionist policies that are intended to facilitate climate-aligned investment.
- International investment law itself must develop mechanisms to differentiate between climate-aligned and climate-harmful investments and offer additional legal protections for climate-aligned investments that reduce the risks faced by private investors.
- Given the scale of mitigation investment needed in the coming decades, international investment law, which has traditionally only addressed private investment, will need to build coordination mechanisms between public and private investment flows. Collectively, this requires a radical reimagining of international investment law.
This project develops a detailed proposal for climate-aligned reform of the investment law system.