Including environmental protection in international investment agreements

Environmental concerns have amplified dramatically in the past decades. Global threats to the environment such as climate change or declining biodiversity have emerged and become an essential part of the world’s social challenges. The investment landscape is also changing. Traditionally, the home and host State role was clearly divided between North and South, with the members of the Organisation for Economic Co-operation and Development (OECD) as the capital exporting countries. Nowadays, however, developing economies have become increasingly large investors themselves. Furthermore, transnational corporations (TNCs) have become an important player within the investment system fuelling the discussion on how to include investors’ obligations into international investment agreements (IIAs). Others are concerned with the perceived imbalance between investor protection and the host State’s right to regulate. These concerns arose largely in response to the increasing number of investor-State disputes touching on delicate public policy issues and often leading to unexpected interpretations and/or heavy charges on States’ budgets. These changes and deficiencies reveal the need to address wider public policy objectives, such as the protection of the environment or sustainable development goals, in the international investment regime. These developments are leading to a new generation of IIAs. The time is opportune: 1300 bilateral investment treaties (BITs), that is almost half of the existing BITs, expire in the near future. This offers a unique opportunity to address irregularities within the agreements and ultimately to revisit the whole international investment regime. However, environmental protection is a marginal target in current strategies of investment promotion agencies (IPAs), despite the importance in national and global policy agendas. Hence, the purpose of this paper is to contribute to a better understanding on how to include environmental protection into international investment agreements. Stocktaking of the current treaty practices and highlighting the most important investment arbitration decisions, it is thus a critical analysis of the models available at the moment and what could be the de lege ferenda