Submission to the Organisation for Economic Co-operation and Development on Investment Agreements and Climate Change

The submission contends that ISDS mechanisms allow fossil fuel companies to shift the financial risk of stranded assets onto taxpayers and create a 'regulatory chill' that discourages governments from implementing emissions-reduction policies. It highlights that the fossil fuel industry is the most litigious sector in ISDS, accounting for nearly 20% of cases. The authors argue that the perceived benefits of investment agreements in attracting renewable energy are unproven, while the costs—including massive compensation awards—are high. To align investment law with the Paris Agreement, the document recommends the OECD explore multilateral termination of treaties, the removal of protections for carbon-intensive investments, and the creation of 'climate carve-outs' to exempt climate-related measures from arbitration.

• Investor-state dispute settlement (ISDS) mechanisms are being used by companies to shift the financial risk of 'stranded assets'—which could reach USD 1.8 trillion in the power sector and between USD 3 trillion and USD 17 trillion in upstream oil and gas—onto taxpayers.
• There is a lack of evidence that international investment agreements (IIAs) or the Energy Charter Treaty (ECT) increase foreign direct investment in renewable energy; in fact, between 2013 and 2018, an average of 75% of global renewable energy investment was domestic.
• The fossil fuel industry is the most litigious sector within the ISDS system, representing nearly 20% of all known cases.

APA

Center for International Environmental Law (2022). Submission to the Organisation for Economic Co-operation and Development on Investment Agreements and Climate Change. https://www.ciel.org/wp-content/uploads/2022/04/investment-consultation-v3.pdf

Chicago

Center for International Environmental Law. Submission to the Organisation for Economic Co-operation and Development on Investment Agreements and Climate Change. 2022. https://www.ciel.org/wp-content/uploads/2022/04/investment-consultation-v3.pdf.

Wikipedia

{{cite report |author=Center for International Environmental Law |title=Submission to the Organisation for Economic Co-operation and Development on Investment Agreements and Climate Change |date=1 March 2022 |url=https://www.ciel.org/wp-content/uploads/2022/04/investment-consultation-v3.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{centerforinternationalenvironmentallaw2022submission, author = {{Center for International Environmental Law}}, title = {{Submission to the Organisation for Economic Co-operation and Development on Investment Agreements and Climate Change}}, institution = {Center for International Environmental Law}, year = {2022}, month = mar, url = {https://www.ciel.org/wp-content/uploads/2022/04/investment-consultation-v3.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }