Campaigners are pushing to eliminate “corporate courts,” highlighting their role as a significant obstacle to climate action. The investor-state dispute settlement (ISDS) system allows businesses to challenge government policies that aim to protect the environment, like banning oil drilling and coal mining. This setup exists within numerous trade agreements and investment deals.
In the UK, the first climate-related ISDS case has emerged after a high court decision halted a coal mine in Cumbria. Fossil fuel companies have been the primary winners in this system, raking in over $80 billion from claims. UK investors, known for their proactive approach, account for a large portion of these cases. Research indicates that the UK safeguards more potential greenhouse gas emissions through its ISDS treaties than any other country.
A staggering £19 billion in claims related to fossil fuels has been filed by UK investors—almost double what the UK government allocates for international climate finance.
Colombia’s environment minister, Irene Vélez Torres, recently offered insights at a conference, especially after Colombia’s announcement to protect part of the Amazon from exploitation. She pointed out that ISDS complicates such protective measures. Colombia has faced 23 known cases and could face up to 280 more if it continues to pursue ambitious climate policies. “No government should have to choose between safeguarding the planet and shielding itself from arbitrators,” she asserted.
Nick Dearden from Global Justice Now reinforced that ISDS stands in the way of taking effective climate action. “Instead of supporting the protection of the Amazon, it shields those who threaten it,” he declared. He emphasized that ISDS is essentially reversing climate finance, where those responsible for creating the crisis end up compensated by their victims.
The conversation surrounding ISDS highlights a growing concern about how corporate interests can undermine environmental protection. With more countries taking climate initiatives, there is a rising need for reform. Activists and policymakers are calling for a coalition to ensure a future that is free from the constraints of ISDS.
For more insights into the impact of ISDS on climate policy, check out E3G’s research.
