IIED | November 2023

Investor-state dispute settlements: a hidden handbrake on climate action

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

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.

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