AFTINET | 24 November 2025
ISDS exposed as a barrier to climate action and Australia to chair but not host 2026 climate negotiations
As the UN climate conference began in Belem, Brazil last week, an official UN report, Baku to Belém Roadmap to 1.3T on climate financing explicitly called out Investor-State Dispute Settlement (ISDS) in trade agreements as a systemic barrier to financing climate action in developing countries (p.52). ISDS enables foreign investors to claim billions in compensation from governments if they can convince an international tribunal that the change will reduce their future profits even if the change is needed to address the climate crisis or other public interest goals.
At the climate conference campaigners launched a new initiative to phase out ISDS which which is now a “major impediment to climate action.” Fossil fuel companies are using ISDS to challenge governments for taking a wide range of policy actions including prohibiting oil drilling and fracking, and phasing out coal power, already claiming over $80 billion .
Irene Vélez Torres, the environment minister of Colombia, spoke at the launch event, following a much-lauded announcement in which Colombia said it would protect its part of the Amazon from fossil fuel exploitation. She said ISDS made such decisions far more difficult because Colombia is one of the most affected countries in the world by ISDS, with 23 known cases already, and as many as 280 potential cases if the country continues to take ambitious climate action.
“No government should have to choose between protecting nature and its people, and protecting itself from arbitrators,” she told the conference.
Australia to chair negotiations and Pacific -based finance meeting during 2026: ISDS campaign to continue
After months of stalemate, Australia and Türkiye negotiated a compromise at the Brazil meeting on the hosting of the 2026 climate conference.Türkiye not Australia is hosting the conference. Australian trade minister Bowen will be president of the negotiations, with a leaders’ meeting in the Pacific before the main conference to decide on financing climate action in global south countries.
This compromise was needed because Australia’s bid had strong support from other countries, but Türkiye would not withdraw its bid, and UN rules required consensus. Australia will have the significant role of organising the agenda and negotiations, including topics, working groups and draft texts, and a meeting of government leaders in the Pacific.
A Just Transition mechanism was adopted by the conference but Brazil‘s proposal for phaseout of fossil fuels was not adopted in the main conference statement. However Australia signed a Columbia-led statement on phasing out fossil fuels signed by 24 countries, the Belém Declaration on the Transition Away From Fossil Fuels. It is the strongest ever statement on fossil fuels from an Australian Government.
The Climate Action Network of Australia (CANA) expressed disappointment at the loss of hosting rights but challenged the Australian government to prove it is serious as the incoming lead of the 2026 negotiations.
“Australia’s Climate Minister Chris Bowen now has his priorities clearly set out for him: deal with the cause of dangerous overheating at the source – coal, oil and gas – and deliver climate finance to enable transition and adaptation for all,” said Denise Cauchi, CEO of CANA.
“The adoption of the Just Transition mechanism at COP30 is a powerful outcome from Belém. For too long, workers and communities have managed the transition away from fossil fuels with no formal support or plan. The new Just Transition package will unlock the resources they need to build thriving new economies and community-led adaptation and resilience,” she said.
All of these potentially positive actions by governments could be challenged by ISDS claims. The Australian government has a policy against ISDS. AFTINET will continue our national and international campaigns to pressure the government as the president of the negotiations to take up the issue of ISDS as a threat to climate action and the need for coordinated government action to remove ISDS from trade and investment agreements.
