CIEL | 2 October 2025
The international investment legal regime, climate change, and human rights: an overview
Embedded in thousands of international investment agreements, the little-known investor-state dispute settlement (ISDS) system allows foreign companies to sue states for damages when they take measures to protect the environment and the public. ISDS threatens climate action and undermines countries’ compliance with their legal obligations to prevent and remedy climate harm—presenting an impermissible barrier to the necessary phaseout of fossil fuels and other climate measures required under international human rights and environmental law.
Our brief, The International Investment Legal Regime, Climate Change, and Human Rights: An Overview, explains how ISDS negatively impacts human rights and the environment, and examines how ISDS stands in direct conflict with the growing global momentum for bold climate action—and how we can stop it. The brief highlights how recent legal developments, including historic rulings on climate change from international courts, bolster the case against ISDS.
Fossil fuel companies alone have launched over 300 ISDS cases, seeking over $80 billion in damages for climate-related policies aimed at phasing out oil, gas, and coal. This threatens to make climate action financially prohibitive for many countries, creating a “regulatory chill” that deters governments from taking the necessary climate action.
Paying polluters cannot be the price for protecting people and the planet. Building on CIEL’s prior work, this brief outlines:
- How ISDS erodes sovereignty and obstructs a just energy transition.
- Why climate and human rights obligations should supersede corporate interests
- What States can do to remove the threat of ISDS, including withdrawal from treaties with investment arbitration provisions, exclusion of fossil fuels from investment protections, and alignment of trade and investment rules with human rights obligations.
As countries ramp up climate action, they must also dismantle the legal architecture that protects polluters to avoid potentially billions more in future claims.
This publication provides states and other interested advocates with suggested ways forward to challenge ISDS, leveraging recent judicial rulings that clarify states’ binding legal duties to prevent climate harm.
