Rethinking International Investment Governance

IISD’s Investment team is at the forefront of global efforts to rethink international investment law and policy. Through our multi-year research and policy project, Rethinking International Investment Governance, we map out an international investment regime fit for the 21st century—one that is sustainable, fair, and inclusive; addresses the historic imbalances underpinning the current regime; and tackles the urgent climate, environmental, and economic challenges facing decision-makers today.

The ongoing Rethinking International Investment Governance project spans the key components of international investment law and policy, with in-depth papers on national investment laws and international investment treaties already published.

The report series feeds into a range of activities and outputs that help us share and develop the series’ ideas and policy proposals, including events, webinars, stakeholder consultations, government advice, policy briefs, blogs, academic articles, and media commentary. Amid ever-growing scrutiny of the unfair and unsustainable state of the current international investment regime, the global community urgently needs spaces where investment policy-makers, experts, and institutions can come together and shape the laws, policies, and norms of the next generation’s investment governance. IISD’s Rethinking International Investment Governance platform is such a space.

Rethinking National Investment Laws 

National investment laws are a critical tool for governments to channel foreign investment toward sustainable development and domestic policy priorities. However, the vast majority of investment laws today fail to deliver on their promise due to a lack of awareness of the functions they can serve; misguided starting points, such as governments granting ineffective tax incentives; and many laws granting outdated investor–state dispute settlements (ISDS).  

The first paper in our series, Rethinking National Investment Laws, published in July 2023, addresses this knowledge gap by unpacking the evolution, functions, and potential of national investment laws. It provides a comprehensive guide for decision-makers to understand and reform national investment laws to meet economic, social, and climate challenges and tailor them to domestic policy priorities. Later that month, the report authors and experts discussed the report’s key findings and recommendations. Catch up on the webinar here. 

Rethinking International Investment Treaties

Over the last decade, investment treaties—agreements regulating investment between two or more states—have come under increasing scrutiny. Particularly, the ISDS system entrenched in over 2,000 treaties is in the spotlight, with citizens and policy-makers across continents turning away from this outdated model that repeatedly threatens climate action, environmental protection, and social justice. In a high-profile example of this trend, the European Union, the United Kingdom, Germany, France, and many other countries have all left the Energy Charter Treaty, which has generated more claims by fossil fuel investors than any other treaty.  

Several regional and multilateral processes have been launched to address the glaring need for investment treaty reform. Now, it is critical that investment policy-makers continue to approach the reform initiatives with ambition and innovation so they deliver the fundamental changes in international investment governance that the world needs. 

This is the backdrop to the second paper in our series, Rethinking Investment Treaties, published in May 2024, which explores how an alternative treaty system tailored to the challenges of our time would look, what policy problems treaties should seek to solve, and how they could help solve them. 

The paper initiates a conversation on how investment treaties could be redesigned to improve international cooperation on investment governance, align financial flows with the Paris Agreement, ensure that host states reap greater benefits from investment projects, and promote strong human rights and environmental standards in investment projects. The report authors and experts unpacked the report’s key themes and questions in this webinar. 

Rethinking Investment Contracts

Investment contracts —agreements between governments and investors—receive the least attention from the public, policy-makers, and media among the core investment policy tools. Partly due to this lack of transparency and oversight, investment contracts are particularly prone to reflect the power imbalance between developing countries and foreign investors, leading to limited benefits for host countries and sustainable development efforts.  

With the ongoing multilateral reform of investment treaties, it will also become increasingly important to highlight and reform the governance of investment contracts to ensure that the progress made on protecting governments’ climate, environmental, and social policy space under treaties is not jeopardized through outdated investment contracts. IISD’s Investment team will be at the forefront of these efforts.