CYIL vol. 13 (2022)

CYIL 13 ȍ2022Ȏ INTEGRATING CLIMATE CHANGE ELEMENTS INTO INTERNATIONAL INVESTMENT… In the context of discussions on the modernization of the ECT Bernasconi-Osterwalder and Brauch proposed a flexible, state-specific approach to defining covered energy investments by the ECT that would mirror the voluntary approach of nationally determined contributions under the Paris Agreement. 45 46 In other words, each State would prepare its own list of low carbon investments, respectively investments that are desirable from the point of view of the particular State. It would be up for each State party to determine which sectors, sub-sectors, and activities pertaining to the generation, transmission, and distribution of renewable energy and other low-carbon energy investments it would list in its schedule. 47 As a result, no global definition of what investment can be considered low-carbon was part of their proposal. As it follows from the above, the modernized ECT did not seek to create a definition of a low-emission investment in abstract. As regards other fora, for example, OECD, in its definitional stocktaking paper, reviewed the concepts and definitions related to ‘green’ investments (e.g., ‘clean’, ‘sustainable’, ‘climate change’ investments) as used in the marketplace in 2012. 48 The analysis considered different classes of assets, however, the focus was on the investment approach of institutional investors (such as pension funds and insurance companies). The OECD concluded that there was no consensus on the usage and definition of the term ‘green investment’. 49 In terms of ‘green’, the study found that some definitions are very broad and generic, others are more technical and specific. While a certain common intersection exists of the various definitions, there are also some areas of controversy and uncertainty and there is no clarity around the appropriate metric for ‘greenness’. 50 Similarly in terms of ‘investment’, the opinions differ. Such term can be a stand-alone concept, a sub set of a broader investment theme, or closely related to other investment approaches such as socially responsible investing (SRI), environmental, social and governance investing (ESG), sustainable, long-term investing, or similar concepts. 51 Specifically with respect to foreign direct investment, the analysis (referring to previous OECD studies) notes that for example there is general understanding that the production of renewable energy is a green activity, including wind, solar, hydropower, biomass, geothermal, and ocean energy. 52 There is on the other hand no consensus as regards to nuclear energy and areas such as co-generation, hydrogen, and waste that are usually by-products of industries which themselves contribute to greenhouse gas emissions. Green foreign investment in services can include water and wastewater treatment and waste management, air pollution control, soil and water remediation, and noise abatement. 53 The final suggestion of the OECD paper in 2012 was to take an open and dynamic stance towards definitions and standards, with international institutions and governments 45 For nationally determined contributions see Article 4 of the Paris Agreement. 46 BERNASCONI-OSTERWALDER, N., BRAUCH, M. D. Redesigning the Energy Charter Treaty to Advance the Low-Carbon Transition. TDM 1 (2019), pp. 11–12. 47 Ibid., p. 11. 48 INDERST, G., KAMINKER, Ch., STEWARD, F. Defining and Measuring Green Investments: Implications for Institutional Investors’ Asset Allocations. OECD Working Papers on Finance, Insurance and Private Pensions , 2012, No. 24, OECD Publishing.

49 Ibid., p. 5. 50 Ibid., p. 6. 51 Ibid. 52 Ibid., p. 11. 53 Ibid., pp. 11–12, 38.

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