CYIL vol. 13 (2022)

CYIL 13 ȍ2022Ȏ INTEGRATING CLIMATE CHANGE ELEMENTS INTO INTERNATIONAL INVESTMENT… The EU and other taxonomies confirm that a common standard can in fact be established. Therefore, a globally acceptable definition for the purposes of investment treaty definitions should be likewise achievable. To find a definition that is neither too broad nor too narrow is obviously challenging. The work underlying the taxonomy initiatives could inspire and inform States in determining the best approach to define what can be considered low emission investments that will benefit from treaty protection. An expert group composed of climate, environmental, investment, and energy experts could help to find a basic definition with objectively set criteria that will adequately stimulate capital flows into greener economy. Standardised definitions of low-carbon, climate-resilient, or ‘green’ investments can better guide investor behaviour. The topic is gaining importance in the context of debates about investor action against climate change and the potential opportunities available in the transition to a low carbon economy. The idea of differentiation of investments and prioritizing certain sectors have been already visible in the preambles of newly agreed IIAs. Some recent international investment and cooperation treaties recognize for example ‘the benefits of sustainable energy, renewable energy, in particular offshore generation in the North Sea’ 78 or contain a ‘commitment to enhance the use of renewable energy sources’. 79 A low carbon investment can be considered a subset of green investment, however, for the purposes of international investment regime, a broad definition of green investment that reflects the concept of sustainable development is more appropriate. Article 2(1) of the Paris Agreement expressly combines the fight against climate change with the prerogative of sustainable development. The definition of investment shall thus encompass not only investment that assist the contractual countries to become carbon neutral (e.g., low carbon, climate change specific, and climate resilient investments) but also satisfy the highest standards of labour and human rights, public health, and environmental protection for the coherent implementation of climate action and sustainable development. In light of the practical importance of the full alignment of a State’s investment regulatory framework with their climate change objectives more research on technical details is needed. Further complexity and importance to the matter have been added by some authors questioning whether host States have human rights obligations to secure that investments made in their territory do not contradict with certain standards. 80

78 Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part (2021) OJ L 149, Preamble 14 and 17. 79 Strategic Partnership, Trade and Cooperation Agreement between the Republic of Moldova and the United Kingdom of Great Britain and Northern Ireland (signed 24 December 2020, not in force), Preamble. 80 SCHACHERER, S., HOFFMANN, R. T. International investment law and sustainable development. In: KRAJEWSKI, M. and HOFFMANN, R. T. Research Handbook on Foreign Direct Investment . Cheltenham: Edward Elgar Publishing, 2019, p. 595.

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