Aligning International Investment Agreements with the Sustainable Development Goals

LISE JOHNSON*, LISA SACHS** & NATHAN LOBEL***

International investment agreements (“IIAs”) provide enforceable protections to foreign investors in order to stimulate investment flows and therefore sustainable development. However, as understandings of both the effectiveness of these agreements as well as the effects of investment and investment governance on sustainable development have evolved, it is not clear that IIAs as currently designed are fit for that purpose. This article examines the alignment of IIAs with the 2030 Sustainable Development Agenda. It develops this examination in three ways. First, it proposes that IIAs should be designed and evaluated with respect to their ability to promote investments that advance sustainable development goals and to withhold benefits from investments that undermine these goals. Second, it considers the effects of IIAs on policy-making processes and regulatory space, cautioning that current provisions in IIAs protect the interests of investors over those of other stakeholders and constrain states’ abilities to regulate investments in conformity with the public interest. Finally, it suggests that international agreements could and should do more to address transnational governance gaps, regulatory races to the bottom, and global commons problems, where international commitments related to the governance of investment could advance development outcomes. While the authors affirm the importance of foreign direct investment and international investment governance to achieve the 2030 Agenda for Sustainable Development, they argue that existing IIAs must be meaningfully reformed and future treaties reimagined in order to align with the sustainable development goals.

* Lise Johnson is the Investment Law and Policy Head at the Columbia Center on Sustainable Investment (“CCSI”). Her work at CCSI centers on analyzing investment treaties and treaty-based investor-state arbitrations, and examining the implications those instruments and cases have for host countries’ domestic policies and sustainable development strategies. In addition, she concentrates on key institutional and procedural aspects of the investment law framework, including efforts to increase transparency in and legitimacy of investor-state dispute settlement. She has a B.A. from Yale University, a J.D. from the University of Arizona, an LL.M. from Columbia Law School, and is admitted to the bar in California.

** Lisa Sachs is the Director of CCSI, where she oversees three areas of focus: investments in extractive industries, investments in land and agriculture, and investment law and policy. She received a B.A. in economics from Harvard University, and earned her J.D. and M.A. in international affairs from Columbia University, where she was a James Kent Scholar and recipient of the Parker School Certificate in International and Comparative Law. She is admitted to the bar in New York.

*** Nathan Lobel is a J.D. candidate at Harvard Law School, where he focuses on climate policy and political economy. Prior to law school, he was the Special Assistant to the Director of CCSI, where his scholarship centered on international governance and the clean energy transition. He received his B.A. in political science from Yale University with high honors, during which time he also worked with the Yale Program on Climate Change Communication and as a fossil fuel divestment organizer.