Environmental issues are of growing importance for investors across industries and have played a central role in recent high-stake investment disputes. The classic context in which environmental policy-related arguments have previously been developed is as host State defences (shield) against claims of treaty violations. More recently, environmental policies and regulations have been invoked by renewable energy investors as a sword, with foreign investors relying on the host State’s environmental measures in an effort to enforce their rights against States. Moreover, host States have also started exploring new arguments and sought to use environment as a sword by bringing environmental counterclaims against foreign investors and could potentially turn to illegality arguments if foreign investors violate environmental laws and regulations in making or implementing their investments. Host States will, however, need to meet the jurisdictional requirements and high thresholds established by arbitral tribunals in order to succeed on counterclaims and illegality claims.