Human Rights Due Diligence and the Climate Change Dimension: Implications for Investor Responsibility in International Investment Law

In: Climate Law
Sek Lun Cheong Melbourne Law School, University of Melbourne, Melbourne, Vic, Australia

Search for other papers by Sek Lun Cheong in
Current site
Google Scholar
Open Access


The concept of human rights due diligence (hrdd) of businesses under the United Nations Guiding Principles on Business and Human Rights (ungps) is an important milestone in the standards of business conduct. The responsibility of businesses to conduct hrdd is focused on the human rights risks to, or impacts on, communities from business activities. Recent developments highlight the increasing convergence and integration between the ungps’ framework of hrdd and climate change. This synergy contrasts starkly with the state of the international investment regime, which has traditionally been characterized as operating in isolation from other fields in international law, notably human rights and environmental law. Given that international investment law is now increasingly featuring the human rights responsibility of foreign investors – in particular with respect to the ungps’ framework of hrdd or its public-interest aspect – the intersection of human rights and international investment law serves as a potential pathway to advancing investor responsibility for the climate-related harm that investment activities may cause.

1 Introduction

In the domestic regulation of business conduct, the role and accountability of businesses for human rights violations and the undermining of environmental protection have been recognized for some time now.1 The frontier of the evolution and regulation of corporate responsibility is currently a requirement of human rights due diligence (hrdd) for corporations. This concept is proliferating in national legislation as well as in international instruments, such as the United Nations Guiding Principles on Business and Human Rights (ungps), the ilo Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (as amended in March 2017), and the International Finance Corporation (ifc) Performance Standards on Environmental and Social Sustainability (2012).2

The ungps are the most authoritative and prominent instrument exhorting hrdd.3 The ungps are built on three pillars: Pillar I on the state duty to protect human rights, Pillar ii on the corporate responsibility to respect human rights, and Pillar iii on access to remedy.4 Pillar ii sets out the hrdd framework that businesses must undertake ‘In order to identify, prevent, mitigate and account for how they address their adverse human rights impacts’.5

As human rights and environmental (and climate change) concerns converge, the ungps are increasingly understood as also including a climate change aspect.6 The District Court of the Hague has drawn on the ungps to elaborate a corporation’s duty of care under Dutch law to conduct due diligence with regard to climate change.7

In the context of international investment law (iil), foreign investors generally do not have human rights or environmental (or climate change) obligations, in part because international investment agreements (iias) do not stipulate them.8 However, new-generation iias increasingly recognize such obligations.9 To the extent that the hrdd framework under the ungps (including its people-centred focus) is featured in iil, foreign investors would also need to consider their climate-related responsibility.

Although the hrdd responsibility of foreign investors as business entities still does not feature explicitly in iil, it has featured (and in some instances may feature) in indirect ways.10 For example, new-generation iias stipulate provisions that incorporate hrdd (albeit indirectly) or mirror some aspects of hrdd, such as social or environmental impact assessment.11 In international investment arbitration, the interpretation and application of the fair and equitable treatment (fet) standard and its component of legitimate expectations could be understood as featuring investor responsibility to consider risks to people, which is a hallmark of hrdd. These developments in, and aspects of, iil are thus entry points for climate change considerations to permeate the investment regime, potentially engendering new forms of responsibility for foreign investors.

As no iia has yet to expressly provide for the hrdd obligation of investors and not all states have passed legislation on mandatory due diligence, there is little room for respondent states to argue for the inclusion of climate change considerations through these avenues. However, as noted above, hrdd legislation and policy have been proliferating, and new-generation iias stipulating more-progressive provisions are beginning to emerge.12 These developments enable respondent states to employ innovative arguments to replicate the effects of hrdd, as iil has avenues for integrating hrdd (or its people-centred focus) other than through explicit stipulation in iias.13

2 The Connection between the ungps and Climate Change

While the human rights/climate change nexus is not new, this article explores it through the lens of the responsibility of businesses to conduct due diligence.

It is now clear that the ungps apply to climate-related human rights harms.14 The report of the Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy, and sustainable environment states that ‘corporations should comply with the Guiding Principles on Business and Human Rights as they pertain to human rights and climate change’.15 The UN Office of the High Commissioner for Human Rights (ohchr) notes that the ungps ‘provide the authoritative global framework to prevent and address negative human rights impacts related to business, which include business-related human rights impacts from climate change’.16 To this end, businesses should conduct hrdd that addresses adverse climate-change-related human rights impacts.17 Such impacts, however, pose complex issues of attribution of responsibility, in particular with respect to the emission of greenhouse gases.18 Thus, while the integration of climate change considerations about climate adaptation and mitigation within hrdd has been endorsed, it is unlikely that a corporation could be held responsible for a general ‘climate change harm’, although it could be found responsible for contributing to such harms through its emissions, for instance.19 That having been said, climate-attribution science has progressed in recent years, advancing the pursuit of scientifically accurate attribution,20 for instance by improving the feasibility of quantifying the historical emissions of a business.21 This may improve future prospects of attribution of responsibility.22 The operationalization of climate change considerations in undertaking hrdd will thus evolve with time.

The relevance of climate change to the ungps is more than merely a general abstraction; other sources envisage a meaningful integration of climate change elements within the hrdd framework of the ungps. For example, a 2021 joint report by the Australian Human Rights Commission and the Australian Human Rights Institute at the University of New South Wales notes that

implementing the ungps in the climate context means business should: have a policy commitment to respecting human rights, by mitigating climate change (with specific measures to that end); incorporate climate-related human rights risks into their human rights due diligence; and ensure those impacted have access to remedy.23

Moreover, the ohchr published a fact sheet in 2021 which clarified that, under the ungps, the responsibility of businesses to respect human rights includes avoiding causing or contributing, but also positively preventing or mitigating, emission of greenhouse gases and deforestation.24 Social and environmental impact assessment should be an integral part of the hrdd process.25 In addition, a business should support climate adaptation measures.26

Another practical integration of climate change and the ungps involves the hrdd stakeholder engagement process, which provides that the information resulting from this process is to be integrated into companies’ climate change responses.27 As the transition to a low-carbon economy could incur collateral damage in the form of adverse human rights impacts,28 the ungps are particularly important, as the hrdd process may reveal both climate-related and human rights risks, aiding the prioritization of actions a company should be undertaking.29

On a conceptual level, climate due diligence has been argued to be an inherent dimension of hrdd.30 The principle of ‘systemic integration’ in the context of the Vienna Convention on the Law of Treaties (vclt)31 has been said to entail that the corporate responsibility to respect human rights under Pillar ii of the ungps should be interpreted in the light of other bodies of law, such as environmental law and climate law.32 In this respect, the Paris Agreement, the reports of the ipcc, and principles of international environmental law may inform climate due diligence.33

hrdd and climate due diligence are also operationally similar.34 Both, for instance, focus on risks and impacts to people or the environment, rather than risks to business operations. hrdd was drawn from the more established impact assessment systems, such as environmental impact assessment.35 This similarity could act as an ‘important methodology bridge’ that links the hrdd framework under the ungps and environmental/climate due diligence.36 Further, both types of due diligence concern harms that arise throughout the value chain. The concept of Scope 1, 2, and 3 emissions in the climate change context parallels the notion of leverage in hrdd under the ungps, according to which a business has the capacity to influence the practices of another business which is linked to its operations, products, or services.37 Both also adopt a preventive approach to risks and harm: the ‘precautionary principle’ in environmental law is akin to the risk-based approach of hrdd to identify, prevent, and mitigate potential human rights impacts.38

Other instruments that mention the environment have utilized the language of the ungps. The oecd Due Diligence Guidance, a set of policy guidelines that includes environmental matters, notes that the severity of impacts depends on the ‘scale’, ‘scope’, and the ‘irremediable character’ of the impact.39 These words are identical to the commentary on Guiding Principle 14 of the ungps, which concerns the severity of human rights impacts.40 Further, the idea of prioritization of risks features in both the ungps and the oecd Due Diligence Guidance. UN Human Rights Council Resolution 45/30 also mirrors the language of the ungps in recognizing a child’s right to a healthy environment.41

The ungps have been referred to as a source for the elaboration of domestic law. For example, they have informed the interpretation of the corporate duty of care under the Dutch Civil Code. In Milieudefensie et al. v. Royal Dutch Shell plc, the District Court of the Hague relied on the ungps, among other factors, in interpreting Shell’s duty of care with respect to climate change.42 The ungps may also inform the interpretation of domestic law on mandatory due diligence more generally, such as in the case of France’s Duty of Vigilance Law, which includes within its scope environmental damage resulting from business operations.43

The increasing integration of the ungps with the issue of climate change provides a vital starting point from which to consider the inclusion of climate change considerations in the hrdd process. The emerging interactions between iil and human rights, particularly with respect to the ungps’ framework of hrdd or its ‘risk to people’ dimension, serve as potential pathways to incorporate climate change considerations into the investment regime.

3 Human Rights Due Diligence in International Investment Agreements

The clearest interaction between iil and human rights with respect to hrdd would be a stipulation of an hrdd requirement in an iia. Although no iia has yet to expressly stipulate a hrdd obligation of investors, some have featured it indirectly in various ways. For instance, some iias have referenced instruments that exhort hrdd, notably the ungps.44 Also, iias may contain legality clauses that impose obligations on investors or condition investment protection on investors’ compliance with the domestic law on mandatory due diligence, including impact assessment.45 As impact assessment is an element of the due diligence framework under the ungps,46 existing iia provisions stipulating environmental or social impact assessment mirror some aspects of a due-diligence requirement.47 These avenues of interaction in the context of iias are entry points for the assimilation of climate considerations into iil through the ungps’ connection with climate change.

3.1 Reference to Human Rights Due Diligence by Incorporation

The requirement to conduct hrdd is in some cases stipulated in an iia indirectly by referencing an instrument that exhorts hrdd, such as the ungps and the oecd’s Guidelines for Multinational Enterprises (oecd Guidelines),48 as the examples that follow illustrate. In such cases, the hrdd requirement is incorporated into the relevant iia through the referenced instrument. For example, Article 12(4) of the Slovakia-United Arab Emirates Bilateral Investment Treaty (bit) (2016) provides that ‘Each Contracting Party shall promote as far as possible … the oecd Guidelines for Multinational Enterprises to the extent that they are not inconsistent with their domestic laws.’49 Another example is Article 406(2)(b) of the EU-UK Trade and Cooperation Agreement (2020), which stipulates that the contracting parties ‘shall … support the adherence, implementation … of relevant international instruments, such as the oecd Guidelines for Multinational Enterprises ... and the UN Guiding Principles on Business and Human Rights’.50 Further, Article 7(2) of the Netherlands Model bit provides for the contracting parties to encourage investors to incorporate the oecd Guidelines and ungps in their internal policies,51 while Article 23 of the same instrument provides that tribunals can take account of investors’ non-compliance with the two instruments in determining compensation.52

Incorporation by reference ‘would allow the investment tribunals to rely on standards such as the ungps or the oecd Guidelines when interpreting and applying the terms of investment agreements.’53 Incorporating hrdd in this manner is significant, particularly where state parties to iias do not have the political will to impose direct obligations on investors. An analogy might be drawn with the case where a renvoi to domestic law is required in order to aid the interpretation of a rule of international law where the domestic law is incorporated in the iia.

Inclusion of domestic legislation that mandates hrdd in iias is a significant way of incorporating hrdd, given the legal force of legislation. However, such incorporation has yet to feature in iil.54 Incorporating instruments exhorting hrdd in their entirety furnishes a legal basis to argue for a binding obligation on investors to conduct hrdd, in much the same way as where hrdd is directly stipulated in the iia.55 A 2023 update to the oecd Guidelines makes clear that when businesses conduct hrdd they should assess and address the effects of environmental impacts on human rights through due-diligence exercises.56 Thus, businesses have to conduct hrdd – including its climate change dimension – where their investment activities, such as extractive investments, pose risks of climate-related adverse impacts on human rights.

Further, although not in the context of iil, several instances of climate litigation against corporations have revolved around arguments that the impugned corporations have not fulfilled their hrdd responsibility, by virtue of the climate impacts of their business activity.57 Because tribunals have yet to address a case involving an investor’s hrdd obligation derived from an iia, it is by no means certain that a tribunal will interpret hrdd to apply to investors’ activities that have adverse impacts for climate change. Nevertheless, the increasing connection between climate impacts of business activities and hrdd, as evident in the climate litigation cases, would be relevant to respondent states seeking to illuminate the tribunal on the application of hrdd in the context of iil. Thus, the incorporation of hrdd in iias would be a cause for caution for investors to be mindful of the climate impacts of their investments.

3.2 Treaty Provisions on Impact Assessment

Human rights impact assessment (hria) is almost exclusively considered, if at all, in the context of trade agreements – it is yet to be mainstreamed in the context of bits.58 While no publicly available iia contains provisions on hria as an obligation of investors, the sadc Model bit stipulates other types of impact assessment, such as environmental or social assessment, which include human rights considerations.59 Article 13.2 of the Model bit states that

The impact assessments required under paragraph 13.1 [environmental and social assessments] shall include assessments of the impacts on the human rights of the persons in the areas potentially impacted by the investment, including the progressive realization of human rights in those areas.60

eia and social impact assessment (sia) are comparable to hria.61 Some sources consider that sia includes human rights issues. For example, the European Bank for Reconstruction and Development’s 2019 Environmental and Social Policy states:

[The Bank] is committed to providing “environmentally sound and sustainable development” in the full range of its activities … The Bank recognises that environmental and social sustainability is a fundamental aspect of achieving outcomes consistent with its transition mandate.62

The 2014 version of the same Policy defines ‘social’ as

those issues which pertain to project-affected people and their communities and workers and [are] related to socioeconomic status, vulnerability, gender identity, human rights, sexual orientation, cultural heritage, labour and working conditions, health and safety and participation in decision making.63

In addition, the commentary on Guiding Principle 18 of the ungps states that ‘processes for assessing human rights impacts can be incorporated within other processes such as risk assessments or environmental and social impact assessments’.64 This suggests that both eias and sias are broad enough to include human rights issues. In fact, it has been noted that ‘hria is recognized to have evolved from eia and social impact assessment’.65 Human rights issues are therefore relevant considerations in iia provisions that stipulate social and environmental impact assessment.66

As impact assessment is a part of the due-diligence process,67 the climate change dimension of due diligence under the ungps (as discussed in sections 2 and 3.1) applies to impact assessment.68 Respondent states would be able to draw on the increasing body of developments on this front – as the instances of climate litigation show – to persuade tribunals about the interpretation and application of iia provisions on impact assessment.

3.3 Human Rights Due Diligence Stipulations in Host-/Home-State Law and Legality Clauses

iias can indirectly require hrdd where they contain an ‘in accordance with the law’ provision or a legality clause requiring investor compliance with domestic law that mandates hrdd. For example, Article 12(1) of the ecowas Supplementary Act on Investments provides that

Investors or the investments shall comply with environmental assessment screening criteria and assessment processes applicable to their proposed investments prior to their establishment, as required by the laws of the host Member State for such an investment or the laws of the home State for such an investment.69

This provision suggests that the basis of the requirement to undertake an environmental assessment is the domestic law of either the host or home state.70 The provision also illustrates the way in which iias can require a hrdd obligation for investors through the domestic laws of the host/home state.

Where the nature of the investment is likely to impact on the environment, such as in the case of mining investments, investors will need to integrate climate mitigation and adaptation measures into their due diligence processes (as discussed in section 2). Because regulation and policy development in this area are still nascent, there is uncertainty as to the specific actions that will be required of investors. Indeed, the International Bar Association’s Climate Change Justice and Human Rights Task Force acknowledges that ‘[corporate] responsibility must be accompanied by development of coherent and clear regulatory standards that make compliance possible’.71 The Task Force recommends that ‘In the short term, corporations should adopt and promote the UN Guiding Principles on Business and Human Rights as they pertain to climate change’.72 It suggests that a model policy would essentially involve the corporation adopting ‘an explicit policy that stipulates measures designed to prevent or mitigate adverse climate change impacts linked to its operations’, implementing ‘a due-diligence process to identify, prevent, mitigate and account for its actual climate change impacts’, and ‘implement remediation processes’.73 The Task Force further recommends that corporations disclose ‘evident climate change effects’ arising from the actions of their subsidiaries, affiliates, and supply chains, implementable through contractual provisions mandating disclosure.74 For corporations in the finance and banking sectors, the Equator Principles provide guidance to integrate climate-risk management in their due diligence processes.75

While falling back on the ungps for guidance means relying on broad principles rather than specific policy prescriptions, investors have a duty not to abdicate their obligation to incorporate climate adaptation and mitigation considerations as part of the hrdd process even if this duty entails ongoing adjustments to their policies. Despite acknowledging the complexity of such an exercise, in a complaint brought by four ngos against ing under the National Contact Point (ncp) procedure provided for under the oecd Guidelines, the Dutch ncp

stresses that absence of a methodology or international accepted standard will not dismiss [sic] companies, including financial institutions, to seek measurement and disclosure of environmental impact in areas where reporting standards are still evolving such as, for example, social, environmental and risk reporting. This is particularly the case with greenhouse gas emissions.76

Even if an iia does not expressly stipulate an ‘in accordance with the law’ provision, some tribunals have implied a requirement for investors to comply with the laws of the host state.77 For example, the tribunal in Cortec Mining Kenya Ltd v. Kenya denied treaty protection to the investor for its failure to comply with Kenya’s eia regulatory regime despite the absence of explicit language requiring the investor to comply with the laws of Kenya.78

Generally, most breaches of ‘in accordance with the law’ clauses impact the definition of a covered ‘investment’ and hence are relevant only at the initiation phase of an investment. In contrast, some legality provisions are not restricted in this way. They have a broader effect,79 directly imposing an obligation on investors to comply with the host state’s domestic law beyond the initiation phase of the investment,80 failing which a substantive treaty provision is breached. In other words, the provision does not merely affect the definition of an ‘investment’; it elevates a breach of domestic law to the international treaty level. This breach may also provide jurisdiction to the host state to initiate counterclaims or hold the investor directly accountable under the treaty.81

An example of an iia that provides for this type of legality clause is the Common Market for Eastern and Southern Africa (comesa) Investment Agreement, which provides that ‘comesa investors and their investments shall comply with all applicable domestic measures of the Member State in which their investment is made.’82 Further, Article 28 of the Agreement provides that the host state may, inter alia, assert a counterclaim against the investor if it has not complied with its obligations under the domestic law of the host state.83 Another example is the East African Community Model Investment Treaty, which provides a ‘stand-alone’ treaty obligation for the investor to comply with the laws of the host state.84 It similarly facilitates a host-state counterclaim for treaty breaches by the investor.85

These stand-alone legality clauses not tied to the definition of an ‘investment’ are thus useful in enforcing domestic-law obligations at the international level. As such, a provision can elevate a domestic law that stipulates an hrdd requirement on investors to the international level. This avenue represents another entry point for the climate (domestic) obligations of investors to feature in the international investment regime. France’s Duty of Vigilance Law or Germany’s Supply Chain Due Diligence Act may well be this domestic hrdd legislation. Both have an environmental component to them.86 The latest Dutch amended draft bill on mandatory due diligence – Bill for Responsible and Sustainable International Business Conduct – incorporates climate change as part of the due-diligence obligation. It requires businesses to investigate and tackle the risks of adverse impacts of their activities on climate change.87 As part of addressing those risks, businesses must produce a climate plan detailing steps to be taken, including stating ‘objectives in the climate plan to reduce net greenhouse gas emissions by at least 55% in 2030 compared with the 1990 levels’.88 Further, they must monitor and report on the execution of the climate plan.89 A failure to comply with these requirements may result in an administrative penalty amounting to no more than 10 per cent of the business’s net turnover.90

4 The People-Centred Aspect of hrdd in International Investment Arbitration

Compared to commercial due diligence, a hallmark of hrdd under the ungps is its concern for risks and impacts of business operations to people.91 In some areas of international investment arbitration, investors may have to consider the risks and impacts of their investment activities to the host state’s population. As will be discussed below, these considerations may become relevant in the assessment of whether a host state has accorded fair and equitable treatment (fet) to an investor under an approach to fet that also considers the behaviour of the investor. Similarly, in determining whether an investor’s expectations have been frustrated as a component of fet, tribunals may consider the extent to which the investor has conducted certain kinds of due diligence that might inform its expectations. These areas serve as entry points for the climate-related impacts of an investment to inform tribunals’ assessment of an investment-treaty claim.

4.1 Fair and Equitable Treatment

fet is a standard of investment protection that is usually understood in relation to the host state’s obligation to treat the investor and its investment fairly and equitably.

However, some of the literature and arbitral practice have noted that the conduct of both the host state and the investor are relevant considerations. In Mamidoil v. Albania, the tribunal stated that ‘the standard [fet] is addressed to both the State and the investor. Fairness and equitableness cannot be established adequately without an adequate and balanced appraisal of both parties’ conduct’.92

Scholars have also argued for this approach to fet. According to Muchlinski, ‘fairness’ ‘leaves open the possibility of looking not only at the conduct of the person who must act fairly but also the conduct of the person who is acted upon’,93 while ‘equity’ ‘suggests a balancing process and weighing up of what is right in all the circumstances’.94 Sornarajah echoes this sentiment, noting that ‘In applying that standard [fet], it is always relevant to look at the conduct of the foreign investor. … Fairness is a concept that cuts both ways and must be assessed in light of the whole situation.’95 A balanced approach to interpreting fet in this manner opens the door to considering a range of investor conduct. This assessment is an inherently normative exercise, which involves evaluating the nature of investors’ conduct. Francioni argues that a ‘progressive interpretation’ of fet ‘entails that the investor who seeks equity for the protection of his investment must also be accountable, under principles of equity and fairness, to the host state’s population affected by the investment’.96 He further notes that

It is hard to conceive of equity as a one-sided concept: equity always requires fair and equitable balancing of competing interests, in this case the interests of the investor and the interest of individuals and social groups who seek judicial protection against possible adverse impacts of the investment on their life or their environment.97

Building on this approach to fet, investors would need to consider the effect of their investments on climate change and respond accordingly.

As discussed in section 3.3, the specific actions required of investors are still developing. The complexity underlying appropriate business responses to the potential climate change impacts of their activities is made worse by the fact that such responses are sector-specific and highly dependent on the particular circumstances of an investment. The oecd Guidelines 2023 acknowledge that assessing ‘to what extent an enterprise is contributing to an adverse environmental impact ... may be challenging’ and that the rule of thumb should be for enterprises to heed ‘widely recognised standards ... regarding good environmental practice; benchmarks and standards established in applicable environmental rules and regulatory frameworks; and relevant international agreements’.98

Given the centrality of the ungps as a guide for appropriate action in this context, investors would do well to conduct their operations based on the tenets of the due-diligence mechanism.99 In the mining industry, some corporations have already taken measures along these lines, including undertaking ‘site-level scientific modeling to identify and quantify physical risks and opportunities at the local level’, modifying ‘risk-identification processes to include climate risks’, and incorporating ‘climate-related risks and mitigation measures into business decisions throughout the project lifecycle’.100 Some more technical actions include ‘Ensuring robust engineering design and construction standards for facilities’ to withstand extreme weather conditions, and ‘Designing comprehensive water management measures’ to ensure sustainable use of water through conservation practices and recycling.101

This approach to fet would also be buttressed by the increasing reference to environmental concerns in new-generation iias, as these treaty provisions may impact the interpretation of fet.102 These provisions would represent the benchmark by which an investor’s lack of diligence may be assessed. For example, iias that incorporate by reference the oecd Guidelines 2023 would impel investors to review the climate impacts of their investment activity, as this version of the guidelines provides for the conduct of environmental due diligence, which encompasses climate change among other environmental impacts.103 Investors are expected to maintain an environmental management system by conducting risk-based due diligence under the guidelines.104 They would need, for instance, to identify and assess adverse environmental impacts of their operations and regularly review the effectiveness of the environmental targets and strategies they implement.105 Under this approach to fet, investments in, say, energy-intensive industries undertaken without having such a system of environmental due diligence in place would undermine an investor’s treaty claim that the host state has breached its fet obligation.

4.2 Legitimate Expectations

The arbitral cases on renewable energy since 2016 have evidenced tribunals’ increasing consideration of investors’ due diligence as a countervailing factor in assessing their treaty claims.106 This consideration in the cases arises particularly in the context of investors’ claims that their legitimate expectations have been frustrated by host states’ amendments to their regulatory framework on tariff incentives. Investors in these cases have argued that they relied to their detriment on the promised stability of the legal/regulatory conditions governing their investment. Arbitral tribunals have held that, for an investor to claim that its expectations have been frustrated, the expectations must be legitimate and reasonable.107 The legitimacy and reasonableness of the investor’s expectations are to be assessed objectively.108

Interrogating the reasonableness of an investor’s expectations provides an avenue for assessing, inter alia, whether the investor has conducted (human rights) due diligence in undertaking an investment in a sector with a high risk for human rights abuse (such as the extractive industry) where the investor knew (or ought to have known) of such a risk. The ifc Performance Standards on Environmental and Social Sustainability recognize that, in such high-risk situations, hrdd is relevant in complementing other forms of impact assessment.109 Hence, the failure to conduct hrdd may potentially be a factor in determining the reasonableness of the investor’s expectations that the host state will not take a disputed measure to disrupt the investment.

Since due diligence is a flexible concept,110 there is room for interpretation in assessing whether the investor has acted reasonably with respect not only to the performance of the due diligence but also its nature. The notion of investor due diligence may be elaborated to include climate-related due diligence,111 for example in the context of mining investments, since such investments pose risks for climate change.

In specific terms, an investor’s expectations may be assessed as being contingent upon the investor having conducted due diligence with respect to the environment, failing which its treaty claim may be undermined. For example, the investor’s due diligence could extend to the need to be apprised of a situation where the host state announces its ndc under the Paris Agreement or another such commitment.112 These commitments are part of the regulatory condition under which foreign investments would be subject, and are thus relevant factors that investors are expected to consider in undertaking their due diligence. Indeed, investors have been expected to take cognisance of several aspects of the regulatory framework of the host state that impact on their investments, such as relevant national judicial decisions113 and even the broader socio-political and economic environment114 of the host state. As these factors inform investors’ expectations, they affect both the interpretation of the legal standard of legitimate expectations and whether the investor factually has such expectations.115 Thus, climate change provisions in iias, as treaty commitments, would inform the legitimate expectations of investors.116 Tribunals could also consider norms in the international climate change context in assessing investment-protection obligations by recognizing them as relevant rules of international law under Article 31(3)(c) of the vclt.117 Investors would need to consider these norms as part of their due diligence, as tribunals could take them into account in assessing legitimate expectations.

5 Conclusion

Investor obligations with respect to human rights and the environment are increasingly common, as reflected in the provisions of new-generation iias. Although hrdd of investors has yet to feature expressly, existing aspects of iil may replicate, and in some instances have largely replicated, hrdd or its people-focused character even without direct policy intervention in the form of investment treaty-making.

In other words, the international investment regime already has the doctrinal capacity to accommodate and reflect the hrdd responsibility of foreign investors as businesses under the ungps. This can and should be done through innovations in iia manoeuvring and adopting a balanced approach to assessing existing concepts in investment arbitration in which the investor’s due diligence is also taken into account. The capacity of the investment regime to achieve these ends is a significant finding because it illuminates a doctrinal avenue, apart from iia reform, to ameliorate a part of the legitimacy crisis underlying iil, namely that the international investment regime was designed in such a way that overly protects foreign investors by granting them extensive rights but does not hold them accountable when they commit human rights or environmental abuses.118

While such an avenue might raise questions of legitimacy with respect to arbitrators having wide discretion in assessing existing standards of investment protection, this exercise of discretion is not without legal basis. For example, it has always been within the arbiter’s prerogative to elaborate on the content of reasonableness (as discussed in the context of legitimate expectations) and due diligence where these are not expressly defined in a treaty.119 With respect to iia manoeuvring to incorporate hrdd, this method falls back on host states’ existing domestic law stipulating hrdd or impact assessment (as discussed in section 3). The increasing proliferation of domestic legislation on mandatory due diligence also reflects the expectations of states on the standard of conduct of business actors. Arbitrators’ legitimate exercise of discretion in favour of the inclusion of hrdd and the interests of the host-state community in investment arbitration is in line with the current international political morality underpinning the international investment regime.120

The various ways in which hrdd under the ungps or its people-centred aspect may feature in iil represent potential pathways for considering climate change elements within the international investment regime. The recognition of the climate change dimension of hrdd in the ungps and the oecd Guidelines means that investors cannot ignore potentially adverse climate impacts of their investments. Their failure to take this factor into account may undermine their investment treaty claims in various ways, as discussed. While iia provisions concerning the environment and climate change are featured in climate change discourse, climate due diligence and its connection with the more established hrdd mechanism are a less considered aspect of the human rights-climate change nexus. The ungps’ framework of hrdd is therefore an important point of departure for analysing how human rights, iil, and climate change interact. The scope of non-economic considerations in iil is gradually expanding with important implications for foreign-investor responsibility, including with respect to climate change.


See Jennifer A. Zerk, Multinationals and Corporate Social Responsibility: Limitations and Opportunities in International Law (Cambridge: Cambridge University Press, 2006), 7.


For an overview of these instruments, see Robert McCorquodale, ‘Human Rights Due Diligence Instruments: Evaluating the Current Legislative Landscape’, in Research Handbook on Global Governance, Business and Human Rights, edited by Axel Marx, et al. (Cheltenham, UK: Edward Elgar, 2022), 124–40.


John Gerard Ruggie, ‘The Social Construction of the UN Guiding Principles on Business and Human Rights’, in Research Handbook on Human Rights and Business, edited by Surya Deva and David Birchall (Cheltenham, UK: Edward Elgar, 2020), 63.


‘Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy”’, Annex to unhrc, Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, John Ruggie (21 March 2011), UN Doc. a/hrc/17/31 (hereinafter ungps).


Ibid., 16 (Guiding Principle 17).


Discussed further in Section 2.


Milieudefensie et al. v. Royal Dutch Shell plc, District Court of the Hague, C/09/571932/ha za 19–379, 26 May 2021 (English version) (hereinafter Milieudefensie).


UN General Assembly, Report of the Working Group on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, UN Doc. A/76/238 (27 July 2021), para. 15 (hereinafter Report of the Working Group on Human Rights and tncs).


Ibid., paras 41–7.


Discussed further in Sections 3 and 4.


See, e.g., Reciprocal Investment Promotion and Protection Agreement between the Government of the Kingdom of Morocco and the Government of the Federal Republic of Nigeria, signed 3 December 2016 (not yet in force), arts 14(1) and 14(2) (hereinafter Morocco-Nigeria bit); Draft Pan-African Investment Code, art. 37(4).


See, e.g., UN General Assembly, Report of the Working Group on Human Rights and tncs, supra note 8, paras 28–47.


As sections 3 and 4 discuss, these avenues have begun to be explored to some extent.


ohchr, ‘Frequently Asked Questions on Human Rights and Climate Change’ (Fact Sheet No. 38, 2021) (hereinafter ‘Frequently Asked Questions’); ohchr, ‘Human Rights, Climate Change and Business: Key Messages’ (Report, 2020) (hereinafter ‘Key Messages’); UN General Assembly, Report of the Special Rapporteur on the Issue of Human Rights Obligations Relating to the Enjoyment of a Safe, Clean, Healthy and Sustainable Environment, UN Doc. A/74/161 (15 July 2019) (hereinafter Report on Enjoyment of a Safe, Clean, Healthy and Sustainable Environment).


UN General Assembly, Report on Enjoyment of a Safe, Clean, Healthy and Sustainable Environment, supra note 14, para. 71.


ohchr, ‘Key Messages’, supra note 14, 1.


See also the latest version of the EU Corporate Sustainability Due Diligence Directive (csddd) adopted by the EU Parliament on 1 June 2023 on, for example, amendments 32, 33, and 366 <>. Further, the UN Special Rapporteur on the promotion and protection of human rights in the context of climate change highlights that certain climate mitigation actions employed by businesses themselves have human rights implications (see UN General Assembly, Report of the Special Rapporteur on the Promotion and Protection of Human Rights in the Context of Climate Change: Promotion and Protection of Human Rights in the Context of Climate Change Mitigation, Loss and Damage and Participation, UN Doc. A/77/226 (26 July 2022), paras 16–25), which further justify hrdd to be conducted.


Geetanjali Ganguly, Joana Setzer, and Veerle Heyvaert, ‘If at First You Don’t Succeed: Suing Corporations for Climate Change’, 38(4) Oxford Journal of Legal Studies 841 (2018), 849 (‘pinpointing the actor(s) responsible for an injury can be factually and conceptually difficult, if not impossible, in cases where the damage is a result of climate change’).


Indeed, plaintiffs in climate litigation cases have often faced the challenge of substantiating the issue of causation with respect to emission of greenhouse gases. See, e.g., Native Village of Kivalina v. ExxonMobil Corporation et al. 696 F.3d 849 (9th Cir., 2012) (‘it is not plausible to state which emissions – emitted by whom and at what time in the last several centuries and at what place in the world – “caused” Plaintiffs’ alleged global warming related injuries’: ‘Order Granting Defendants’ Motions to Dismiss for Lack of Subject Matter Jurisdiction’, <>, 20); Comer v. Murphy Oil USA Inc. et al., Civil Action No. 1:05-cv-436-lg-rhw (US District Court, Southern District of Mississippi, 2007) <> and No. 07-60756 (5th Cir., 2009) <>. See however the ongoing case of Lliuya v. rwe ag (Higher Regional Court of Hamm, 2018), English translation of the Order <>, where the Higher Regional Court of Hamm rejected the first instance decision of the Regional Court of Essen (in which the plaintiff did not succeed in establishing causation) and requested to hear expert evidence on the matter.


Ganguly, Setzer, and Heyvaert, supra note 18, 854–5, noting developments in attribution science.


See Richard Heede, ‘Tracing Anthropogenic Carbon Dioxide and Methane Emissions to Fossil Fuel and Cement Producers, 1854–2010’, 122 (1–2) Climatic Change 229 (2014); Ganguly, Setzer, and Heyvaert, supra note 18, 852–4.


Rupert F. Stuart-Smith, et al., ‘Filling the Evidentiary Gap in Climate Litigation’, 11 Nature Climate Change 651 (2021), 654. The authors note that ‘current scientific methodologies enable quantifying individual emitters’ marginal contributions to extreme weather events and slow-onset changes. Methods for modelling the response of the climate system to excluding certain ghg emissions exist and have been applied to evaluate the contribution of countries’ emissions to extreme weather probabilities. Evidence of this type appears capable of plugging evidentiary gaps identified in some prior cases.’ In a survey of 73 lawsuits from 14 jurisdictions, the authors find that limitations in scientific evidence in past lawsuits may have been the challenge for the issue of causation, that ‘such evidence lags substantially behind the state of the art in climate science’, and that ‘In some cases, courts have explicitly, and incorrectly, stated the infeasibility of scientifically attributing climate impacts to individual emitters’: 654.


Australian Human Rights Commission and Australian Human Rights Institute unsw, ‘At the Crossroads: 10 Years of Implementing the UN Guiding Principles on Business and Human Rights in Australia’ (Report, September 2021), 28.


ohchr, ‘Frequently Asked Questions’, supra note 14, 36–7. See also Economist Impact, ‘Asia in Focus: Climate Change and the Business and Human Rights Agenda’ (Briefing Note, November 2022), 12.


ohchr, ‘Frequently Asked Questions’, supra note 14, 37.




shift, ‘Climate Action and Human Rights: How the UN Guiding Principles Can Help Companies Respect Human Rights When Responding to Climate Change’ (Report, February 2023), 15–17.


See Economist Impact, supra note 24, 5.


shift, supra note 27, 17–19.


See Chiara Macchi and Nadia Bernaz, ‘Business, Human Rights and Climate Due Diligence: Understanding the Responsibility of Banks’, 13(15) Sustainability 8391 (2021), 6–8.


Vienna Convention on the Law of Treaties (adopted 23 May 1969, entered into force 27 January 1980), 1155 unts 331.


Macchi and Bernaz, supra note 30, 7.




See, e.g., Institute for Human Rights and Business, ‘Connecting the Climate Change and Business and Human Rights Agendas’ (Briefing, 2020), 5; Macchi and Bernaz, supra note 30, 7.


Nora Götzmann, ‘Introduction to the Handbook on Human Rights Impact Assessment: Principles, Methods and Approaches’, in Handbook on Human Rights Impact Assessment, edited by Nora Götzmann (Cheltenham, UK: Edward Elgar, 2019), 5.


Institute for Human Rights and Business, supra note 34, 5.


See ungps, supra note 4, 18–19 (Commentary on Guiding Principle 19), which discusses further how and when businesses should exercise leverage.


Institute for Human Rights and Business, supra note 34, 5.


oecd, Due Diligence Guidance for Responsible Business Conduct (2018), 42.


ungps, supra note 4, 14 (Commentary on Guiding Principle 14).


Human Rights Council, Resolution 45/30, Rights of the Child: Realizing the Rights of the Child Through a Healthy Environment, UN Doc. a/hrc/res/45/30 (13 October 2020), para. 11.


Milieudefensie, supra note 7, paras 4.4.2, 4.4.11–4.4.21.


See Colin Mackie, ‘Due Diligence in Global Value Chains: Conceptualizing “Adverse Environmental Impact”’, 30(3) Review of European, Comparative and International Environmental Law 297 (2021), 298.


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, signed 30 December 2020 (entered into force 1 May 2021), Part Two, Title xi, Chapter 8, art. 406(2)(b) (hereinafter EU-UK Trade and Cooperation Agreement (2020)); Netherlands Model Investment Agreement, adopted on 22 March 2019, art. 7(2) (hereinafter Netherlands Model bit).


See, e.g., Morocco-Nigeria bit, supra note 11, art. 14(1); Supplementary Act a/sa.3/12/08 Adopting Community Rules on Investment and the Modalities for their Implementation with ecowas, signed 19 December 2008 (entered into force 19 January 2009), art. 12(1) (hereinafter ecowas Supplementary Act). See section 3.3 for further discussion.


Götzmann, supra note 35, 3–5.


See, e.g., ecowas Supplementary Act, supra note 45, art. 12(1). See section 3.2 for further discussion.


oecd, Guidelines for Multinational Enterprises (1976, version 2011). See also the 2023 update to the guidelines: oecd, Guidelines for Multinational Enterprises on Responsible Business Conduct (1976, version 2023) (hereinafter oecd Guidelines 2023).


Agreement between the Slovak Republic and the United Arab Emirates for the Promotion and Reciprocal Protection of Investments, signed 22 September 2016 (entered into force 5 February 2018), art. 12(4).


EU-UK Trade and Cooperation Agreement (2020), supra note 44, Part Two, Title xi, Chapter 8, art. 406(2)(b). See also Agreement between the United States of America, the United Mexican States and Canada, signed 30 November 2018 (entered into force 1 July 2020), Chapter 14, art. 14.17, which stipulates that the contracting parties reaffirm the importance of ‘encouraging enterprises ... to voluntarily incorporate into their internal policies those internationally recognized standards ... which may include the oecd Guidelines for Multinational Enterprises’.


Netherlands Model bit, supra note 44, art. 7(2).


Ibid., art. 23.


Markus Krajewski, ‘A Nightmare or a Noble Dream? Establishing Investor Obligations Through Treaty-Making and Treaty-Application’, 5(1) Business and Human Rights Journal 105 (2020), 129.


Krajewski advocates this: see ibid., 128–9.


See ibid., which makes essentially the same point but referring instead to the incorporation in investment treaties of domestic law regulating corporate conduct.


oecd Guidelines 2023, supra note 48, 36 para. 70.


See, e.g., the lawsuit by several French ngos against French oil company TotalEnergies, for ‘climate inaction’: Aline Robert (translated by Daniel Eck), ‘Oil giant Total sued for “climate inaction” in France’s first climate case’, Euractiv, 29 January 2020, <>; Milieudefensie, supra note 7 (where the District Court of The Hague drew on the ungps, among other instruments, in elaborating the oil and gas company’s climate due-diligence obligation: at paras 4.4.2, 4.4.11–4.4.21); Greenpeace Southeast Asia et al., Petition: Requesting for Investigation of the Responsibility of the Carbon Majors for Human Rights Violations or Threats of Violations Resulting from the Impacts of Climate Change, (2015), <> (in a response to the petition, the Philippines Commission on Human Rights issued a report, noting that businesses must ‘Include climate change as an element of human rights due diligence undertaken in accordance with Principle 17’ of the ungps: Republic of the Philippines Commission on Human Rights, National Inquiry on Climate Change Report: A report by the Commission en Banc V of the Commission on Human Rights, (2022), 85 <>).


See James Harrison, ‘Human Rights Impact Assessments of Trade Agreements: Reflections on Practice and Principles for Future Assessments’ (Background Paper, Expert Seminar on Human Rights Impact Assessments of Trade and Investment Agreements, Geneva, 23–4 June 2010), 6, where Harrison notes that ‘There are no existing resources ... which consider how a human rights impact assessment of investment provisions or labour standards might be undertaken.’ In the context of sustainability, see also Markus W. Gehring, ‘Tools for More Sustainable Trade Treaties with Developing Countries’, 5 World Bank Legal Review 63 (2014); Markus Gehring, Sean Stephenson, and Marie-Claire Cordonier-Segger, ‘Sustainability Impact Assessments as Inputs and as Interpretative Aids in International Investment Law’, 18(1) Journal of World Investment and Trade 163 (2017).


sadc Model Bilateral Investment Treaty Template with Commentary, adopted in July 2012, arts 13(1) and 13(2).


Ibid., art. 13(2).


Götzmann, supra note 35, 5.


European Bank for Reconstruction and Development, Environmental and Social Policy (2019), 3 (emphasis added) (citations omitted).


European Bank for Reconstruction and Development, Environmental and Social Policy (2014), 1, para. 1, n. 2 (emphasis added).


ungps, supra note 4, 17 (Commentary on Guiding Principle 18).


Siobhán McInerney-Lankford, ‘Human Rights, International Financial Institutions and Environmental and Social Due Diligence: The Value Added of hria’, in Handbook on Human Rights Impact Assessments, edited by Nora Götzmann (Cheltenham, UK: Edward Elgar, 2019), 411.


See, e.g., iias that provide for sia and eia: ecowas Supplementary Act, supra note 45, art. 12(1); Morocco-Nigeria bit, supra note 11, arts 14(1) and 14(2); Netherlands Model bit, supra note 44, art. 7(3).


While there are diverse approaches to hrias, they typically concern the elements of hrdd under the ungps pertaining to the identification and assessment of adverse human rights impacts of a business activity: Götzmann, supra note 35, 5, 7.


The ohchr notes that the corporate responsibility to respect human rights under the ungps requires businesses to institute a hrdd process and that ‘Carrying out social and environmental impact assessments should be an integral part of this’ process: ohchr, ‘Frequently Asked Questions’, supra note 14, 37.


ecowas Supplementary Act, supra note 45, art. 12(1).


See also Morocco-Nigeria bit, supra note 11, art. 14(1).


International Bar Association, ‘Achieving Justice and Human Rights in an Era of Climate Disruption’ (Climate Change Justice and Human Rights Task Force Report, July 2014), 16.




Ibid., 16–17.


Ibid., 17.


The Equator Principles ‘serve as a common baseline and risk management framework for financial institutions to identify, assess and manage environmental and social risks’ in project finance: Equator Principles, ‘The Equator Principles: A financial industry benchmark for determining, assessing and managing environmental and social risk in projects’, Equator Principles, <>.


Final Statement: Oxfam Novib, Greenpeace Netherlands, BankTrack and Friends of the Earth Netherlands (Milieudefensie) versus ing, Dutch ncp, 19 April 2019, 5 <>, internal quotation marks omitted.


See, e.g., Plama Consortium Ltd v. Bulgaria (Award), icsid Case No. arb/03/24 (2008); World Duty Free Co Ltd v. Kenya (Award), icsid Case No. arb/00/7 (2006); Gustav fw Hamester GmbH & Co kg v. Ghana (Award), icsid Case No. arb/07/24 (2010).


Cortec Mining Kenya Ltd v. Kenya (Award), icsid Case No. arb/15/29, paras 333, 365 (2018). See also Aven and Others v. Costa Rica where the tribunal implied an obligation, which is based on the environmental laws of the host state, on the investor in iil despite the absence of express provision to this effect under the Free Trade Agreement between Central America, the Dominican Republic and the United States of America (2004): Aven and Others v. Costa Rica (Final Award), icsid Case No. unct/15/3, paras 732–5 (2018). The tribunal dismissed the host state’s counterclaim on procedural grounds: at paras 745–7.


See Nicola Soekoe, ‘The Human Rights Case for Robust “In Accordance with Domestic Law” Provisions in Africa’s International Investment Law’, Investment Treaty News Blog, 30 March 2022, <>.




Ibid; Diego Mejía-Lemos, ‘The Suitability of Investor-State Dispute Settlement and Host State Counterclaims for Implementing Climate Change International Responsibility’, 32(2) Review of European, Comparative and International Environmental Law 334 (2023), 341.


Investment Agreement for the comesa Common Investment Area, signed 23 May 2007 (not yet in force), art. 13.


Ibid., art. 28(9).


The eac Model Investment Treaty, adopted in February 2016, art. 10.


Ibid., art. 21.


France, Duty of Vigilance Law (2017): Loi no. 2017399 du 27 Mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d’ordre; Germany, Supply Chain Due Diligence Act (2021): Gesetz über die unternehmerischen Sorgfaltspflichten in Lieferketten.


Amended Bill for Responsible and Sustainable International Business Conduct, Parts 2.3–2.4 of the translated version of the bill, <>.


Ibid., section 2.4.2(2).


Ibid., Parts 2.5–2.6.


Ibid., section 3.2.3(3).


See, e.g., ungps, supra note 4, 13 (Guiding Principle 11), which provides that ‘Business enterprises should respect human rights. This means that they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved’ (emphasis added). See also Peter Muchlinski, ‘Towards a Coherent International Investment System: Key Issues in the Reform of International Investment Law’, in Prospects in International Investment Law and Policy: World Trade Forum, edited by Roberto Echandi and Pierre Sauvé (Cambridge: Cambridge University Press, 2013), 423.


Mamidoil Jetoil Greek Petroleum Products Societe sa v. Albania (Award), icsid Case No. arb/11/24, para. 634 (2015) (hereinafter Mamidoil v. Albania).


Peter Muchlinski, ‘“Caveat Investor”? The Relevance of the Conduct of the Investor Under the Fair and Equitable Treatment Standard’, 55(3) International and Comparative Law Quarterly 527 (2006), 531.


Ibid., 532.


M. Sornarajah, The International Law on Foreign Investment, 5th ed. (Cambridge: Cambridge University Press, 2021), 186.


Francesco Francioni, ‘Access to Justice, Denial of Justice and International Investment Law’, 20(3) European Journal of International Law 729 (2009), 739.




oecd Guidelines 2023, supra note 48, 36, para. 69.


The UN Working Group on Business and Human Rights released an information note in June 2023, which provides further guidance on what businesses are expected to do to integrate climate change considerations in their operations: Working Group on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, ‘Information Note on Climate Change and the Guiding Principles on Business and Human Rights’ (2023) <>. According to the information note, corporations should, among other measures, ‘Identify all their Scope 1, 2 and 3 greenhouse gas emissions throughout their operations’, conduct meaningful consultation with relevant stakeholders, and ‘not use carbon offsets’: 6. See, further, The Danish Institute for Human Rights, Due Diligence in the Downstream Value Chain: Case Studies of Current Company Practice (February 2023); Global Business Initiative on Human Rights (gbi), Effective Downstream Human Rights Due Diligence: Key Questions for Companies (14 February 2023). Although these reports focus on human rights impacts, their guidance on the integration of human rights impacts in the hrdd process illuminates how investors can take into account of climate change considerations as part of hrdd.


Julia Nelson and Ryan Schuchard, ‘Adapting to Climate Change: A Guide for the Mining Industry’, bsr, <>, 6. For instance, Exxaro uses downscale climate models to assess physical climate risks on both its operations and the local communities: Exxaro, ‘Powering a Cleaner World’ (Climate Change Response Strategy Report 2020), 19–20 <>.


Nelson and Schuchard, supra note 100, 7.


See Avidan Kent and Markus Gehring, ‘Investment Law and the Environment: Evolving International Practice and Norms’, in Routledge Handbook of International Environmental Law, edited by Erika Techera, Jade Lindley, Karen N. Scott, and Anastasia Telesetsky (2nd ed.) (London, UK: Routledge, 2020), 399–400.


oecd Guidelines 2023, supra note 48, Chapter vi on environment.


Ibid., 33, para. 1.




See, e.g., Cavalum sgps, sa v. Spain (Decision on Jurisdiction, Liability and Directions on Quantum), icsid Case No. arb/15/34 (2020); Stadtwerke München GmbH v. Spain (Award), icsid Case No. arb/15/1 (2019) (hereinafter Stadtwerke München v. Spain); Belenergia sa v. Italy (Award), icsid Case No. arb/15/40 (2019); Antaris Solar GmbH v. Czech Republic (Award), Permanent Court of Arbitration Case No. 2014–01 (2018); Charanne bv v. Spain (Final Award), Stockholm Chamber of Commerce Case No. 062/2012 (2016) (translated version of the Spanish award by Mena Chambers, which can be accessed here: <>) (hereinafter Charanne v. Spain).


See, e.g., Biwater Gauff (Tanzania) Ltd v. Tanzania (Award), icsid Case No. arb/05/22, para. 602 (2008); Unión Fenosa Gas v. Egypt (Award), icsid Case No. arb/14/4, para. 9.53 (2018); Mohammad Ammar Al-Bahloul v. Tajikistan (Partial Award on Jurisdiction and Liability), Stockholm Chamber of Commerce Case No. V(064/2008), para. 200 (2009); Rumeli Telekom as v. Kazakhstan (Award), icsid Case No. arb/05/16, para. 609 (2008).


See, e.g., El Paso Energy International Co v. Argentina (Award), icsid Case No. arb/03/15, para. 356 (2011).


International Finance Corporation, Performance Standards on Environmental and Social Sustainability (Performance Standards, 1 January 2012), 8, n. 12 (Performance Standard 1) <>.


See Anne Peters, Heike Krieger, and Leonhard Kreuzer, ‘Due Diligence in the International Legal Order: Dissecting the Leitmotif of Current Accountability Debates’, in Due Diligence in the International Legal Order, edited by Heike Krieger, Anne Peters, and Leonhard Kreuzer (Oxford, UK: Oxford University Press, 2020), 2–3.


See Chiara Macchi, ‘The Climate Change Dimension of Business and Human Rights: The Gradual Consolidation of a Concept of “Climate Due Diligence”’, 6(1) Business and Human Rights Journal 93 (2021).


See Josephine Dooley, ‘The Co-Existence of Mitigation and International Investment Law: A Practical Assessment of Climate Change Action Under Less “Green-Friendly” Investment Agreements’, 23(5–6) Journal of World Investment and Trade 849 (2022), 873; Markus Gehring and Marios Tokas, ‘Synergies and Approaches to Climate Change in International Investment Agreements: Comparative Analysis of Investment Liberalization and Investment Protection Provisions in European Union Agreements’, 23(5–6) Journal of World Investment and Trade 778 (2022), 794–5.


See, e.g., Stadtwerke München v. Spain, supra note 106, paras 277–8; Charanne v. Spain, supra note 106, paras 505–8; Isolux Infrastructure Netherlands bv v. Spain (Award), Stockholm Chamber of Commerce Case No. 2013/153, paras 793–4 (2016).


See, e.g., Mamidoil v. Albania, supra note 92, paras 624–6; Parkerings-Compagniet as v. Lithuania (Award), icsid Case No. arb/05/8, paras 306, 335 (2007).


See Gehring and Tokas, supra note 112, 794; Jorge Viñuales, ‘Investor Diligence in Investment Arbitration: Sources and Arguments’ 32(2) icsid Review 346 (2017), 361–2.


Gehring and Tokas, supra note 112, 794–5.


Mala Sharma, ‘Integrating, Reconciling, and Prioritising Climate Aspirations in Investor-State Arbitration for a Sustainable Future: The Role of Different Players’, 23(5–6) Journal of World Investment and Trade 746 (2022), 765.


See, e.g., Alessandra Arcuri and Francesco Montanaro, ‘Justice for All? Protecting the Public Interest in Investment Treaties’, 59(8) Boston College Law Review 2791 (2018), 2798–800; Muchlinski, supra note 91, 411–12; Karsten Nowrot, ‘Obligations of Investors’, in International Investment Law, edited by Marc Bungenberg et al. (CH Beck, Hart, Nomos, 2015), 1154–5. Indeed, ‘Foreign investors have used isds [investor-state dispute settlement] to seek compensation for disruptions to investment projects that stem from their own environmental mismanagement’ (oecd, ‘Investment Treaties and Climate Change: oecd Public Consultation, January-March 2022’ (Compilation of Submissions, 13 April 2022), 39, para. 3 (submission by Julia Calvert, ‘Reforming iias to Combat Climate Change: Lessons from Latin America’) <>), driving a wedge directly into host states’ regulatory sovereignty to pursue legitimate climate policies. In such instances for example, investors should not also be unjustly enriched by methods of quantifying awards of compensation that are not in line with the climate goals of the Paris Agreement: see Oliver Hailes, ‘Unjust Enrichment in Investor-State Arbitration: A Principled Limit on Compensation for Future Income from Fossil Fuels’, 32(2) Review of European, Comparative and International Environmental Law 358 (2023), 358–9.


For instance, Levine notes that ‘Investment treaties rarely provide specific standards of diligence’: Matthew A. J. Levine, ‘Emerging Practice on Investor Diligence: Jurisdiction, Admissibility, and Merits’, in Handbook of International Investment Law and Policy, edited by Julien Chaisse, Leïla Choukroune, and Sufian Jusoh (Singapore: Springer, 2021), 1101.


See Steven R. Ratner, ‘Fair and Equitable Treatment and Human Rights: A Moral and Legal Reconciliation’, 25(4) Journal of International Economic Law 568 (2022), 576, 578. Ratner claims that ‘the existing international political morality regarding international law and the process of foreign investment (i.e. the positive morality) demands a human rights-centric interpretation of fet’ (576), that ‘The current international political morality sees a role for business in the regime of human rights protection and the need for consequences if it violates them’ (citing the ungps), and that the ‘endorsement by states, international organizations, industry groups, and numerous civil society actors [of the ungps] suggests that a concern for the human rights impact of businesses on affected populations is part of international political morality’ (578).

Content Metrics

All Time Past Year Past 30 Days
Abstract Views 24 24 0
Full Text Views 921 921 49
PDF Views & Downloads 1575 1575 116