Author: Wolfgang Alschner and Elisabeth Tuerk

[Wolfgang Alschner is a PhD Candidate and Teaching Assistant at the Graduate Institute in Geneva, and Elisabeth Tuerk is Officer in Charge (OiC) of the Section on International Investment Agreements (IIAs) in UNCTAD's Division on Investment and Enterprise.]  One of the policy tools typically aimed at attracting foreign investment has been the conclusion of international investment agreements (IIAs). Foreign investment is an important source of finance for sustainable development, especially in low-income countries. However, the benefits from foreign investment are not automatic and the link between IIAs and sustainable development is a complex one: whereas IIA may contribute to more attracting more (sustainable) investment, they also constrain regulatory action by host governments that seek to maximize the positive and minimize the negative effects of foreign investment on sustainable development. This paper gives an overview of recent UNCTAD research on the nexus between IIAs and sustainable development in three areas of public policy-making. These include 1) combating climate change; 2) integrating investment and industrial policy; and 3) promoting responsible corporate behaviour. The paper concludes on the need for more inter-State cooperation to address the various challenges facing the IIA regime today and to enhance its sustainability dimension.

1) IIAs and climate change

When it comes to combating climate change, IIAs are a double edged sword.