At COP28 in December 2023, 198 countries called for a transition away from fossil fuels and a tripling of renewable energy by 2030 in the Global Stocktake under the Paris Agreement. Well-designed investment treaties can contribute to climate-aligned finance and investment, drive action towards net-zero emissions and encourage ambitious government climate policies. Governments at the OECD initiated in 2021 the first major multilateral effort to consider climate policies for investment treaties. The alignment of investment treaties with the Paris Agreement is at the core of the work.
Investment treaties
Over 2 500 investment treaties are in force today and shape the terms and treatment of certain foreign investments. Most treaties are decades-old and were designed under different conditions, with different concerns in mind, and without experience of how these treaties would be used and interpreted. Many governments are interested in updating their older treaties to adjust them to better account for the climate-crisis, to clarify their content and obligations, and to ensure greater predictability of outcomes for governments and investors. Governments from 99 jurisdictions use the OECD to advance these considerations.
Key messages
Hundreds of investment treaties concluded in earlier decades are being used and interpretated in unintended ways. Newer treaties’ substantive protections are thus designed differently, and broadly similar across jurisdictions. While an update of older treaties would be desirable, a treaty-by-treaty approach is costly and time-consuming. The OECD hosts inclusive discussions on how substantive protections could be desiged in light of fairly homogeneous modern practice and how a transition of treaties with outdated designs could be achieved in a pragmatic way.
OECD workstreams
Context
How can investment treaties support climate goals?
Achieving climate goals will require massive amounts of public and private investment, both international and domestic. How can investment treaties help direct investment to where it is needed? Regulatory and policy changes are needed to address climate change. How can investment treaties assist governments in taking the necessary measures? Learn more about OECD work on the Future of Investment Treaties
Treaty-based investment protection in force (bilateral relationships, 1959-2023)
Over the past half century, many governments around the globe have established a treaty-based system of international investment protection. Since 1959, when the first modern Bilateral Investment Treaty (BIT) was signed, largely over 3,000 BITs have been negotiated, of which over 2,200 are in force today. In addition, investment protection provisions stemming from multilateral investment agreements or investment chapters integrated in bilateral or multilateral preferential trade agreements cover hundreds of additional bilateral relationships.
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