Aligning Investment Treaties with Sustainable Development


Policy makers and other stakeholders are currently asking fundamental questions about whether and to what extent international investment agreements (IIAs) are consistent with and are helping to advance sustainable development objectives at home and abroad.

A 2019 paper from CCSI examines the alignment of IIAs with the 2030 Sustainable Development Agenda, arguing that while FDI will play an important role in advancing development outcomes, existing treaties must be reformed and future IIAs reimagined in order to achieve deep alignment with the sustainable development goals.

The paper proposes that IIAs should be designed and evaluated with respect to their ability to promote investments that advance sustainable development goals, while withholding benefits from investments that undermine these goals.

It then argues that treaties should also be evaluated according to their ability to promote, rather than constrain, responsible, SDG-advancing governance at the national level. 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 to conform 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.

A summary is available here.

Lisa Sachs describes the Framework in this video prepared for UNCTAD’s 2020 IIA Conference held virtually on November 26, 2020.

This framework builds on a previous study, commissioned by the Swiss Agency for Development and Cooperation, that focuses on helping capital-exporting states assess their treaties’ alignment with sustainable development and applies the framework to a review of Swiss IIAs.

The framework identifies five principles that should guide the content and application of IIAs (if and when the treaties are concluded) in order to align them with sustainable development objectives:

  1. Maintain legitimate policy space and allow legal and regulatory frameworks to evolve over time to address new challenges and changing circumstances;
  2. Do no harm;
  3. Advance labor standards, human rights, and environmental protection;
  4. Increase cross-border investment flows; and
  5. Ensure coherence across relevant government policy spheres.

The study reviews 40 Swiss IIAs – agreements concluded over roughly the past 50 years – in light of those five principles. Based on that review, the report concludes both that Swiss IIAs often risk frustrating sustainable development outcomes, and represent missed opportunities to proactively advance progress on sustainable development goals. At the same time, the report identifies feasible, concrete steps that the government can take to address these issues in both their existing and future treaties.

The Swiss Government’s initiative to analyze IIAs from a sustainable development perspective offers a framework that other governments – particularly governments of capital exporting states – can use to conduct similar reviews.