International investment agreements have the potential to mobilize and channel investment towards inclusive green economic activities.
However, putting the potential of international investment agreements into practice will rely on reforming the way they are currently designed and applied. The way many international investment agreements are designed currently overlooks the importance of environmental and social considerations. Moreover, in their present form and operation, they may restrict the ability of States to implement policies that protect the environment and support a green economy transition.
In order to realize the potential of international investment agreements, they must be designed and applied in a way that reserves sufficient policy space for governments to regulate as well as to incentivize investment in sectors that are conducive to sustainable development.
This policy note examines these interlinkages and provides practical recommendations for reforming the current investment architecture and the design of international investment agreements, towards safeguarding policy space and mobilizing investment for a green economy.