The Rise of Sustainability Provisions in International Investment Agreements

Abstract

There is a lively debate about whether international investment agreements (IIAs)—the central instruments governing foreign direct investment—are compatible with sustainable development objectives. One critical argument is that investment treaty provisions limit governments’ policy space to achieve transitions toward sustainability and may lead to costly legal disputes. Against this background, governments, international organizations, and other stakeholders have begun to consider options for modernizing international investment law by including provisions related to sustainable development in the treaties. In this article, we examine to what extent and why states include sustainability references in IIAs. Our automated text analysis of 2,083 bilateral investment treaties and 374 other treaties with investment provisions shows that the number of sustainability references has risen sharply recently. Drawing on the literature on issue linkage in economic agreements, we test different explanations for the changes in the treaty language. We find that the level of democracy among treaty parties and the experience of being sued in the past are strong drivers of the described trend.