Climate Finance and International Investment Law

Published on February 2025

This briefing provides an overview of climate finance frameworks, focusing on the distribution of finance via two key channels - those within the multilateral climate regime supervised by UNFCC and the Paris agreement, and funds and frameworks operating outside this.

Executive Summary

This briefing discusses the role of private investments, particularly foreign investors, in global energy transition. It highlights the interaction between climate finance frameworks and international investment law, emphasising the legal risks for host countries, such as regulatory chill and increased costs of managing transitions. The document underscores the necessity for developing countries to align their investment protection frameworks with just transition objectives, ensuring that climate-friendly investments are scaled up without compromising socio-economic contexts. It explores the complexities of balancing investment protections with climate action and human rights obligations, advocating for policy reforms to create enabling environments for clean energy investments while mitigating potential disputes.

This briefing was submitted by:

• Dr Anil Yilmaz Vastardis, Senior Lecturer, Essex Law School. University of Essex, UK

Author