ISDS vs. the climate: How a colonial-era investment mechanism jeopardises a just transition
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CAN Europe | 29 January 2026
ISDS vs. the climate: How a colonial-era investment mechanism jeopardises a just transition
Phasing out fossil fuels is urgent to prevent disastrous climate breakdown. But there’s a problem. A little-known yet powerful legal mechanism is undermining the energy transition, by enabling fossil fuel companies to sue countries that take climate action. This little-known mechanism is called Investor-State Dispute Settlement (ISDS).
ISDS is a mechanism in trade and investment agreements that enables foreign investors, including fossil fuel companies, to sue countries over climate policies, including phasing out fossil fuels.
ISDS is included in more than 2,600 trade and investment agreements. Using ISDS, companies can sue governments in secretive tribunals for millions and billions of dollars. Some cases are never made public.
This paper sets out what is wrong with ISDS, explores the colonial
origins of this regime and proposes that States take decisive
action to move away from ISDS. Action to address the planetary
environmental crisis and its catastrophic consequences for
human rights cannot wait.
The report is co-published by CAN Europe, CAN Southeast Asia, CAN Africa, CAN RAC Canada, CAN Zimbabwe, Pacific Islands CAN and
CAN Latin America.
For more information:
Leah Sullivan, Trade and Climate Policy Coordinator, leah.sullivan@caneurope.org
