Title: Implications of the Rise of ESG Concepts for IIA Reform: The Realization of Responsible Investment

Author: Zhang Yaoxuan

Abstract: The rise of Environmental, Social and Governance (ESG) investment has attracted worldwide attention in recent years, and the International Investment Agreement (IIA) regime and practice regularly interact with it. ESG factors have been reflected in international investment arbitration, and the IIA reform also promotes sustainable development, measures to counter climate change, responsible investment, energy transition and society governance embedded therein. Existing IIAs still have limited ability to respond to the rise of ESG concept and to realize the principle of responsible investment, i.e., there is a lack of provisions on investors’ accountability and obligations. The rise and development of ESG concepts can provide insightful ideas for the IIA reform. While it is difficult to introduce detailed ESG standards directly as IIA provisions, the corporate social responsibility (CSR) provisions can be good guides for the IIA reform in terms of incorporating ESG factors. Besides improving on the corporate social responsibility (CSR) provisions, other substantive reform in IIAs can also enhance the accountability of investors. Further, the dispute resolution provision can also be reformed in pursuance of substantive reform, especially in the areas of counterclaims.

Keywords: Environmental, Social and Governance (ESG), International Investment Agreement (IIA) Reform, Responsible Investment