The ECT is an unobtrusive investment treaty from the 1990s, which enables foreign energy companies to delay and hamper efforts for more ambitious climate legislation. If a government decides to phase out coal or, for example stop an energy infrastructure project, it can be sued by international corporations under the ECT. Thus, the ECT paves the way for expensive investor-state dispute settlement (ISDS) claims against governments that are seeking to increase their efforts to fight climate change. Responsible shareholders should be clear on the fact that Paris-compliant transition plans must include a pledge that the ECT will not be used to prolong the life of fossil assets.
This briefing shows why using the ECT to sue countries for their coal, oil and gas exit laws means directly opposing climate action for corporate financial gains.