A response by the Columbia Center on Sustainable Investment to the OECD Public Consultation on Investment Treaties and Climate Change. The Columbia Center on Sustainable Investment (CCSI) — a joint research center of Columbia Law School and the Earth Institute at Columbia University — explores elements of the international investment legal framework, including the impact of investment treaties, investor–state dispute settlement, and home and host government policies governing inward and outward investment, among many other issues.
PLUS POLITICS is a multi-part series of briefs from the Columbia Center on Sustainable Investment that aims to encourage practitioners to apply a more systematic political lens to their work on governance in the extractive industries. Each brief will deal with a key governance issue and will provide a brief analysis of its political challenges and practical recommendations to address them.
For the last 20 years, fostering greater transparency in the historically opaque extractive industries has been a governance priority in the sector. It is now time to build on the progress made and unlock greater gains from it. Achieving this requires getting serious about politics. The extractive industries (EI) are at a critical juncture, confronted with major contextual upheaval. A period of significant commodity price volatility is intersecting with the global energy transition and, more recently, the major social, political, and economic repercussions of the COVID-19 pandemic–a combination of forces creating both uncertainty and potentially major shifts in how EI are developed and governed. As EI governance practitioners grapple with these shifts, and the challenges and opportunities they bring, transparency will be an essential tool. However, practitioners need to think–and work– more politically as they develop and deploy this tool moving forward to make the most of its potential. Work on EI transparency has achieved important successes over the last two decades. For example, significant commitments to disclosure have been secured, the volume of publicly available information about critical activities has increased considerably, and norms around certain information being in the public domain have been established. There is also a growing library of use cases for this information. However, technical and political factors have–and continue to–limit the full range of benefits that can flow from data disclosures. Unlocking the potential of this critical work will require identifying and reckoning with these factors head-on. This brief is part of the Columbia Center on Sustainable Investment's PLUS Politics series, a multi-part series of briefs from CCSI that aims to encourage practitioners to apply a more systematic political lens to their work on governance in the extractive industries.
Work on transparency in the extractive industries (EI) has achieved important successes over the last two decades. For example, significant commitments to disclosure have been secured, the volume of publicly available information about critical activities has increased considerably, and norms around certain information being in the public domain have been established. There is also a growing library of use cases for this information. Nonetheless, important work remains to be done to translate these efforts into impact. Political context is crucial to determining the fate of transparency efforts. Therefore, grappling with political context more effectively will also be key to unlocking more of the potential impact of these efforts. Our intention with this project is to provide a foundation for both understanding and addressing the politics of extractive industry transparency in practice, starting with this discussion paper (the main elements of which are summarized in the PLUS Politics brief). The time is ripe for a focus on political contexts for two reasons: First, work on transparency has matured and there is an opportunity to reflect on its track record to date, and Second, the added pressures on government, industry, civil society, and funders to adjust their priorities in the wake of the COVID-19 pandemic raise the question: can EI transparency processes retain attention and resourcing at a moment when they are arguably more necessary than ever, but competing with other demands? Focusing on political dynamics will be essential to make sure they do. Our research provides insights and recommendations for thinking and working politically across the transparency lifecycle.
In connection with the US Department of State's Annual Advisory Committee on Private International law meeting in May 2019, CCSI submitted written views regarding UNCITRAL's Working Group III on ISDS reform. CCSI's comments highlighted specific areas of CCSI's research as it relates to the US Government and its work within the Working Group. Specifically, US investment treaty negotiating objectives specify that covered foreign investors in the United States should not be accorded greater substantive rights than domestic investors. CCSI highlights the ways in which greater procedural rights afforded under investment treaties to foreign investors in practice result in greater substantive rights, and focuses on three distinct issues including: (1) third-party funding, (2) the rights and interests of non-parties to disputes, and (3) settlement of ISDS disputes. UNCITRAL's Working Group III, which is focused on procedural reforms to ISDS, provides an opportunity to address and reform rules in these three areas to better align with US treaty objectives.
What Are International Investment Agreements (IIAs)? IIAs are bilateral or multilateral treaties that commit state-parties to afford specific standards of conduct to foreign investors from the other state-parties. These treaties grant foreign investors certain benefits, including recourse to Investor-State Dispute Settlement (ISDS) to resolve disputes with host states. Over 3,300 agreements have been concluded worldwide, including NAFTA and the Comprehensive and Progressive TransPacific Partnership. What is Investor-State Dispute Settlement (ISDS)? IIAs allow foreign investors (individuals and companies) to allege treaty violations by suing states through ad hoc arbitration. Arbitration tribunals are composed of party-appointed (and party-paid) private lawyers. Tribunals are not bound by precedent, and can order remedies (usually in the form of monetary awards) to investors if they find that states have breached treaty obligations. Notably, in most cases investors are not required to attempt to resolve disputes through available domestic remedies before filing ISDS claims. This is extraordinary and unusual: by contrast, the WTO only permits states to raise claims against other states, and international human rights courts require claimants to attempt to exhaust domestic remedies before raising disputes at the supranational level.
Indigenous and tribal peoples' right to free, prior and informed consent (FPIC) has transformative potential. Where this right is recognized and meaningfully operationalized, FPIC can help safeguard a variety of rights specific to indigenous and tribal peoples, and while doing so, remake the power relations between peoples, governments, and, in some contexts, extractives companies. Yet, this potential is far from being realized: there is a considerable gap between FPIC in theory and what happens in practice. Our research shows that the political contexts in which FPIC and prior consultation processes unfold account for much of this gap. Global actors who support broader recognition of FPIC and improved implementation of prior consultation processes usually focus on normative standards and best practices–and much less on directly addressing the political challenges and opportunities that shape how these processes unfold. This brief—drawing on the larger research project on which it is based—aims to spur practitioners to apply a more systematic political lens to their work on FPIC and prior consultation processes. It previews some of the key political challenges facing effective implementation, based on research from three countries in Latin America—Brazil, Colombia, and Peru—and proposes a menu of different approaches to tackle them. This brief is part of the Columbia Center on Sustainable Investment's PLUS Politics series, a multi-part series of briefs from CCSI that aims to encourage practitioners to apply a more systematic political lens to their work on governance in the extractive industries.
The Columbia Center on Sustainable Investment (CCSI) is grateful for the opportunity to provide this input to the UN Special Rapporteur on the rights of indigenous peoples. As a joint center of Columbia Law School and the Earth Institute, we focus on international investment and its impacts on sustainable development. In this context, we are increasingly concerned about the repression and criminalization of human rights defenders, including indigenous rights defenders, in the context of investment projects—a situation that unfortunately seems to show no sign of abating. Our input focuses on one specific topic that we believe may be overlooked in general discussions about human rights defenders: the possibility that the international investment law regime, comprised of thousands of bilateral and multilateral treaties, may in a causal way exacerbate the potential for repression and criminalization of human rights defenders. This concern was raised at a one-day roundtable hosted by CCSI and the UN Working Group for Business and Human Rights in October 2017,1 and we believe it merits further exploration.
CCSI helped launch a letter signed by over 230 law and economics professors urging President Trump to remove ISDS provisions from NAFTA. As the letter notes, the ISDS mechanism "undermines the important roles of our domestic and democratic institutions, threatens domestic sovereignty, and weakens the rule of law." The letter builds upon the center's past work, including a similar letter published last year calling on Congress to reject the Trans Pacific Partnership for its inclusion of ISDS, and broader analyses of both the threat that ISDS poses to domestic US law and of the ISDS provisions that were included in the TPP.
An emerging consensus on the need for greater transparency in land-based investment is increasingly evident across various forums. This document consolidates recommendations regarding transparency featured in guidelines and principles published by international organizations, government agencies, and multilateral or multi-stakeholder groups. Viewed together, these recommendations offer insight on the evolving narrative on transparency in land-based investment, assist stakeholders in addressing the issue of transparency, and provide an informed starting point for further analysis.
CCSI helped launch a letter joined by over 220 law and economics professors calling on Congress to oppose the final Trans-Pacific Partnership agreement because that treaty includes the investor-state dispute settlement (ISDS) mechanism. As the letter notes, the ISDS mechanism "threatens to dilute constitutional protections, weaken the judicial branch and outsource our domestic legal system to a system of private arbitration that is isolated from essential checks and balances." Despite the Obama administration's claims to have addressed growing concerns about the ISDS system, the final TPP would instead vastly expand the ISDS threat to the rule of law and U.S. democratic institutions. This letter served as the model for a similar letter published in October 2017 urging President Trump to remove ISDS provisions from NAFTA.
With support from GIZ, CCSI prepared a report titled "Linkages to the Resource Sector: The Role of Companies, Governments, and International Development Cooperation." It outlines options for how these stakeholders can increase the economic linkages to the extractive industries sector not only in terms of 'breadth' (number of linkages) but also in terms of 'depth' (local value added). Apart from providing the theoretical framework for linkage creation and an overview of existing literature on this topic, the study highlights successful case study examples. Recommendations are provided for the three types of stakeholders.
In February 2015, CCSI sent comments to the World Bank regarding its draft Environmental and Social Framework. This took place in the context of the Bank's consultations on the review and update of its safeguards policies. CCSI's comments focused on ensuring consistent and comprehensive application of the framework, and on the need to more expansively incorporate human rights standards. The memo also underlined the need to protect all legitimate tenure rights, including those not currently recognized by national law, and to limit the permissibility of forced evictions. In addition, the comments include proposed amendments that would ensure that government borrowers cannot suspend vital protections to indigenous peoples.
In November 2014, CCSI convened a one-day roundtable focused on lessons learned from good governance initiatives for extractive industry investments and large land-based agricultural investments. The roundtable brought together a range of stakeholders working on extractive industry investments and/or land-based forestry and agricultural investments, including representatives from civil society, government, academia, and the private sector. CCSI has published an outcome note from this roundtable. Key structural differences between the extractive industries and the forestry and agriculture sectors mean that not all lessons learned from good governance initiatives related to extractives investments or land-based agricultural investments are transferrable. However, large-scale extractive industry investments and land-based forestry and agricultural investments share enough challenges regarding certain issues that efforts to better understand the benefits, drawbacks, and best practices around good governance initiatives can be a useful exercise. The roundtable facilitated conversation on these issues, while providing an opportunity for participants to brainstorm further ways to explore shared lessons around governing natural resources. This outcome document aims to provide more information for stakeholders interested in increased knowledge sharing around this topic.
Guinea's 2011 Mining Code introduced a large number of reforms directed to increasing transparency and the contribution of the mining sector to development, including requirements for the establishment of a local development fund and for community development agreements between mining companies and local communities. As part of the legal and fiscal analysis of the gold mining investments in Guinea, CCSI examined how these provisions could be implemented effectively. CCSI produced a report that makes recommendations as to how the Government, mining companies, civil society and communities can work together to maximize the benefits of local development funding in the Guinean context. The report analyzes the legal framework that has been in place in Guinea to date, focusing in particular on the experiences of the stakeholders around the Société AngloGold Ashanti de Guinée mine in Siguiri, assesses the improvements and remaining weaknesses in the draft regulations (as compared to the previous legal framework) and provides a comparative analysis of models and good practices of community development agreements and local development funds globally. The report provides recommendations on: The definition of multi-stakeholder revenue management bodies The definition of the local communities that are to benefit from community funding The allocation of mining revenue among communities affected by or around the mine Revenue management and volatility The selection of development projects under the local development fund Management of projects funded by the local development fund The process for entering into community development agreements Institutional arrangements to implement the requirements of the community development agreements
