Theresa May is understandably keen to cement her legacy in her final month as Prime Minister. This week she announced that the UK will become the first G7 country to commit in legislation to being carbon-neutral by 2050. This is one of the most ambitious climate change goals set by a major polluting nation, and has subsequently been warmly received by many environmental groups.
However, it is difficult to square the government’s 2050 commitment with its trade policy. The Conservative Party continues to support Investor-State Dispute Settlement (ISDS), mechanisms in trade agreements which are used by investors to sue government for changes in policy which harms their profits. The UK has ISDS agreements with 106 countries around the world, and is likely to sign more such agreements after Brexit. This is not just Theresa May’s idea: of the Conservative leadership candidates who are actually in with a shot, all are campaigning for the UK to adopt a fully independent trade policy after Brexit.
ISDS severely hinders progress on climate change. It has been used by dozens of multinational companies, many of them headquartered in Britain, to challenge environmental legislation - sometimes successfully. Furthermore, ISDS can lead to ‘regulatory chill’, where governments choose not to bring in environmental legislation (such as a ban on fracking) for fear that they will be challenged by investors.
