Just transition, profit margins and investment protection

Abstract This article assesses whether the interpretation and treatment of profit margins in investment treaty renewable energy disputes may interfere with just transition goals by safeguarding strong profit margins as legal entitlements for ‘green’ investments. There is an ongoing academic and policy debate about the role of investment treaties in shaping climate action. As far as climate-friendly investments are concerned, the focus of the debate has largely been on the role of investment treaties in incentivising renewable energy investments. Whether relying on investment treaties to protect RE investments can be conducive to just transition outcomes has not been the subject of much academic discussion. This article analyses the role of profit rates in renewable energy arbitral awards and situates investment treaties within the ‘de-risking’ ecosystem dominating energy transition policies. Situating investment treaties within this de-risking ecosystem enables a more holistic assessment of their role within energy transition and their impact on just transition goals. The article calls for the integration of profitability and burden-sharing considerations into proposals for rethinking the future of sustainable investment governance.