On May 28, G7 trade ministers agreed, “2021 is a crucial year to accelerate international efforts to address climate change.” (Photo: Number 10 via Flickr)
By Michel Bélanger, Bernard Colas, Paul Fauteux, David Gooderham, Sabaa Khan, Konstantia Koutouki, Richard Lindgren, and Daniel Turp
The 2021 G7 Summit opens on June 11, less than a week after World Environment Day (June 5). On May 21, G7 climate and environment ministers acknowledged, “with grave concern that the unprecedented and interdependent crises of climate change and biodiversity loss pose an existential threat to nature, people, prosperity and security.” On May 28, G7 trade ministers agreed, “2021 is a crucial year to accelerate international efforts to address climate change.”
So why are G7 members, including Canada, continuing to support a system under which oil, gas, and coal companies can sue or threaten to sue them–as well as hundreds of other states around the world who need foreign investment–if they take, or even propose to take, measures to combat climate change?
Because the right to make profits trumps climate protection.
In The Triumph of Injustice, Gabriel Zucman and Emmanuel Saez show that American billionaires pay less tax as a proportion of their income than their secretaries. They dissect the deliberate choices (and sins of indecision) that led to the triumph of this tax injustice: the gradual exemption of capital owners; the surge of a new tax avoidance industry, and the spiral of tax competition among nations. They also show that the decline of tax progressivity in a context of rising inequality is by no means specific to the United States, and calls for global solutions.
“We can’t continue with an international system that benefits only a certain class of actors,” namely multinational corporations and their shareholders.
Investor-state dispute settlement (ISDS) is an eloquent example of why, as Zucman recently stated, “we can’t continue with an international system that benefits only a certain class of actors,” namely multinational corporations and their shareholders.
In an attempt to implement the 2015 Paris Agreement on climate change, renowned environmentalist Nicolas Hulot, then French President Emmanuel Macron’s environment minister, introduced a bill in 2017 that would have phased out fossil fuel extraction in France. Canadian oil and gas company Vermillion, which extracts nearly 75 per cent of all French oil, threatened to file an ISDS lawsuit. As a result, the bill was shelved and replaced by a watered-down law that continues to allow it. Hulot resigned soon after.
This is one of many cases in which foreign investors sue or threaten to sue–under ISDS clauses in international investment protection agreements–states that dare to put forward laws or other measures to address the climate emergency.
This “litigation terrorism,” as Nobel Prize-winning economist Joseph Stiglitz has called it, is even more unacceptable at a time when the International Energy Agency confirms it will be impossible to meet the Paris Agreement’s goal of holding the increase in the global average temperature to 1.5 degrees C above pre-industrial levels unless new fossil fuel projects are banned.
In the face of this other triumph of injustice that is ISDS, for several years an international movement has taken shape to oppose it. This movement, made up of state and court decisions and citizen initiatives around the world, has contributed to the European Union ending ISDS in relations between its member States. Similarly, ISDS is now largely absent from the Canada-U.S.-Mexico Agreement (CUSMA) that replaced NAFTA, because the U.S. opposed it. Yet Canada continues to promote it.
This could be surprising, coming from the country that was responsible for the adoption by the United Nations of the Montevideo Programme for Development and Periodic Review of Environmental Law in 1982.
So why has Canada so far refused to join the international anti-ISDS movement? Is it because it’s a petrostate and the real goal of its climate policy is not to protect the climate, but its oil and gas industry?
So why has Canada so far refused to join the international anti-ISDS movement? Is it because it’s a petrostate and the real goal of its climate policy is not to protect the climate, but its oil and gas industry?
The upcoming federal election should be an opportunity to ask all political party leaders to take a stand against this unfair system that allows foreign investors to sue states, but not the other way around.
Instead of protecting profits, the law should be put in the service of human dignity. No longer allowing oil, gas, and coal companies to use ISDS to prevent states from taking climate action would be a good place to start.
The name of the 1972 Stockholm Conference (United Nations Conference on the Human Environment) emphasized the relationship between humans and the environment. It’s not too late to put people back at the centre of our concerns.
This op-ed was originally published in The Hill Times
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