An investor protection regime is said to be stalling climate action and instead paying polluters. The lawsuits hold governments to ransom over green policies, but some states are fighting back.
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00:00Let me present to you the valley of Roșia Montana.
00:05This is where you can see what we saved.
00:08This is a UNESCO protected area of Romania's Transylvania.
00:12It would be a lunis landscape.
00:14It would be an industrial mining site.
00:17The Romanian government has beaten a multinational corporation from trying to mine these mountains
00:22for gold using a potentially deadly chemical.
00:26It would have been another deserted area, another apocalyptic landscape.
00:31In this era of conservation and climate change, how are foreign investors trying to sue governments
00:36over their climate policies?
00:44And how are communities fighting back?
00:47To find out, we visit two countries on opposite sides of the world in this episode of Transforming
00:52Business.
00:56We begin in the La Guajira region of northern Colombia.
01:00It's home to the El Cerrojón open pit coal mine, one of the largest in the world.
01:05For many years, the mine has been surrounded in controversy over accusations by indigenous
01:10people of human and environmental abuses.
01:13These include air, water and noise pollution.
01:16It's owned by Glencore, a Swiss multinational mining company.
01:20This coal is exported globally, including to Europe and the USA.
01:25Carbon dioxide from coal accounts for about 40 percent of greenhouse gas emissions from
01:31fossil fuels.
01:35Underground in this region, there are coal reserves, economically important to Glencore.
01:48These farmers say they were forcibly moved from here by Colombian police.
01:53They point out to this water source, the Bruno River, which flows through Cerrojón's mining
01:59concession.
02:00It's a vein of water in a region hit by years of extreme drought and a lifeline for
02:06locals.
02:07But it's in jeopardy.
02:22The mine gulps down over 33 million litres of water per day.
02:28After community pressure in 2017, the Colombian Constitutional Court moved to protect the
02:34Bruno River and indigenous communities who rely on it.
02:38It did this after Glencore partially changed the course of the river to extract more coal.
02:44Glencore responded to the Constitutional Court decision by kicking off legal proceedings
02:49to sue Colombia for an undisclosed amount of money.
02:54In response, Glencore says it supports rigorous social and environmental practices and it
03:21has other claims against the Colombian state.
03:43Colombia's environment minister, after this interview with us, refused to answer questions
03:47on the matter, citing potential legal issues.
03:51In a statement to us, Glencore said,
03:53Our preference is to resolve issues of dispute through constructive engagement with host
03:58governments.
03:59Where an amicable settlement cannot be achieved, we may initiate a claim via a legal route
04:05that utilizes arbitration processes.
04:10When asked about how much it's seeking in compensation, its answer, no comment.
04:18This is how Glencore is trying to sue the Colombian government.
04:23ISDS stands for Investor State Dispute Settlements.
04:27It's a legal framework that allows foreign investors to sue governments in which they've
04:31invested money or assets if they believe their interests have been adversely affected.
04:36The rationale for ISDS in the first place is that it promotes foreign investment because
04:44are being encouraged to invest in a jurisdiction where often there are rule of law concerns
04:49or where the local laws are insufficient to provide real protection to investors.
04:56Investors derive these economic rights from international investment agreements signed
05:01by states over the last 50 years.
05:04In the case of Glencore versus Colombia, it's using the Colombia-Switzerland bilateral investment
05:09treaty.
05:12As the planet continues to heat up because of the burning of fossil fuels, policymakers
05:17are upping their game to curb emissions and protect the environment.
05:21This is leading to a trimming back of fossil fuels.
05:26According to a report from the International Institute for Sustainable Development, the
05:31fossil fuel industry is the most litigious in the ISDS system.
05:35The second most is the mining sector.
05:38ISDS has been really heavily weaponized and manipulated by corporations who are holding
05:44on to their profits and activities in complete disregard of the broader issues.
05:50ISDS cases are usually quite secretive and operate outside of domestic courts in arbitration.
05:57The investor appoints an arbitrator, the state appoints an arbitrator, and both can agree
06:02on a third, independent arbitrator, who usually acts as president or chair of proceedings.
06:22According to Global ISDS Tracker, the number of fossil fuel cases has increased steadily
06:28in the last three decades.
06:31The International Institute for Sustainable Development says fossil fuel cases also have
06:36a nearly five times higher average amount of compensation awarded, in the region of
06:41600 million dollars.
06:43An article published in the journal Science suggests that globally ISDS claims from fossil
06:48fuel investors could amount to over 340 billion dollars.
06:53And there have been multiple reports from a host of international bodies criticizing
06:57the impact of ISDS on green policy.
07:03The former UN Special Rapporteur on Human Rights and the Environment, David Boyd, said
07:08fossil fuel and mining cases act as a deterrent for governments and create regulatory chill.
07:15In 2018, according to a UN report, New Zealand withdrew from cancelling existing offshore
07:32oil permits because of fears of ISDS.
07:36When France was allegedly threatened by an ISDS lawsuit from a Canadian multinational,
07:41Green Group Friends of the Earth says that the country diluted its plans for a fossil
07:46fuel extraction phase-out by 2040.
07:50And in Denmark, it's reported that expensive ISDS claims have meant it's chosen 2050, rather
07:56than an earlier date, for phasing out oil and gas production.
08:02But there have been some interesting developments in at least one ISDS case, and we've travelled
08:07to Romania to hear more.
08:11Let me present to you the valley of Roșia Montana.
08:14This is where you can see what we saved.
08:17This is a UNESCO protected area of Transylvania called Roșia Montana.
08:24It would be an industrial mining site.
08:26It would be of gigantic proportion, just imagine trucks that are 15, 20 tons heavy going around
08:33and just imagine tons of explosives per day.
08:37The Romanian government, driven by local community efforts, has beaten a multinational
08:42corporation in an ISDS case worth 4.4 billion dollars.
08:46The Canadian company Gabriel Resources wanted to excavate these mountains to build one of
08:52the biggest gold mines in Europe.
08:54In this valley, it wanted to build a long reservoir to collect over 200 tons of wastewater
09:00Wastewater laced with cyanide, a deadly chemical used to extract gold from rocks.
09:10It could have looked something like this, acid mine drainage from a local copper mine.
09:15And the town of Roșia Montana would have looked totally different.
09:20It would have been another deserted area, another apocalyptic landscape.
09:27Roșia Montana is a very old gold mining region.
09:31It dates to before the Romans.
09:33You'll find extensive underground Roman mine galleries, about 7 kilometres long.
09:39People are proud of their mining heritage.
09:43During communism, this region was mined by the Romanian government, here in this open
09:48pit gold mine.
09:50Gabriel Resources won mining rights in the region in 1999.
09:55Major national protests because of community mobilisation stalled the project and drew
10:00international attention.
10:03We meet locals who were the backbone of this opposition.
10:07Davian Petrišor.
10:11He tells us how for years he was heartbroken and destroyed morally, living in constant
10:16fear that he would be thrown out of his home.
10:19Now people are more hopeful.
10:22They were able to show to the court that they are a sovereign state and that they can
10:27take decisions on whether they want to approve a project or not, regardless of the corporate
10:32grip and pressure that Gabriel Resources put on them.
10:36Gabriel Resources is now trying to nullify the costs of the case it needs to pay the
10:40Romanian government.
10:42And it's issued notification of a potential second ISDS action.
10:47When we repeatedly asked them for a statement, they never responded.
10:51Nowadays, states realise that they can no longer be held hostages by corporations who
10:57might want to use that mechanism to threaten them if they were to implement climate or
11:02environmental policies.
11:05Back in Colombia, communities continue to take a stand against coal mining in their
11:09region.
11:15Their futures are uncertain, with ISDS cases hanging in the balance.
11:22What the people of Guajiro want is to protect the Arroyo Bruno, to preserve that water source
11:30and that the water is above the coal.
11:34They're looking to Romania as an example of hope, an example of change, in favour of the planet.
11:42What do you think of ISDS cases?
11:44Let us know in the comments below.
11:46And if you liked this episode, please check out the Transforming Business playlist for
11:50videos on topics just like this one.