The trend towards greater regulation of corporations, including laws such as Human Rights Due Diligence, promises to hold companies responsible for their social and environmental impact. But they could be derailed by irresponsible corporations using controversial investor-state dispute settlement (ISDS) clauses.

However, the ISDS system that appears in thousands of trade and investment deals allows corporations to sue states through secretive private courts if government policies threaten their profits – even if those policies are aimed at protecting human rights and environment.

This briefing seeks to explain why states should combine the introduction of human rights and environmental due diligence legislation with reform of trade and investment agreements, removing ISDS and with it the ability of irresponsible corporations to undermine vital new regulation.

Key takeaways from the report:

1. Laws seeking to hold companies accountable for their rights abuses could be derailed by claims brought under ISDS clauses.
2. A just recovery from the pandemic could be undermined by international trade and investment agreements, which have played a key role in establishing and entrenching corporate power.
3. ISDS clauses further exacerbate the inequality in development between the Global North and the Global South.