Wall Street investors profit from lawsuits against green policies
Financial speculators are pouring money into lawsuits against governments over environmental regulations, with fossil fuel and mining firms securing billions in public funds through international arbitration.
Patrick Greenfield and Phoebe Weston report for The Guardian.
In short:
- Corporations use investor-state dispute settlement (ISDS) to sue governments over policies that affect their profits, with awards now averaging over $200 million per case.
- Hedge funds and litigation financiers increasingly fund these lawsuits, taking a share of settlements, often targeting developing nations.
- Fossil fuel and mining firms have won at least $92 billion from governments, with many awards undisclosed, making the total likely much higher.
Key quote:
“The creation of a ‘gambler’s Nirvana’ by allowing third-party funders to use investor-state dispute settlements as a means of financial speculation, without any possibility of making costs awards against those funders, is deeply problematic.”
— Kamal Hossain, ISDS arbitrator
Why this matters:
A complex web of legal mechanisms allows corporations, particularly in the fossil fuel and mining industries, to challenge government policies designed to protect public health and the environment. These legal challenges often take place through investor-state dispute settlement systems, which permit companies to sue governments for policies they claim harm their investments. The result can be staggering financial penalties, sometimes reaching into the billions, which are ultimately shouldered by taxpayers.
This trend is especially concerning in developing nations, where the financial burden of these legal battles can stifle environmental protections and deepen economic inequalities. The involvement of litigation financiers — who fund lawsuits in exchange for a share of the settlement — adds another layer of controversy, turning legal disputes into high-stakes investment opportunities.
Related: Trump faces obstacles in limiting lawsuits targeting fossil fuel industry
