This dissertation analyses the implications of international investment law on host states’ legal ability to protect the environment, regulate sustainable use of natural resources, and develop new approaches to manage environmental risks and uncertainties. ‘Environmental policy space’ is found to be a useful term when exploring the regulatory autonomy in this context.On one hand, investment law aims to ensure stability of the investment environment. On the other hand, environmental law needs flexibility to react to the degradation of the environment. It is found that those different aims do not have to be in conflict. There are useful mechanisms in national environmental law which provide for accessible, transparent and predictable decisions for the private actor. These mechanisms can fulfill the aim of stability in investment law.It is, however, concluded that core provisions of international investment treaties risk to put constraints to environmental law in a variety of ways. To diminish these risks, states, when concluding investment treaties, should make clear that constraining environmental regulation is not compatible with the overarching aim of sustainable development. Furthermore, the interpretation of provisions of investment protection must respect principles and instruments of environmental law not to continue being unbalanced towards investor interests. It is also concluded that allowing for investor – state arbitration, without the investor exhausting local remedies, will ignore the important national administrative review system of public environmental measures.