What is state responsibility under international law for failing to take climate action? The existing literature and state practice have primarily focused on international environmental law and human rights law to address this question. This paper explores state responsibility for climate inaction under international investment law. The existing literature has mainly focused on how states’ climate action, such as phasing-out policies, could harm foreign investments in the fossil fuel industries and potentially lead to violations of investment treaty obligations. This paper illustrates how international investment law could also support claims against climate inaction. It distinguishes between two types of climate risks that affect foreign investments—physical risks and transition risks—which have opposite implications on state responsibility to protect foreign investments. Based on an analysis of investment arbitration jurisprudence, the paper argues that a host state’s climate inaction that causes damages to foreign investments can violate investment treaty obligations. The paper proposes investment tribunals adopt a balanced interpretation of investment treaties when determining state responsibility for climate inaction. This requires a contextual analysis that takes into account (1) the foreign investor’s due diligence in mitigating and adapting to physical climate damages; (2) the host state’s resources and capacity to adopt climate action; and (3) whether force majeure can be a justifiable ground for failing to prevent damages caused by unforeseeable climate effects.