29 Nov 2021
NUDGING TOWARDS A GREENER FUTURE IN ARBITRATION
Lucy Greenwood and Leonor Díaz-Córdova
It is now almost universally accepted that human activity has caused climate change and behavioural changes are an essential mitigation measure. The recent United Nations Climate Change Conference (COP26), which took place from 31 October to 13 November 2021, has produced the “Glasgow Climate Pact”, which has been described as neither a triumph nor a train wreck. On the one hand there have been significant breakthroughs, such as the explicit acknowledgment that coal and fossil fuels are the main drivers of climate change. On the other, many developed and developing countries have regretted the concessions that have been made in order to reach an agreed text. As a result, the actions that will come from the Glasgow Climate Pact may not be sufficient to allow the goals of the Paris agreement to be reached; namely, to keep temperature rise below 2°C and strive to limit it to 1.5°C by the end of the century.
Aside from the limitations of international diplomacy, a greater appreciation of the scale of the climate change emergency has led to a welcome focus on accelerating action to combat it. The question for us all is how we achieve the collective behavioural change that is urgently required, and it is here that principles of behavioural economics may be applied to facilitate that change.
Speaking at COP26, the UK’s chief scientific adviser Sir Patrick Vallance said "[b]ehaviour change is part of this [i.e. the fight against climate change], and some of that is down to what we do as individuals and some of it is what needs to make things easier for us. We can't assume it's going to be dramatic personal behaviour change that's going to be the solution to this unless we have some way of making that easier, so the green choice is actually the easy choice." We couldn’t agree more.
Economists Richard H. Thaler and Cass R. Sunstein introduced the concept of “nudging” to the wider public in a 2008 book titled “Nudge”, with a revised edition released in 2021. As a starting point, they explain how economists have historically assessed human behaviour from the prism of homo economicus, rather than homo sapiens. Behavioural economics has traditionally assumed humans are rational actors who assess objectively, choose optimally and make unbiased forecasts and decisions. An important shift in perspective has been to accept that humans, unlike homo economicus, are not rational “textbook” actors; they do not always make predictions or decisions based on an unbiased objective analysis, carefully weighing the costs and benefits of alternative scenarios. This means not only that humans are (of course) fallible, but also that they are easily influenced by what those authors term “choice architecture”: the practice of influencing choice by organising the context in which people make decisions. The most common example of this is the way food is arranged in supermarkets or cafeterias, which may persuade people to choose healthier choices over more tempting ones, or vice versa.
Nudges are a non-intrusive element of choice architecture. In the authors’ words:
“A nudge […] is any aspect of the choice architecture that alters people’s behavio[u]r in a predictable way without forbidding any options or significantly changing their economic incentives. […] the intervention must be easy and cheap to avoid […] Putting the fruit at eye level counts as a nudge. Banning junk food does not.”
Nudges can be particularly impactful given we all suffer from status quo bias, preferring inertia over action and opting for the path of least resistance. Yet, inertia is not an option in the fight against climate change. International arbitration practitioners have been slow to wake up to the issue in our industry; they cannot be slow to act. There needs to be focused, sustainable change in our practices to reduce our collective carbon footprint. But we need a significant nudge to get us there.
Nudging towards greener arbitrations
We need urgent and coordinated action by everyone involved in international arbitration. But there are obstacles to significant collective action to combat climate change. These include so-called ‘present bias’, namely that “people are more concerned with now as opposed to later.” For example, climate change is seen as a less pressing issue than the COVID-19 pandemic. Arbitration adapted quickly and flexibly to the pandemic with hearings moving, fairly seamlessly, to a remote basis; we would encourage the arbitration community to show that same adaptability to introduce greener practices.
A further obstacle is ‘salience’, essentially the notion that if you don’t see the impacts of climate change you are unlikely to be concerned by them. We would counter here that in the international arbitration community we are accustomed to interacting with individuals all over the world who are seeing the impacts of climate change in their daily lives. As we were writing this article schools and offices in Delhi were shut down for a week due to severe air pollution. The consequences of climate change are all around us and it is no longer possible to turn a blind eye to them.
Another obstacle is that there is no specific villain to fight. Here we would hope that arbitration practitioners are used to disputes with faceless villains and can bring their combative skills to bear on the environmental challenges we are facing.
The final obstacle we identify is that people do not receive positive feedback on the environmental consequences of their actions. To counter this, we need the community to applaud action in this area and celebrate achievements. Examples of this are the large-scale enthusiastic reaction to the Campaign for Greener Arbitration and the numerous signatories to the Green Pledge, which have increased the visibility and the palatability of actions in this space.
All that said, we still need a significant nudge to achieve sustainable change.
First rule: make it easy
The first rule of a successful ‘nudge’ is, in line with Sir Patrick Vallance’s point, to make it easy. According to the authors of Nudge: “Architectural solutions, making things easy or automatic, can have a much bigger impact than asking people to do the right thing.” The Campaign for Greener Arbitrations has paved the way to make it easy to go green. The Green Protocols are a set of directives intended to guide the effort to reduce the environmental impact of international arbitrations. The Green Protocols primarily focus on three critical areas in which changes in the behavioural practices of arbitration practitioners could have the largest impact in substantially reducing carbon emissions. Specifically, the community is encouraged to: (i) adopt clean forms of energy, (ii) reduce or eliminate long–haul travel and (iii) minimize waste, for example by eliminating hard copy filings altogether. There is a detailed framework document which provides a roadmap to help navigate through the Protocols and outlines the sustainable measures that permeate throughout each Protocol. There are six Green Protocols to choose from:
The Green Protocol for Arbitral Proceedings and the Model Green Procedural Order
The Arbitral Proceedings Green Protocol (and accompanying Model Procedural Order) offers guidance from inception through completion of an arbitration matter. It outlines a series of measures suggested to conduct proceedings in a more environmentally sensitive manner. As with all Protocols, the suggested measures are intended to be adopted individually or in their entirety, as appropriate. To the extent possible, stakeholders are encouraged to subscribe to as many of the measures as practical. Examples of measures contained in the Arbitral Proceedings Protocol include conducting remote proceedings, refraining from printing materials and avoiding unnecessary travel.
The Green Protocol for Law Firms, Chambers and Legal Service Providers Working in Arbitration
This Protocol shifts focus to the day-to-day operations of organisations. To encourage compliance amongst colleagues, firms are urged to appoint “Green Ambassadors”, to develop policies and best practices within their organisations to subscribe to more environmentally friendly procedures.
The Green Protocol for Arbitrators
This Protocol is a guide for Arbitrators; the key components of energy, travel and waste considerations are noted as they pertain to the working environment and practices of arbitrators.
The Green Protocol for Arbitral Institutions
With direct input from institutional representatives, this Protocol was developed to provide guidance for both the internal operations of institutions and in their management of arbitrations.
The Green Protocol for Arbitration Conferences
Stakeholders who plan and host arbitration events should consult the Arbitration Conferences Protocol which addresses event planning and venue selection. Organisers are encouraged to partner with “green” organisations, those that practice sustainable behaviours in their operations and offerings. Serious consideration should be given to hosting virtual events rather than in-person events particularly for those who plan multiple conferences annually.
The Green Protocol for Arbitration Hearing Venues
Facilitators of hearing venue spaces are referred to the measures included in this protocol. Among the actions offered here, facilitators are encouraged to employ technology platforms to promote digital presentations and file sharing as a way to reduce the reliance on paper during proceedings. Particular consideration should be given to powering venues through the use of cleaner forms of energy, wherever practical.
Second rule: make it the default
The second rule of a successful ‘nudge’ is to make it a default position: every part of an international arbitration practice must be viewed through an environmental lens. One of the main action points on this is with regards to travel. As a community, we love to travel. Prior to the pandemic we would travel for initial kick-off meetings, to finalise submissions, to meet and interview witnesses or experts, for procedural conferences, for hearings, for networking, for conferences. Underlying much of this is the belief that in person meetings are better than virtual meetings; that is something which we need to examine carefully and question.
The greatest green challenge that arbitration practitioners face as we emerge from the pandemic will be making travel the exception, rather than the norm. The reality is that it will never be possible to eliminate travel entirely, but there is certainly scope for all of us to reduce the amount of travel we undertake on our cases. Where travel is considered necessary, there are steps that can be taken to ensure that it is done in a more environmentally friendly way. For example, is a flight necessary, or can the trip reasonably be done by train? A train journey from London to Paris emits 90% less greenhouse gas than the equivalent short haul flight and produces less carbon per passenger than a single car journey from central London to Heathrow Airport. Often, we are not making those simple calculations and we should be. Making it a default position that we will not travel will mean that when we do travel, we do so on an informed basis.
Nudges have been successfully deployed to increase organ donation, recycling, tax compliance, to reduce salt intake and cut smoking rates. The Green Protocols are a nudge in the right direction; making remote hearings the default option is another meaningful nudge.
As a community we have been slow to wake up to the issue of climate change. Now we are awake, we need to move quickly to implement the changes to our practices that are urgently required.
In his statement at the conclusion of COP26, UN Secretary-General Antonio Guterres said that the approved texts were a compromise, reflecting “the interests, the conditions, the contradictions and the state of political will in the world today. They take important steps, but unfortunately the collective political will was not enough to overcome some deep contradictions.”
We are confident that the arbitration community has a stronger collective will, and that the efforts to fight climate change will increase. Let’s view all aspects of arbitration through an environmental lens, let’s make green choices easy, and let’s make them the default choice.
About the authors:
Lucy Greenwood is a Chartered Arbitrator, qualified in the United States and the United Kingdom, specializing in commercial and investment treaty arbitrations with a particular focus on energy related disputes and renewables. She is the President of the Campaign for Greener Arbitrations. Visit www.greenwoodarbitration.com for more information.
Leonor Díaz-Córdova is Group Director of Legal Services at C|T Group, assisting law firms, in-house lawyers, litigation funders and corporate clients to resolve disputes through research, intelligence and communication services.
You may also be interested in:
The Alexander Lecture 2021
Wendy Miles QC FCIArb’s thought-provoking lecture on sustainability and international arbitration.
 The Intergovernmental Panel on Climate Change (IPCC) issued a globally peer-reviewed report in 2013 which categorically stated that climate change is real and human activity is the main cause (IPCC Fifth Assessment Report).
 “Nudge, The Final Edition,” Allen Lane (2021).
 “Nudge, The Final Edition,” page 8.
 “Nudge, The Final Edition,” page 282.
 “Nudge, The Final Edition,” page 305.