🌱 Greencloud: Cloudflare's Sustainability Report

Hello everyone. Welcome to Cloudflare TV. My name is Annika. I'm so excited to be joined by my colleagues, Andie and Patrick, to be bringing you content leading up to Earth Day. Earth Day 2022 is coming up on Friday. And as part of Greencloud, which is Cloudflare's sustainability-focused ERG, we're bringing you content focused on how Cloudflare thinks about sustainability. So check out lots of segments happening this week on a variety of topics, from crypto to transportation to places. Today, we're going to talk about Cloudflare's sustainability reporting and how we think about measuring and publicly reporting on and being transparent around our sustainability practices. But first, let's do some intros. I'm on the product team here at Cloudflare and a member of Greencloud, passionate about sustainability, the environment, and how Cloudflare approaches our sustainability practices. Excited to be joined by my colleagues. Andie, do you want to introduce yourself? Yeah. My name is Andie Goodwin. I'm in Austin and I'm part of Cloudflare's public policy team. I've been with Cloudflare just over a year. And part of my job is highlighting the work that Cloudflare does with sustainability, as well as our programs like the Galileo Project, Project Athenian, and Cloudflare for Campaigns. Awesome. So excited to have you here. And Patrick, do you want to do an introduction? Yeah, mine sounds very similar. Hi, I'm Patrick Day. I'm part of the public policy team. Located in Washington, D.C. And like Andie, I work on all things sustainability and Cloudflare impact and human rights, as well as sort of our corporate responsibility programs like Galileo, Athenian, Pangea, all of the above. So yeah, super excited to talk about sustainability. Nice. Okay. Well, let's get into it. I'd love to start at the high level and then we'll get into some Cloudflare-specific. So overall, why is it important for companies in general, not just Cloudflare and not even just tech, to number one, internally measure, and then number two, be publicly transparent about their sustainability practices? Patrick, if you want to take it for a shot. Yeah, so I think you and I have actually talked about this before, and I'm trying to sort of get my answer boiled down, because I do like to start sort of at the highest level. But I think the easiest and most obvious reason to do it is it's the right thing to do, right? If you think about – and here we go. I hope this doesn't take too long. If you start at sort of the macro level, like how is humanity going to address climate change, we start with sort of internationally organized bodies like the United Nations. So if you look at Kyoto Protocol and the Paris Climate Agreement and then Glasgow more recently, we sort of set these global national targets for emissions and reducing greenhouse gases and therefore controlling temperature rise, hopefully over the next several decades. So if you boil down from that sort of macro national level leadership, you then get into country-level targets where national governments sort of organize their climate programs on a broad scale. You then get down into regional or municipality-level commitments like the city of San Francisco or California or Portugal or London. And then below that, it's incumbent upon every individual, every household, every corporation, every sort of member of that community to make their contribution to being more efficient, reducing carbon emissions, transitioning to renewables where necessary. None of that sort of these big broad goals that we have at the international level will be executed unless every single person sort of does their part. And I think that's true of companies no matter the sector, but I think it sort of aligns really well with Cloudflare's business and we can talk about more of that as we go. So this is the right thing to do. We all have an obligation as citizens of this planet. But if you don't find that compelling, right, if you say, you know, if you're more business-focused, if you find that more persuasive, anytime you sort of dig into the details about how a system works or what it takes to power Cloudflare's network or what that means in terms of carbon emissions and we'll talk about all that, you're essentially getting a better understanding of efficiency and cost, right? And a business's obligation is to reduce cost wherever possible. The better we understand these systems, there is reams of data, both at Cloudflare and externally, that focusing on sustainability, focusing on, excuse me, focusing on sustainability, focusing on efficiency, reduces cost over time. So that's a clear business objective. If you don't find that persuasive, we were having a conversation on our team this morning. There was another study by the Bank of America Equities, I think that may not be, Securities, that found if you're equity -driven and sort of company corporate performance, they had a recent study that was published in Reuters that said that companies with low emissions, or excuse me, companies with high emissions, trade at a 15% discount relative to companies with low emissions. Companies that don't disclose their emissions, the number's even lower. And that was sort of how they described it in the article. So if you're equity-based, there's an appellate reason in that justification, not to mention all sort of the investment flowing into ESG vehicles, companies that perform well and sustainably are being sought after for that type of investment. And then the finally, if none of that is persuasive to you, and I hope that it is, our customers care, right? We get asked about it all the time. We get, if you talk to the RFP team, we're getting questions from, a lot of it stems from 60% of the Fortune 500 have set some sort of energy or climate goal that often includes sort of accountability throughout their supply chains, of which Cloudflare is often a member. So, you know, you talk about sort of our corporate strategy and going up market. These are the kinds of questions we're being asked by these companies. How do you perform in terms of sustainability? What does your data look like? They need to know in terms of their own sustainability commitments. So really, no matter how you slice it, whether you're sort of globally oriented or sort of cut and dry business case, it's clear that we both need to understand our footprint, we need to measure, we need to record over time to gauge our performance. And then, you know, for the customer piece, and this is a second part of your question, we also need to make that information publicly. Across all areas of businesses too, I'd say that there's really an increased drive for transparency and how and where things are made and done and with what kinds of ways, like to protect workers' rights, that there's just this increasing level of expectation of what is shared. Yeah, that's a great point. I think that study is super fascinating and it makes a ton of sense, right? Like investors are thinking about the future, a lot of them are, right? Where am I going to put my money that is going to drive returns for me in the long -term, not just short-term? And if a company is set up in a way that's not going to allow them to be sustainable, it's probably not a great place to put your dollars. The business efficiency thing, I think is fascinating too. Sorry, you have another point? No, I was just going to sort of buttress what you were saying. But now it's sort of escapism. It was ready right in the moment and then I sort of lost it. You lost it, yeah. It'll come to me. I'm sure it was, you know, can't live without it. When you were talking about the business efficiencies, the thing that came to mind for me was our hardware design. We had this really great blog article last year, I think, that came out as part of Impact Week about how we're approaching server design and getting more performance per watt. And it makes total sense for us to do that from a very sort of pure business, like capitalist perspective, right? Like if we can get more juice out of the energy usage of our servers and our data centers, that makes sense. And then the fact that lower energy usage means lower carbon output is kind of like a cool side effect. More information on that, by the way, if you're interested in how Cloudflare thinks about hardware, we're doing another segment, I think, on Friday. Yeah, Friday on Cloudflare TV with Rebecca Weakley, who's our head of hardware, who's going to talk about that. It was really interesting, actually. And we'll talk about how we do our calculations in a second. But, you know, my very first conversation with the infrastructure team, sort of trying to figure out exactly how we use energy and how we could collect that to sort of do macro level calculations. Their point was sort of, yeah, of course we know how much energy we use. It's a cost driver for us. We are constantly striving to drive as much efficiency or as much compute power per watt that we consume as sort of a central part of our business, which is one of the cool things about working on sustainability at a company like Cloudflare is that our business itself is oriented towards driving a better climate outcome. So all the energy stuff that comes on top of that sort of documentation and recording and telling that story, that is all derivative of, you know, it's a core function for us. And that's sort of why we do it. Yeah, I think I remember too being amazed at like the level of granularity. Like we know how much energy a single server is using or a single server at a data center because yeah, it does make sense for us to track that. So that's cool. And then the last thing you mentioned about customers ask us for this all the time, for those who aren't familiar with the acronym RFPs, request for proposal. It's a whole bunch of questions about everything that you could think of related to an engagement that someone who's looking to purchase a new good or service could want to know from a possible vendor. So the most basic questions are sort of the center of the RFP are often things about how does the product work? Like, can it do X, Y, Z features? But they'll also ask questions about the business. Like what's the longevity of the business and sustainability practices are a huge part of that. And it's not just yes or no questions. It's also answer yes or no and give us proof. Yes. Yeah. They want to see the data, which is a fantastic segue. How do we answer those questions? We see all these RFPs coming in at a high level. How does Cloudflare approach sustainability measuring and how do we approach kind of packaging that information and being transparent about it with our customers? Sure. Start off with this one if you want. Yeah. So a big part of Cloudflare impact is making sure that we are communicating this kind of information all year, that we do have our impact report that will be released in the fall. Our first one was released last year, but also that this is a conversation that we don't just save for once a year and that we're talking about when we have new products that are more energy efficient or more energy efficient servers, figuring out a way to be transparent, including through our carbon emissions reports. Sorry Patrick, what were you saying? No, that's completely right. I think from an accountability standpoint, the first thing that we do is sort of make sure we have all of our energy flowing into a central repository and then we take that and run it through a calculations process that we've set up. We then, to Andy's point, we make sure that that's publicly available in a central repository so it's easily accessible to customers. But that's sort of how I think about it. Okay. So let's break that down even more. Like when we say our energy data all goes in one place, like what does that even mean actually? Like for folks that aren't at Cloudflare and thinking about like these different components of our business, who uses energy at Cloudflare? How do we determine how much of it we're using? And then how does that actually tie to climate impact or when customers ask, you know, what are your sustainability practices? What's the connection between those things? Sure. So I mentioned the accountability side. That is really getting to your point, the energy we use into emissions and out the door. So that's all based on this, or the one that we happen to use and most companies use is it's called the Greenhouse Gas Protocol and sort of this international standard that's developed through non-governmental organizations derived from the UN. And it basically lays out the rules for how you do sort of energy and carbon emissions accounting. For Cloudflare, there are essentially three types of energy and this is getting way into the weeds, but there are three scopes. And the two that are most relevant for Cloudflare are scope one and scope two. So scope one is everything from combustion engines, if we owned, you know, a fleet of delivery vehicles, if we had sort of, if we were a power company, we ran power generation, that would be scope one. We actually don't have any scope one within our operational control. So we're focused on scope two emissions, which is derivative from purchased energy. So if you think about Cloudflare as a company, the way that you use energy is primarily in two ways. We have our global network, which is all of our geographically distributed POPs all over the world. As you mentioned earlier, we have a tool that the infrastructure team runs where they pull energy data from all of those machines on a monthly basis. That goes into sort of a calculation tool that we've set up and I'll talk about more in a moment. And the second half of the ledger is all of our facilities. And so the way that you collect data on facilities is either you use electrical bills, like everyone's familiar with, in your house, which tells you sort of how much energy you use per month. If we have a co-working space, like a WeWork in some locations, or the conditions of our lease don't give us access to sort of the underlying utility bill, then we use these estimation metrics that governments have come up with where they've done surveys of thousands of buildings and they sort of have averages based on your square footage, how much energy you use per year. So we take all the information from our network on a monthly basis, we store it over the course of the year, we then take all of our facilities data, we put those two together, and then we, in order to convert it to carbon emissions, we use what are called emissions factors. And these are, again, these are conversion rates that we pay for. There's an international organization that goes out and measures the carbon intensity of electrical grids all over the world, and they put out averages sometimes by region, sometimes by country. So you take sort of your total energy use, you then multiply it by the emissions of the electrical grid based on the locality. So all of our Japan electrical use is multiplied by the relevant Japan emissions factors, all of our emissions, all of our California use is multiplied by local. So you try to get an emissions factor as localized as you can so you get the most accurate data possible. And then you sort of add all that up together, and that is our corporate footprint for carbon emissions. So it's largely derivative of purchased electricity. Like I said, if we had a different business model, if we had delivery trucks, or if we had mining equipment, or we did heavy manufacturing, right, those will all be a little bit different. But for most information technology companies, the focus is really on scope two, which is that purchased electricity. We add all those sources up together, and then we multiply them by localized emissions factors, and that's how we sort of get our total. If you're interested, we're working on the 2021 numbers now. Part of our process to sort of get those out the door is we first have to collect the data, so that's over the course of the year. We then work with an external firm that audits our collection and make sure that we're doing everything correctly and consistent with the standards. Once we have all that data, we put out what's called an emissions inventory or carbon emissions report. A lot of companies put them out. If you Google it, you can find them for most folks. Ours is available on our IMPACT website, so cloudplay.com slash IMPACT. You'll see our 2020 report. We're working on 2021 numbers now. We hope to get those out fairly soon, but that's essentially how the process works. So we do all of this work. We figure out how much energy we're using. We put all of this in a database. We look at where that energy's coming from and use these emission factors. I think that's one aspect of this process that wasn't intuitive to me when you were explaining it for the first time is energy use and the carbon impact of that energy use is going to look different in different places, and the good news is that there's people with entire jobs and entire organizations just around trying to answer those questions, like what's the carbon intensity of a megawatt of energy in one location versus another in the world, so we can use those measurements that those experts who have done that analysis have gone and done for us. We don't have to kind of make our own conclusions or do our own research about that. We can kind of trust the expert data. Yeah, and the point of that, right, is we need sort of... Andy, I apologize for interrupting there. Go ahead. We need sort of, for customers or investors or individual consumers, we need sort of a uniform methodology to calculate emissions. Otherwise, there's no comparison, right? Even, you know... And so this sort of helps streamline even among different sectors and different industries, so you can do sort of apples -to-apples comparisons. And so while it's not... I think the science of it is not wholly complete, right? I think as we get... As the climate crisis becomes more acute, there's more attention being paid to every step along this process and how calculations are done. This is outside of platform. This is sort of at the global level, so you'll... But it's the best tool we have available, and so we'll continue to sort of upgrade our practices internally and sort of continue to evaluate and make use of whatever the best... the current best practice is in the industry. And so it's an evolving sort of practice. Since we're getting so granular with data across the globe too, it creates great incentives for us to make sure that we are serving data as close to the end user as possible with as efficient servers as possible that we're already looking at this data and figuring out how we can do better each year. Yeah, absolutely. And then also that allows us to make smarter decisions too about where we want to invest to make those decisions and where maybe processes that aren't as latency intensive could happen across the different options that we have across our network. And we have actually entire products and services that are focused around that specifically. Andy, I wonder actually if you wanted to briefly touch on... We don't have time to go into it super in-depth, but the idea of this kind of green pops function that we launched or this new capability that's available to customers, I think initially introduced last year. What's the point of that? How does that work and how does that dovetail with this other... this sort of measuring process that we've been talking about? Yeah, that's part of what we were saying about really putting control in the hands of our customers and figuring out how we can help them reduce their own footprint. So using workers, they can schedule workload to happen in data centers that are powered by 100% renewable energy and that's through green compute. There's a really great blog on it. It's really cool stuff. Cool. I think just to build on Andy's point, I actually think this is the coolest thing that we do in sustainability at this company. The reporting and the disclosures and the data collection, there's a compelling business case to do it and it's important and our customers ask for it and that's why we do it. But the fun part to me, and I think really the spot where we can sort of, as a company, the thing that we thrive in is innovation. I mean, this is how we take our technology and do something that other similarly situated companies or other folks who work at the application layer or other places who may have more resources, they can't do these types of things. So what I mean is we have one of the world's largest, most efficient global networks. It's geographically distributed in a way that other networks aren't. The business case for that is obviously being close to the user and latency and et cetera, but it also gives us the opportunity to look at emissions factors and places where we can run things more efficiently all over the world, potentially directing compute workload to those facilities, those electrical grids that are most efficient from electricity or carbon, et cetera. We have the ability to sort of use our network intelligently with no extra work by the consumer to sort of drive a better climate outcome. And I think we just started with that, like the very first step of that was green compute with workers, but your mind starts to race with the possibilities of things that we could do with it. And I think the more mature we get in terms of data collection and really understanding our network, those opportunities just sort of present themselves. So I'm really excited about both, you know, I think the progress we've made on green compute with workers, but also what it represents in terms of using our network as an asset to drive a sustainability goal that's also unique to our company. So I think that to me is one of the most exciting things that we do. That's awesome. And this is sort of, you know, talking about futures a little bit too, but I think along the lines of what you were just mentioning, like Cochlear does automated traffic engineering on a bunch of different characteristics all the time, right? Like we have software systems that are making decisions about where and when and how to send traffic based on the latency of a given path, based on the congestion of a given path, based on if there's packet loss or other things going on in the Internet. Because our whole mission as a company is to help build a better Internet and the better decisions and the smarter decisions we can make about where to send traffic to be able to get around, in this case, a lot of the traffic engineering that we do today is sort of problems that impact end user experience, but we could do exactly the same kind of thing for optimizing energy and carbon impact, right? If we can serve more traffic from locations that are running on more renewable energy sources, it's the same kind of mechanisms that we've already built. It's just using them in new ways or with new sort of inputs to the system. And so I think you're right. There's like a ton of opportunity for us there. And that's really exciting position for us to be in as an organization. I think it just makes Cloudflare a super interesting partner, right? Like I mentioned, 60% of the Fortune 500 now have some climate commitment, likely includes sort of a commitment to reduce emissions across their supply chain. Not only is Cloudflare 100% renewable in terms of our equipment, but we can, theoretically, we can build products like Green Compute to help use our network to drive additional positive climate outcomes. I think if you're one of those large companies who has legacy infrastructure that's very difficult and costly to sort of make progress quickly on your climate goals, the ability to partner with an organization like Cloudflare that already has the infrastructure into place and is sort of pushing forward in this space as well, I think that it's just an incredibly, there's a lot of opportunity there. Customers can already download their own carbon impact reports to see how much Cloudflare helps them save emissions. Thanks. Yeah, if you have an existing Cloudflare account and you want to check that out, I think it's available, yeah, to everyone, including free, so you can go to your account level dashboard under analytics and view carbon information. And we're going to put our 2021 numbers in there too as soon as they're available, which would be great. Okay, so we've talked kind of about the little past arc of our conversations sort of around decisions that we can make to spend more of our energy points in places that are more renewable. There's some percentage, so we do all this accounting and everything, right? There's like some percentage of carbon impact that is going to be in places where energy sources are not renewable. What do we do about that? Like we've done this whole accounting project. What's the output of those numbers besides just reporting and telling our customers about them? That's sort of a little bit of a leading question. Sure, so we, Cloudflare's made a commitment to be 100% renewable across our operations. So what that means in practice is we elect renewable sources wherever they're available. So for example, our California offices, we signed up for a super grid service available through our local provider that makes sure that all the energy we're using is from 100% renewable sources, zero emissions. So we make those decisions wherever possible in terms of our infrastructure. But it also means, like you said, we have geographically distributed network. We have all over the world. Although there is renewable energy available, we don't always necessarily control sort of the grid flowing into our data centers. And that's for that reason, this field of renewable energy accounting sort of manifests. So we do all our data crunching and we calculate all of our global electrical usage over the course of the year. And then we purchase the same amount of renewable energy from renewable energy providers. They're called renewable energy credits. So we make sure that our total energy usage globally aligns with the total renewable energy we purchase. So for the purpose of our external commitment to our customers to be 100% renewable, that's sort of how we go about it. Gotcha. Cool. Yeah, I remember learning for the first time about all of like the field of carbon accounting and the fact that there are like these different like, I don't even know what you call them, like entities that you can purchase, RECs and offsets and all these things to kind of help you like even out the impact is absolutely fascinating. I think there's another session as well from maybe last year with Michael Allard from our infrastructure team diving deeper into that, if you kind of want to get nerdy about all of those details, it's really fascinating. Yeah, I mean, the basic issue is there are more companies that want to invest in renewable energy than sort of build their own building and connect it to their own wind farm, right? So how do you leverage all of those smaller investors to continue to drive sort of macro investment in renewable energy generally and convert more of the power grids that connect to our house or connect to a building or connect to a data center somewhere in the United States or somewhere abroad where we have a point of presence co-located? You sort of use these investment vehicles to match the power you're actually using because we all sort of rely on the public infrastructure available to pull in energy. So in that way, yes, it sort of allows more people to participate in sort of the largest entities in the world that can sort of afford to build their own solar plant and connect it directly to their facility. So that's sort of the camp that we found. Yeah, that feels really, really empowering like to be able to have that option, right? Like maybe we don't have an option at this point at this stage that we're at in a company to build a solar farm everywhere we want to have a pop, right? Like Poplar's in 270 cities around the world. That would be a lot of effort and a lot of investment. We probably don't need that much energy everywhere. Not terribly good for the environment, right? Like not everyone needs sort of... Exactly, yeah, totally. Exactly. But I will make this pitch to everyone watching. For Earth Day, you can also do the same thing at your house. So we use the Super Green Service in San Francisco. If you're in the Bay Area, you can talk to your energy provider. They likely have a renewable energy option available so you can elect to join that program. I'm in a similar program in DC so that our house is... And it works the same way we talked about, right? Like you sign up for the Renewable Energy Service. You pay a premium to make sure that you're part of the program that's investing in renewable energy. And over time, the thought is the more that people elect renewable sources, the more investment goes into powering that same grid with an increasing percentage of green energy. So the hope is over time, the grid itself becomes green. But it allows the individual to contribute along the way. So wherever you are located in the world, look at your utility bills. You may have an option to upgrade to renewable energy, and that's something that's worthwhile. So I encourage you to do that. Nice. I'm about to go Google that as soon as we wrap up. And speaking of wrap up, we got a couple of minutes left covered a lot of topics. We talked about accounting. We talked about some of the ways that Cloudflare can help you as a customer directly take control of aspects of your Internet properties, sustainability impact. Anything else we want to give plugs for? Maybe, Andy, is there any other - Yeah. I definitely want to talk about Project Galileo. Someone browsing our site might not understand that this is a way that we help the environment too. We have, as some of our hundreds and hundreds of participants of Project Galileo, we have environmental nonprofits. And a lot of bad actors really try to take downsides with DDoS attacks. So we help make sure that they can stay online, protect their employees and their data. And that's one way that we give back and indirectly help the environment. I think it's pretty exciting and nonprofits can apply on our website. Very cool. Is that Cloudflare.com slash Galileo? Sounds right. Yeah. If you Google Project Galileo, you'll find it. And if you are working with an environmental nonprofit or you know one, definitely send them that information. And it's super easy process to sign up and get approved for the service and get that protection to be able to have access to the Internet in a stable and reliable and speedy way for free through Cloudflare. Cool. Okay. Well, this conversation has been super fun. Really appreciate both of you joining and taking the time. If you're watching, you like this content, you want more of it, check out the rest of Green Cloud TV that's happening all week. I think CloudflareTV.com slash Green Cloud has a full list or you can look at the schedule for anything with the little plant emoji. And there's also a bunch of reruns too from previous sessions that have happened in the past couple of years focusing around this topic. There's so, so, so much to talk about. And a lot of folks within Cloudflare that are really passionate about these topics. So excited to have this forum to be able to share. And happy Earth Day. And happy Earth Day. Thank you so much. Thank you very much. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye.