Originally aired on April 21, 2021 @ 2:00 PM - 2:30 PM EDT
An interview with Doug Kramer, Cloudflare's General Counsel, and Patrick Day, Cloudflare's Senior Policy Counsel, on the overlap between sustainability, tech, and public policy. We'll explore how tech companies including Cloudflare are working with policymakers to build a more sustainable future.
Hello everyone and welcome to Cloudflare TV. I'm Annika. I'm a product manager at Cloudflare and a member of the Greencloud Sustainability Working Group here and I'm so excited to be joined by Doug and Patrick who are on Cloudflare's legal team for a conversation about the intersection of sustainability, technology and public policy celebrating Earth Day this week. Let's start out with introductions. Patrick, could you go ahead and kick us off? Tell us who you are, what you do at Cloudflare. Sure, thank you Annika. Thanks for setting up this chat today. My name is Patrick Day. I'm part of the public policy team which sits on the legal team. One of our councils that sit in the Washington DC office and for the past six months or so I've been working a lot on helping build out Cloudflare's corporate responsibility so I'm excited to talk about that particularly on the environmental side and yeah thanks for having me. Awesome, so glad that you were able to join us. And then Doug, what about you? Who are you, what do you do at Cloudflare? So I'm Doug Kramer. I'm the company's general counsel which means in addition to doing legal stuff, overseeing the legal team, also work with our policy team which includes, as Patrick was describing, some of our sustainability work and all these other things that aren't just viewing you know sort of laws necessarily as a constraining rule-making thing but really think about the way that we exist as a company in a larger sort of ecosystem of policies and circumstances even if they don't touch you know our business directly or you wouldn't think that they touch our business directly. Sure, makes sense. And then one other role that you hold at Cloudflare is you're the executive sponsor of GreenCloud which is incredible. We're really grateful to have your support and I'm just curious, like high level, why does this topic matter to you? Sort of like why did you agree to be our exec advocate? I'm a human being, right? Like that's the answer. We're done, full stop. Like it's, I mean, you know, listen, it should be obvious that the need of this should permeate, you know, every person and everything you do. So that's a no-brainer when Monica, when you all approached me and talked about what you're going to be doing, I was very excited to get involved. But it's also an issue where increasingly, and I think we see this happening in productive ways, it is an issue that we need to bring into our workplaces. We need to bring it into our individual lives. We need to own it even if it's not something that is on our resume or our LinkedIn profile or something like that is a part of what we do. It is a part of what all of us do because we can't escape sort of the demands and the implications and the obligations that are involved. So I think, you know, if you're going to do this sort of organization at a company like Cloudflare, this is the issue. I mean, many, many good issues to do this on. This is a very, very important one to do. So I was happy to have the opportunity to support your efforts. Awesome. Absolutely. I love that. I'm a human being. Yeah. Like every, everyone has a very good reason to care about this. I'm a, yeah, anything we do, you'd have a good reason to do it. For sure. So this conversation is about the intersection of three things, sustainability, technology, public policy. But let's actually just talk about each pair of those separately, maybe, and then the overlap of all three. So to start out maybe for folks in the audience that are not in the public policy space, this, the sort of umbrella of sustainability policy is really big. What all fits under that? And how do you actually think about that space? Maybe Patrick first, and then Doug, if you want to add. Yeah. So I'll try to keep this short. You're absolutely right. It can be an incredibly complicated field and it can mean a lot of different things to different people. I think maybe being a lawyer, I like to start with sort of the rules or the obligations or the treaties or whatever I can sort of, the codified list of things that sort of help define or put a framework around whatever topic I'm working on. So I think for sustainability, sort of starting with the largest and then going down to the smaller, it starts with the United Nations. So around the turn of the century, we had the Millennium Challenge goals, which you may remember. And this was sort of the global community of nations articulating what the world ought to be doing collectively. What's the way to advance human society generally. So we went through the first generation of that over a 10 year period. We're now into the second generation, which are called the UN Sustainable Development Goals. And this is really sort of the baseline of global understanding of what sustainable development means. And there's 17 of them. If you want to take a look at them, you can Google them. There's a lot of information about them. They cover everything from poverty to hunger, to healthcare, to education, to climate, to clean energy, to sustainable workforce and sustainable cities. So they really run the gamut of things that whether you're an individual or a company or a country or a government, these are the things that the community of nations have agreed that we all should be focused on. So that's sort of the broadest possible lens. And the way that touches corporations is there's what's called the UN Global Compact and companies can sign up. It's a sustainability pledge. And you sort of agree to orient towards the UN 10 principles, which we can talk about, which are a little bit differently, but most importantly, the 17 UN Sustainable Development Goals. And those are sort of how you should orient your aspirations, your core business function. That's sort of what we all should be doing. Sort of the next level down, which I think are relevant for Cloudflare and corporations generally are sort of what are called, they're often called ESG standards or environmental social governance standards. And these are really sort of the granular level corporate sustainability criterias. And they cover, they're much more finite and a lot of companies use them like accounting principles, and they put out what are called sustainability reports. So they cover things like corporate governance and fair wages and pay equity and diversity and climate impact and everything that's that sort of the business community has identified that are associated with companies that are built for the long term, that are generating sustainable value over time. And then I think what's most relevant for Earth Day and Green Cloud is within that corporate sustainability bucket. They're really sort of like three target areas that I keep in mind most of the time. The first is carbon emissions. That's the most obvious, it's the most direct impact on climate change. Obviously, most folks are familiar with the greenhouse gas effect at this point. So the obligation of corporations to quantify their carbon emissions, and then you can get into, which I know Michael talked about in a previous session about carbon offsets and all the things that corporations are doing to try to mitigate their climate impact. The other two buckets are water usage, and that's particularly relevant if you're in a water distressed area to make sure that corporations are a positive member of the community, that they're not draining resources from areas that are water distressed. And the last one is waste. So obviously, recycling, how companies deal with supply chain and how they deal with waste. So that's sort of the tiers that I think about. And that's sort of how we've been approaching sustainability at Cloudflare so far. Got it. Awesome. That makes sense. And that's huge. Sorry, go ahead. Sorry, that was overly long. No, no. But I think, you know, from a little bit of the painting with broader strokes here, I've been encouraged, I mean, this will sound overly simplistic, but I think it matters a lot. I have, you know, you can work in these spaces on these issues. And then over time, they get characterized a certain way or labels can ascribe to them. And you think it's just, and it becomes powerful that you think it's distorting and horrible and wrong. I love the fact that we seem to have gravitated to this term sustainability, you know, on these issues, because I think for longest time, when I was growing up, we would have called it conservation, or maybe we would have called it environmental activism, right? And, and when you're doing that, you're positioning it as often can happen in legal and public policy circles, as a constraint on something on some force, right? You have this irresistible, I'm sorry, what is the irresistible force and movable object, we don't yet have the movable object, but there's certainly what looked like irresistible forces out there at play that we're trying to push back on. But I think by referring to it as sustainability, you start to realize what we're viewing is this irresistible force is not inevitable is not a result of chance or anything like that it is what choices that we make. And we need to introduce balance into those choices to make sure that it stops being such an irresistible force. And so our, our option is not merely, you know, chaining ourselves to a tree, or, you know, it's not about hiking, it is about just living a life that is more in equilibrium with these concerns. And sustainability seems to feed that really well. And I think, because of that, as you've seen, you know, laws that have come out over time, but increasingly, you know, sort of the corporate initiatives and the individual initiatives that try to get that sense of balance and taking responsibility for what you're doing. I think it's been a much healthier way to approach the issue. And so, you know, part of your question was, now that we sort of view that in tech, it's one of those times where you're seeing an industry really grow at an explosive rate, as an economic thing, as a hiring thing, and as a corporate thing. But for the first time, having some of those sustainability concerns baked in, in a way that we haven't before, where older industries are having to convert or change, because they weren't being sustainable or achieving that equilibrium from day one, there really is a bit of an opportunity with tech companies as they grow up, to do that in a more holistic way, rather than to view it as, you know, I'm going to go do what I want to do, and these will be the regulatory constraints that I find in my path. So I'm encouraged by that, but I'm not claiming victory by any means. Obviously, we still have a very far way to go, but I think we're on a path to do it in a better way than I think it had been. This or things like this have been done in the past. So there's actually, Doug, that's a great point. There's been a really cool evolution, and I, when I was originally preparing for this conversation, I promised I wasn't going to go back this far, but I'm going to do it anyway. So when I started the, doing research on how we're, you know, we ought to structure our programs, I started at the beginning. So early 1900s, corporate social responsibility, you would have big companies like Standard Oil, and they would generate a lot of profits, and then they would make some big philanthropic endeavors. So Rockefeller Center, they would build a soup kitchen, but at the same time, they weren't paying their workers a living wage. So they were sort of creating the problem that they were also solving. So in the 60s, and I think through the 90s, there was sort of an evolution where it was, okay, it's not just what corporations do with their profits, they also should be accountable in how they make their profits, right? And I think, Doug, that's sort of what you were touching on, sort of like the Clean Air, the Clean Water Act period, where it was like, okay, we really need to impose regulation on sort of an unregulated commercial space, because there are problems that need to be addressed. And so I think what's been really cool, maybe in the last, even the last five, three to five years, is corporations have increasingly internalized these sort of sustainable development objectives. And it's no longer how are you being restricted by something like sustainability, it's almost how you orient your core business towards achieving a sustainable objective. And that really, I think, when you sort of align, this may be, this may be too optimistic, or, but it's sort of when you align a market force with achieving a sustainable objective, you get something really powerful. And I think you, all of the resources and all the attention to ESG reporting and sustainability over the last three years, I think you're starting to see those stars align more so than they have in the history of corporate culture, at least in this country. So I, Doug, I've seen the same thing. I think it's a really cool period in this space, generally. Yeah, it's exciting. I love, I love that framing so much. I was talking to Michael from our infrastructure team yesterday about this on the sort of very micro level, like, in the case of, if a company is trying to minimize the energy impact of their Internet infrastructure, they have lots of different options. And a lot of the things that they can do that actually decrease the energy usage or increase the energy efficiency of their, their processing is actually good for the business for a whole bunch of different reasons. Like it improves the performance of their products, so their end users have a better experience. And so coming at this conversation from the perspective of there's destructive ways that you can make progress, or there's ways that you can work with the environment and with the resources that you have and continue to make progress and grow. But thinking about sustainability as a kind of core value, I think is going to be super important. So that, I think that's a great point. I think you're seeing, I don't know that it's been, to use a legal term, dispositively established, but you're seeing more and more data from investor groups that are pursuing sustainable investment strategies, that those businesses that score high in sustainability perform better over the long term. And so I don't know that it's uniformly accepted as a principle in investing and, you know, I'm on the legal side, so it's a bit outside my lane. But you are, at least from the observer standpoint, you're starting to see a lot of articles and more organizations that are making that argument, which I think, you know, obviously can be really productive. Sure. One thing that I am curious to touch more on is, you mentioned briefly that the intersection of sustainability and tech, and I think when we think about policy in general, a lot of the direction and the energy is, and the focus is placed on the companies that are contributing most directly to the climate crisis, right? Like there's large oil and gas companies, mining, like there's organizations that have a clear, direct, quantifiable impact that's huge and compared to other types of industries. But I think it really is important for tech also to be thinking about this issue, and I'm curious from your perspective why that is. You mentioned growth as one of the reasons, right? Like technology didn't exist as a sector in the way that it does now very recently in sort of human history, but what else? Why is it important for companies in the tech space to think about sustainability? Right. That's an excellent question because, I mean, I view it that there are really two sides to that issue for a company like Cloudflare. But one is, you know, what are the products we offer and are we offering them in a way that is thinking about and doing what we need to be doing from a sustainable point of view, so that our customers can feel good about what they're doing and all that. And part of that, like you said, like it might be fair to sort of say, you know, the tech revolution, it certainly allows us to do both more than we might have done in a day before, but a lot of that more efficiently because a lot of what I do online now is stuff that I would have had to do by driving around town and doing a lot of other things and consuming, you know, actual natural resources in a way that we don't now. I mean, it'll be fascinating to me to see what is coming not only out of what's, you know, unfortunately gone on in the last year, the, you know, ending of our lives related to COVID. You don't have as many people in cars driving as many miles. You know, we're probably not going back to offices the same way. Is there a way to convert all that? So I'm conflating my two points, but let me get to it. So on the one end, tech as an industry, as a company, we should think about our products. We should think about what they are displacing that might've been less efficient, which is good, but it might also lead to multiplication of what people do, which might be bad. But we should think about doing that even if it is a better alternative, more sustainable alternative to what else might've happened. Are we doing that in the most effective way we can? Then the other piece is we are, regardless of what products we provide, we are a company of about, you know, 2000 employees located in, you know, a dozen different locations around the world. What are we doing on a daily basis in the way we operate to minimize the footprint of what we're doing? And I think, you know, all of us, you know, in sort of, you know, that broader level, that more narrow level are things that we need to think about. And even though tech might not be as bad as the auto industry or the airline industry, when it comes to the actual products we do and what we put out, tech is employing, you know, millions of people around the world and the way that they incentivize their employees to live their lives in a way that not only maximizes, you know, efficiency and revenue and things like that, which are values to be considered and maximized, are we also letting them live and operate their lives in a way that, you know, promotes overall sustainability because that's a big engine. And not to mention the fact that I sometimes refer to this big engine that we call the Internet, which sometimes we just see through whatever portal we're looking at, you know, is a big global machine, maybe the largest global machine in the history of the world. And the more we can constantly think about how to get that machine to run even more efficiently will certainly have implications. Yeah, I think that's incredibly well said. I think that I'll say after a close start, you have to admit that you just can't give me the incredibly well said because I stammered at the beginning there a good bit. So don't just maybe that was that I was taking notes. I had to find what you were saying right in the beginning. So maybe I missed the first part. No, I'm gonna steal Doug's line. I mean, first, I think everyone should care, right? Like, this is a this is the health of our planet, every individual, every company, every sector, it should be front of mind. And I think that that was the right point to make at the outset. I think perhaps part of it may be that tech has really come of age in a period of more corporate accountability. So although we don't, you know, tech industry, and we although the tech industry in general, doesn't have the same impact as oil and gas, as they're, you know, in the public spotlight more and more, and it has been raised that tech uses a lot of electricity, for example, and depending on how the electricity is generated, that makes carbon emissions. I think you've seen companies, particularly the largest companies say, yeah, that that's an issue we should work on. And to their credit, they've made some particularly some of the largest companies have made incredible investments in renewable energy in general, driving down costs for every other industry and society, which is, so it's, I think, coming of age in a time of accountability, I think tech also deserves some credit, candidly, for, you know, I'll sort of flip the conversation when I was working in government, I before Cloudflare, I spent 10 years on Capitol Hill, I worked in the Senate. And so, you know, whenever you're putting together legislation, you want to get as much input as possible. Tech was in a position of leadership, right? Like if we were doing something on, even if it wasn't necessarily data or privacy related, you wanted to hear from the tech community, because they occupy a position of leadership, particularly in the US economy. So I think coming of age and coming to the spotlight in this period, but then also acknowledging that tech has adopted, particularly environmental sustainability as something that should be acted on. I think there's some credit for for making that decision. Sure, absolutely. That that framing makes a lot of sense. We talked about it before. Sorry to interrupt you, but I brought a statistic. So I just thought it was interesting. So Google purchased in 2019, Google purchased 10% of the world's total renewable energy investment, which is crazy, right? And it's fundamentally changing the market. So it should be acknowledged. And I think you're seeing not only large companies, but smaller companies in the tech space band together to influence the renewable energy market also, which I think is really exciting, too. That's awesome. That's exactly what I was going to ask about. I think there's like sort of three levels here, right? There's what can we influence within our own organization? And Doug talked about how we can develop products in a way from a framing that helps the end users act in a way that's more sustainable in their lives and their organizations. We can influence other companies, right? You just mentioned, you know, we can look to peer companies that we work with, or maybe compete with in the tech space and see what they're doing and what we can incorporate into our own policies. And then also this idea of sort of broader society, right? If tech is in a position of leadership, we have ability to make change in public policy. What can we do that helps influence organizations outside of tech? Are there any sort of, you mentioned Google, any other sort of initiatives in this space that you're really excited about or encouraged to see tech companies taking a leadership role in this space? Yeah, two of the ones that are really interesting to me that I follow. One's called REBA, the Renewable Energy Buyers Alliance. And this is sort of that, what I just mentioned. It's, you know, making capital investment in a renewable energy facility. So building a wind farm takes a lot of money, right? Not every company can do it. There are a few who can, and they do, but for the rest of companies who want to participate in that market or mitigate their climate impact, it's harder to sort of drive that new additionality or new investment. So REBA is a group of renewable energy buyers, a lot of them in the tech space, that are sort of banding together to use their demand to influence the market. So going into a market, you know, renewable energy is generally pumped into a common electrical grid, right, that you plug into your outlet. The question of how the carbon intensity of any particular grid is how much renewable energy is pumped into it, or what percentage of the energy you're pulling out was from renewable generation. So if you want to influence how that electrical grid functions, you need a lot of consumer demand, right? You need a big purchase. So REBA is bringing, it's sort of a marketplace where renewable energy producers, so people who operate wind farms or solar farms, get together with a lot of medium to small size buyers and sort of come together to put investments to drive that investment. I think Michael probably talked about power purchase agreements, but so that's one that I think is really cool. Another one that I follow is RE100, and it's Renewable Energy 100. This is actually larger corporations, but there's, as more and more companies sort of pursue climate goals, there's rightly a concern about, you know, are they doing what they say they're doing, right? It's the accountability side of this to make sure that there are standards and that companies meet standards. So this is an organization of companies that are committed to powering themselves with 100% renewable energy. And it's not only sort of a commonplace to exchange ideas and best practices, it's a set of standards by which, and they're relatively strict compared to the market generally, about how to purchase renewable energy that sort of has the, drives the best impact. So it's almost, it's a group of companies holding themselves to a really high standard, how they purchase renewable energy to sort of move the conversation forward. So those are two of the groups I follow that I think are doing really cool work. But one of the, I think probably the other cool thing about this is there's so many, I mean, you could name two dozen that are doing cool and interesting things, and it's almost a full-time job to sort of follow all the new developments, which is great, which is what we need. And my answer to that would be much more abstract, and that would, and sort of like claiming the high ground by giving the better answer by not answering the question. But it's like, it's for those who don't live in this space, and I don't know how many people watching this would know this, ESG has really taken off in the, much like a virtual TV show or something like that. Like if you can all, like we all went into COVID and you kind of knew Schitt's Creek was this show up in Canada that like someone, and within like three weeks, everybody and their mother and sister and friends like had watched it, right? And that's kind of what's happened with ESG over the last two years. Like socially conscious investing has existed probably for decades by now, and there were these funds that you could go invest with, you felt like you were doing well. And there's something that happened in the last 18 months where ESG is now in the very middle of what every company is thinking about. It's not just potential investors, although that has certainly grown, but your board is asking about it, and your customers are asking about it. They don't want to sign a big vendor agreement with you unless they have confidence that you have done these things. And so just the extent to which this has gone from a niche sort of thing people were pushing to very much in the mainstream for those who don't work in this space is a hugely transformative thing that we have seen over the last 18 months that shouldn't be underestimated because I probably get this, you know, I'd say two years ago, I would, you know, someone, we were certainly doing work in this space, but ESG as a label or an issue or something, it's something I would run across rarely, right? Now it's like our investor relations team, our board. When I go to sessions that are, you know, fellow GCs that are getting together, we're talking most about office reopenings right now and how we do that. But like the close second is everybody's trying to catch up on ESG or like, have you put together an ESG reporter? Do you have a team that working on this? You can just feel that it has taken over and that's hugely relevant in this space because you have what we lawyers would call, and maybe more than lawyers refer to this, but you know, a collective action problem around climate and around sustainability, because it's this idea that it's really a solution where you kind of need to have everybody involved to some extent, like with an investment or like popularity of like a musical group, you just need to get enough people going there. But with sustainability, you kind of need everybody to do it because if you don't, the people who don't do it might claim some sort of, you know, financial advantage and an incentive that will eventually lead everybody in that direction, because there's going to be an advantage to cheating, right? Problem from a public policy point of view right now is we have a global collective action problem. We have such sort of like disagreement in our politics. We have a leadership that swings back and forth that you get something like the Paris Climate Accords, which were a wonderfully great accomplishment. But depending on who's sitting in the White House that day, and this will be true for other countries as well, you know, that is only going to be so effective. It's still a hugely effective piece of public policy that we should absolutely fight and die for, right? But it needs help to sort of fill in the gaps, you know, and to make sure that we solve this collective action problem. And when you have so many companies and so many customers and so many investors, starting to make this table stakes for all companies, and not just some companies that present themselves as doing the right thing. I think that's transformative. And for those who don't live in this ESG space, you might be missing that development or the importance of that development, but it is really foundational over the last 18 months or so. So I'm going to give you three stats that I brought right directly on that point. And yes, that was a better answer. Thank you. Thank you. That was that when I knew going into a game, if you go Schitt's Creek, I mean, okay. Yeah, exactly. Yeah. Okay, so IBM did a consumer study found eight in 10 respondents indicated sustainability was important to them. 70% said they were willing to pay a premium of up to 35% on average for brands that were environmentally sustainable. 63% of the fortune 100 and 48% of the fortune 500 have already made public sustainability commitments and sustainable funds, investment funds, reached 51 billion in 2020, which is more than double the previous record in 2019. Yeah, that's the you're hitting the hockey stick there. And that stuff matters. Because if you're going to ask people is sustainability and environmental protection important to you, people are going to say, well, yes, right. But that doesn't move the needle, right? Money dedicated to this in the 10s of billions of dollars going up that much your beer matters. When, when vendors reach out to us and say, we can't sign up for Cloudflare services, unless you can demonstrate to us sufficiently, as part of our protocol, that you, we are comfortable with your protocols, and that matters that moves the needle. And we're certainly seeing that now in a way we were not seeing that in 2019. Yeah, I think a really important point for sort of small and medium enterprises is large corporations that are setting these sustainability targets, those corporate sustainability standards that I mentioned, they are now accountable for everyone in their supply chain. So they are now asking their vendors, what are your carbon emissions? What are you doing on energy, etc, etc, because they themselves are accountable. So Cisco or AT&T or whomever, can't reach their climate target without sort of making sure that their suppliers are coming along with them. So you're getting pressure not only from the consumer side, but also top down sort of from the large enterprises who are being most sort of forward leaning, I would argue, in the ESG space. And that's when it becomes real, right? That's when it becomes sort of a competitive business issue, as opposed to a corporate responsibility issue. Okay, we're about to come up on time here. Thank you both so much for this conversation. Leaving on definitely a really positive note. It's been fantastic, as you're both mentioning to see sort of the acceleration, the additional energy put in energy put into this this space recently. And I remember talking to Doug sort of at the beginning of the pandemic about all this and making the point that this is the time, like if there's a time to hit the not the gas, but the renewable energy reset button or change habits. Exactly. Now's the time. So appreciate you both coming on and the time and the conversation. Have a great rest of your day. Happy Earth Week. Thanks so much for everything you're doing this week.