Month: March 2022

Stepping through a cybersecurity company’s journey to 100% clean energy

An interview with Zscaler’s Senior Director of ESG Strategy and Engagement

For Zscaler, a Silicon Valley-based cloud security provider, tackling critical Environmental Social and Governance (ESG) issues is a cornerstone of its business. As the world becomes increasingly hyperconnected while simultaneously more distributed, cybersecurity is surfacing as a key ESG topic for organizations around the globe. So for a company like Zscaler that sits squarely at the intersection of technology and ESG, committing to ambitious climate action is a natural extension of its corporate identity. 

Recently, I sat down with Victor Wong, Senior Director, ESG Strategy and Engagement at Zscaler, to learn more about the company’s ESG philosophy, how it approached its recent work to match 100% of its office and data center emissions with clean energy, and the next steps for the company in its climate action journey.

3Degrees – JC: Thanks so much for taking the time to talk through your recent renewable energy work. To start with, can you introduce yourself, Zscaler, and explain your role with the company?

Zscaler – VW: Of course, happy to. I serve as Zscaler’s Senior Director of ESG Strategy and Engagement. My job is to work with leaders across the company to drive Zscaler’s ESG efforts in support of the company’s growth.

Zscaler is an innovative cloud security provider that is helping to build the future of cybersecurity. The company has built a scalable zero-trust cloud platform designed to improve the digital experience of its users and defend against the largest cybersecurity threats in today’s world. Our efficient cloud spans 150+ data centers globally and services over 5,600 customers and their employees around the world.

3Degrees – JC: How does Zscaler’s work in cloud security intersect with ESG topics?

Zscaler – VW: With the rise of cyberattacks, data loss, and ransomware, cybersecurity is becoming a critical ESG topic discussed among the C-suite and in boardrooms around the world. The past few years have seen a huge shift in how, where, and when people work. Our solutions accelerate companies’ secure digital transformation initiatives by providing fast and secure access to cloud resources for their employees working from anywhere.

Of course, the environment is a key ESG topic. Many of our customerslarge multi-national organizationshave set environmental goals. By eliminating hundreds of thousands of legacy IT hardware and shifting digital infrastructure to a highly efficient cloud, our customers are able to directly mitigate the environmental impact of securely conducting business.

3Degrees – JC: ESG topics are certainly evolving in the digital world. Can you provide some examples of how your organization has demonstrated its ESG philosophy?

Zscaler – VW: One aspect of my role is to fully understand and manage Zscaler’s environmental footprint, to do our part to fight climate change, and to offer a lower carbon impact product that will benefit our customers. When customers entrust their cybersecurity to our cloud, they have the ability to improve their environmental impact by removing on-premises hardware, which also reduces—or even eliminates—activities like shipping, handling, and business travel associated with installing and maintaining stacks of security appliances.

Furthermore, we have recently quantified the energy consumption of our office operations and of the infrastructure used to run our security cloud in data centers around the world. Using this information, we partnered with your organization, 3Degrees, to support renewable energy through the purchase of environmental attribute certificates (EACs) to match the projected MWhs that weren’t already backed by renewables.

3Degrees – JC: I would love to know more about the lead up to your work with 3Degrees. Can you tell me some of the background work you did to quantify your operational and data center emissions?

Zscaler – VW: Absolutely. Our products were born in the cloud and engineered for efficiency, so we knew that we were starting from a good place. Efforts to reduce emissions typically start with collecting data to fully understand impacts. Our approach was no different. We spent time gathering information across our operations.  Luckily, our Cloud Operations team has been collecting detailed data on our cloud infrastructure and our data centers. We worked cross-functionally within the company to obtain a full list of locations and contracted energy use.

My team worked to develop a methodology to calculate our energy usage that is based on data, which has been third-party verified. We calculated the megawatt-hours of energy we were using to power our global offices and cloud that did not already come from renewable sources. At that point, we explored various options to mitigate our impacts for the type of footprint that we had, and determined supporting renewable energy generation through the purchase of high-quality EACs was the best path forward.

3Degrees – JC: You’ve taken a unique approach to address Zscaler’s emissions from data centers. How did you land on this approach?

Zscaler – VW: Data centers are vital to our business so we always place care and attention with who we work with and how we approach it. Our philosophy is to address our biggest impacts, regardless of what the scope is. We also have a maniacal focus on our customers, and are proud to be able to offer them the best Zero Trust Security, which we complement by supporting renewable energy projects in the same regions. We run our own cloud— which processes over 210B transactions a day—in order to provide our customers with the best possible user experience. Given its importance and scale, we felt it was only right to elevate our data center emissions and begin addressing these impacts.

3Degrees – JC: What are some of the initial results of this engagement?

Zscaler – VW: As a result of this engagement we now match the electricity consumption of our security cloud  and offices with RECs and their global equivalents. This work positions us to be a stronger partner and ally to our customers who share the same goals. This initiative allowed us to demonstrate concrete environmental progress as we evolve our ESG program. We’ve had very positive engagements with our stakeholders – from employees, customers, and investors.

3Degrees – JC: What next steps is Zscaler likely to take?

Zscaler – VW: Zscaler is growing at a tremendous rate – our cloud typically doubles every 18 months. So it’s crucial to manage our impacts. We’re always thinking ahead about what a better world looks like. Digital transformation is the future and we’re intent on using our position to enable the modernization of work while minimizing climate impact. 

As an immediate first step, we are purchasing environmental attribute certificates to match the electricity we know to be occurring upstream. In effect, we are doing this on behalf of our data center vendors. We will continue to engage with our data center vendors to help bring down emissions through the continued support of renewable energy.

We’re proud to be building the best cloud for our customers which includes, continuing to refine integration of renewable energy into business operations, procuring quality renewable energy credits, and working with global partners like 3Degrees that are at the forefront of the energy transition and decarbonization.

I would like to thank Victor and Zscaler for sharing their story. This work demonstrates how companies can take action to address climate change by supporting renewable energy projects globally. This begins with accurate emissions calculations and a clear understanding of best-fit renewable energy and decarbonization solutions. To learn more about what this process would look like for your organization, click here


Answers to your LCFS FAQs

Get your questions about LCFS answered here. Check back frequently for updates. Have a question that you need answered? Contact us.

Frequently Asked Questions:

  1. What is the Low Carbon Fuel Standard (LCFS)? 
  2. What is an LCFS credit?
  3. What kinds of vehicles can generate credits?  
  4. How much value can I get from the program?
  5. How do you make money through the LCFS? 
  6. Do projects need to be located in California to be eligible?
  7. Are there requirements on how the revenue from selling LCFS credits is spent?
  8. What kind of fuels can generate credits?
  9. How do you get the most out of the LCFS?

Q: What is the Low Carbon Fuel Standard (LCFS)? 

A: The California LCFS is a statewide market-based policy with the goal of decarbonizing California’s transportation fuel mix. The policy requires “deficit generators” — providers of petroleum-based fuels — to purchase credits from “credit generators” — companies utilizing low carbon fuels like electricity, renewable natural gas (RNG) or renewable diesel. Many transportation-related programs are interested in how efficient a vehicle is, but the LCFS focuses on how “clean” the fuels are that are powering those vehicles and focuses on reducing the carbon intensity, or the emissions per unit of energy, of those fuels. 

Q: What is an LCFS credit? 

A: An LCFS credit represents a metric tonne reduction in GHG emissions. Electric charging and the use of other low carbon fuels are eligible to generate these credits. Fuel producers and importers are required to purchase these credits to offset the carbon intensive fuels they supply.

Q: What kinds of vehicles can generate credits?  

A: There are a wide variety of vehicle and fuel applications that can generate credits. Any vehicle that could be using fossil fuels but is instead using a fuel with lower emissions can generate credits. Examples of electrified vehicle credit generation opportunities include:

  • Battery electric and hydrogen fuel cell electric forklifts
  • Passenger Cars via EV campus charging and public DC Fast Charging
  • Electric buses and shuttles
  • Electric Yard trucks/tractors and other off road cargo handling equipment
  • Electric cargo handling equipment
  • Electric cargo and delivery vans and box trucks
  • Battery and hydrogen fuel cell electric medium and heavy duty trucks and tractors
  •  Shore powered refrigerated trailers run on electricity

3Degrees offers a free assessment to help organizations identify all eligible crediting opportunities based on their unique operations. Reach out to our team here to see if your equipment qualifies.

Q: How much value can I get from the program?   

A: LCFS credit generation varies based on vehicle type, fuel source, and credit value. During our free assessment phase, 3Degrees can help you evaluate the expected value that your organization is entitled to based on your equipment inventory and historical (or projected) charging data.

Q: How do you make money through the LCFS?   

A: LCFS credits are earned per metric ton of avoided emissions, and the monetary value of the credits varies based on supply and demand of the credit market. 3Degrees’ clients benefit from our unparalleled trading expertise and network developed over 15 years as an environmental commodities leader to ensure credits are monetized quickly and revenues are maximized. We assume all credit aggregation and monetization activities (e.g., marketing, sale, contracting, settlement, etc.) and remit proceeds directly to our partners.

Q: Do projects need to be located in California to be eligible?   

A: The LCFS program applies to any transportation fuel that is sold, supplied, or offered for sale in California. However, other states have similar market-based incentive programs that allow credits to be generated via use of low carbon fuels. Oregon has an active program (Clean Fuels Program) as does British Columbia. Washington and the entire country of Canada are expected to launch programs beginning in 2023. 3Degrees participates in all active markets on behalf of its clients and closely tracks other programs launching soon to ensure our clients benefit as soon as they come online.

Q: Are there requirements on how the revenue from selling LCFS credits is spent?   

A: LCFS revenue generated from EV charging must be spent to further benefit vehicle electrification, but the regulation is purposely broad to allow flexibility in how the money is spent. For example, revenues can be used to offset costs from EV purchases and maintenance, charging infrastructure purchases and maintenance, electricity costs, and marketing or education on the benefits of electric transportation. T LCFS credits are also bankable, meaning they don’t have to be sold or used immediately.

*Electric forklifts are not currently required to meet these LCFS credit spend requirements.  

Q: What kind of fuels can generate credits?  

A: The LCFS is greatly reducing the total cost of ownership of electric vehicles. Electric vehicle charging using renewable electricity generates credits at the highest rate, but even electric charging using standard grid electricity creates a strong financial return. Other low-CI fuels generating credits include low-CI hydrogen, ethanol, biodiesel, renewable diesel, compressed natural gas and biogas (CNG), and liquefied natural gas and biogas (LNG).

3Degrees specializes in helping our partners maximize value available through the program for the use of electricity and low-CI hydrogen, as well as helping owners of public charging and hydrogen fueling infrastructure generate and sell credits.

Q: How do you get the most out of the LCFS?

A: For EV charging, using high value renewable energy certificates can significantly increase LCFS revenues. 3Degrees supplies eligible green power and works with each partner to come up with the optimal long-term sourcing strategy. Lower carbon intensive power can also come from onsite renewable sources, like solar panels, and 3Degrees helps our partners leverage those resources when applicable.

Another key component of maximizing LCFS value is aggregating credits. Entities generating a small number of credits may need to take a price discount in the market because the standard transaction size is thousands of credits. Working with a partner like 3Degrees can improve selling power and ensure maximum credit revenue is realized quickly.