How Genentech Used a Parking Lot to Fund Its Employee Commuter Shuttle
<p>The biotech firm found an unlikely way to significantly cut its costs, while at the same time provide a valuable perk for employees that also reduces emissions.</p>
Are you finding it challenging to initiate sustainability projects focused on reducing carbon emissions? You are not alone. Although the reduction in carbon emissions benefits society, there are only so many goodwill projects most corporations are able to afford.
Daniel McCoy, transportation director at Genentech encountered these issues when he first proposed a comprehensive commuting program. He requested millions of dollars each year to provide a private bus service and encourage public transportation, carpooling and biking. Although supportive of the goals, his request was declined.
McCoy was disappointed, but continued to noodle on how to move forward.
Finding the Holy Grail: ROI
Land and cost to develop parking is expensive in the South San Francisco area where Genentech was building. If the parking could be reduced significantly, then the millions in savings could fund the dreamed-of bus service and other commuting programs.
The breakthrough was to realize that much less parking would be required if employees could be convinced to use alternative transportation instead of driving to work.
Since the amount of parking associated with commercial structures is regulated by local governments, the next step was to convince the local government that a new approach to commuting could take enough cars off the road to justify much less parking. Since the local government had similar goals to reduce traffic congestion and carbon emissions, they agreed.
This was good news for Genentech, but for many companies this victory may turn-out to be a dead-end. Most commercial buildings in the U.S. are developed by a third party and not by the tenant. If Genentech had been working with a developer, most developers would be nervous to reduce parking, since they want the most flexible arrangement for future tenants.
Genentech required little parking since employees per square foot was relatively low because much of the facility was used for labs. Dan McCoy explained, "A developer would be concerned about insufficient parking in the future should a different type of business lease the space." If the building was used as a call center in the future, the people density would increase dramatically.
Consequently, developers overbuild parking lots in order to appeal to the greatest variety of potential tenants. Since developers are unlikely to focus on reducing solo driving, they would balk at reducing parking. Savvy negotiations leading to a partnership with the developer would be required to overcome this over-sized parking syndrome.
With the agreement from the city planners and hard savings in land development costs, the new commuting program still needed to ensure adoption by employees.
The program's approach was to first set a goal and then analyze the needs of its commuter population. From this data, a comprehensive strategy was developed. Next, a focused marketing plan was defined. Finally, a management system was put in-place to measure adoption. (Read the details about the program in the notes at the end of this post.)
Results: 100 Million Miles Saved
With solid ROI and a plan to achieve it, when approached again, Genentech management approved the program.
As of October 2011, the program statistics are:
- Number of buses now in service: 41 Coaches and 15 smaller buses nicknamed "sprinters'"
- Estimated annual ridership: Over 1 million commute and inter-campus rides;
- Number of employees registered in commute programs: Over 6,000, which represent more than 60 percent of employees;
- Percent decline in solo drivers since baseline year: 12. (2005 baseline = 77 percent solo drivers; October 2011 = 65 percent solo drivers and 35 percent using alternative methods including public, bus, car pool, self-powered);
- CO2 emissions reduced: Over 30,000 tons (that's 60,000,000 pounds) since the program started, which is the equivalent of 3 million gallons of gasoline consumed;
- Estimated miles saved: Over 86,000,000 miles saved since program started. Genentech will achieve 100 million miles saved in 2012.
Genentech was also recognized for its innovative approach to transportation and received Acterra 2007 Business Environmental Award and a 2009 Clean Air Award from Breathe California.
Next page: Genentech's 5-Step Program for Building a Greener Commute
Since its inception, anecdotal information suggests that employees love the program and it contributes to successful recruiting and retention.
The strategy employed by Genentech can be applied more broadly to fund sustainability projects. First, Dan McCoy determined that commuting was a large contributor to Genentech's carbon footprint and consequently worth the effort to reduce. When he was rejected by management on his first proposal, he persisted.
To find hard benefits, he zoomed out to review the entire value chain to understand what opportunities existed for efficiency. Linking solo driving to parking and parking to real estate was brilliant.
Genentech then went on to convince other stakeholders to realign incentives to make the benefits realizable; specifically when local government agreed to change the parking requirements. Finally, McCoy focused on program adoption to ensure that benefits could be achieved.
Persevere and you too can find a way to provide the hard benefits that corporations crave to fund your next sustainability project.
Genentech's 5-Step Program for Building a Greener Commute
1. Set a goal. Genentech's goal was 30 percent of all commutes would use alternate transportation.
2. Analyze. Map where employees live to identify key locations. Complete surveys to determine what employees most value in a program and what are impediments to adoption. During this stage, Genentech uncovered potential grant money. By sharing the Genentech shuttle service with other nearby companies to take workers to and from public transportation, Genentech realized an additional funding source.
3. Define a comprehensive program. A variety of services is required to satisfy the broad needs of its constituents. Dan McCoy has found that "Focusing on a single feature is unlikely to shift enough people."
The Genentech commute program provides incentives like cash rewards for using alternative commute methods. But even with great incentives, some people hesitate to use commute services.
In addition to incentives, the program researched what prevents people from shifting to alternative methods. One issue that this research uncovered was parents worry about an emergency at home. Getting home quickly may be difficult if they were without a car. To resolve this obstacle to ridership (called an "adoption issue" in the lingo), Genentech guarantees a ride home by paying for a taxi if required. The figure below offers more detail on the incentives and how Genentech overcame adoption issues for each.
4. Market the program. "A program without focused marketing is likely to fail." McCoy said. The first step at Genentech was to establish a program brand and tag line. Genentech's was gRide, and its tag line was "Get On Board." Some ideas for how to market a program like Genentech's:
- Dan McCoy emphasized that "It is essential to the success of the program to communicate reliability, convenience, fun, and even the success of the company." For Genentech, the program enables the company to invest more in work facilities and less in parking garages.
- Leverage related events to reinforce the program such as Bike to Work Day, Spare the Air days, and Earth Day.
- Organize contests such as prizes for the top departments for alternative commuting.
- Outreach to share information about the program. Dan McCoy used "lunch and learn," cafeteria table events, a program website, and created a component in new employee orientation.
- Take advantage of spikes in gas prices to start or boost such programs. For example, at Genentech, interest from employees and corporate leadership grows when gas prices increase.
5. Measure, provide feedback and adjust services. Make sure to share your employees' personal contributions and appreciate their efforts. Develop systems that can capture quantitative data over time to show the environmental and financial impacts. Some ideas from Genentech:
- Provide employees with personal information including reduction in carbon emission and gas money saved. Also share the broader impact from the entire company.
- Track how many people drive alone, carpool, ride shuttles and other alternative modes. Dan McCoy shared that "Genentech has a contractor counting people coming in/out of the campus twice a year. This is more accurate than using the data from the cash reimbursement program, because reimbursement data will be under-reported since some employees will not request reimbursements."
- Calculate the greenhouse gas emissions from commutes and include in your organization's sustainability report since commuting is typically a significant contributor to a company's greenhouse gases.
Although these kinds of commute programs are not for every company, nor for every part of the country, there are many hidden and not-so-hidden benefits and incentives for getting your workforce to rethink its commute practices.
Parking lot photo via Shutterstock.