Navigating the Green Lane

Globally, the importance of sustainable initiatives and projects has increased significantly. The parking industry is pivotal in the quest for a more sustainable future. As a result, ESG criteria have gained importance and become a decisive KPI for public and private parking companies. Stakeholders now demand higher transparency into how companies are taking action for their sustainability. This is not only expected by the public but also by government regulations, such as the U.S. Securities and Exchange Commission (SEC) (Newburger, 2022). In this context, the “Chief Heat Officer” role is becoming increasingly relevant in the U.S. These specialists are asked to cope with the impact of rising temperatures in U.S. cities.

Thus, ESG criteria can act as a guiding principle of minimizing environmental impact, promoting social responsibility, and establishing effective governance structures while creating value for companies. Studies have shown that investing in ESG-optimized assets can be very profitable as these types of companies can differentiate themselves from competitors as ESG pioneers (Polman, 2022). Our consulting experience confirms that continuous investments into sustainable processes and implementing ESG criteria also pay off for parking-related companies (Friesen, 2023).

But how do sustainability and ESG criteria impact the parking industry in particular?

Relevance to the Parking Industry

First, it is important to understand the environmental impact of a parking spot. The most obvious issue is soil sealing, which is hardly avoidable when constructing new parking areas. Secondary to this, parking lots consume vast areas of valuable city land while also contributing to greater heat dissipation. This development, also called “urban heat islands,” is a growing phenomenon in U.S. cities, responsible for an increase in temperature of 3,6 to 5,4 degrees Fahrenheit (Greentumble, 2022).

In the U.S., there are eight parking spots for every car in the nation, consuming an average of more than 5% of urban land (Overstreet, 2023). As an extreme, about 25% of downtown Atlanta is used for car parking (Green, 2023). In contrast, more and more on-street parking spaces are eliminated in Europe. The Norwegian city of Oslo is potentially the furthest ahead with plans to restrict private cars in its city center, creating more livable urban areas but also higher parking pressure for off-street parking facilities.

These examples underline the particular importance of ESG criteria for the U.S. parking industry. Amid challenges such as soil sealing, global warming, carbon emissions, and “parking search traffic” (i.e., unnecessary traffic caused by motorists in search of an available parking spot), mindful management of city parking may substantially contribute to the more sustainable development of urban areas.

Strategic investments in digitization, EV charging infrastructure, micro-mobility, and automated vehicle parking are crucial for the development of parking.

For example, New York City is known for its significant traffic congestion. A study conducted in a 15-block area revealed that cruising for curb parking resulted in 366,000 excess vehicle miles driven annually, primarily because most curb parking remains free or underpriced (Transalt, 2008). A possible solution to this situation is to charge demand-based prices. This alleviates traffic congestion, reduces emissions, and unlocks further commercial potential.

Companies have a wide array of strategies for making car parks more sustainable and profitable. Strategic investments in digitization, EV charging infrastructure, micro-mobility, and automated vehicle parking are crucial for the development of parking.

Strategic Directions for the Commercialization of ESG in the Parking Industry

Digitization

Based on our project experience, digitization is proving to be a key factor in transforming the parking industry. By deploying innovative technologies, operations of parking facilities may not only be optimized, but may also prove to become mobility hubs of the future. The use of digital information in stationary and moving traffic is considered a central foundation in the development of sustainable urban mobility. The digitization of the parking industry is not simply achieved with one single product but through integrating digital services along the entire customer value chain – from providing parking spaces to payment processing.

A prominent example in the U.S. is the successful implementation of digital parking services in downtown San Francisco, where smart parking applications, vehicle detection sensors, and electric vehicle charging services are combined. This integrative model leads to a more efficient utilization of parking spaces while also significantly decreasing traffic congestion and parking search traffic (PricewaterhouseCoopers, 2022).

In Europe, the possibility of reserving parking spots in advance may also enable motorists to find an available space for their vehicle even before departing, thereby reducing uncertainty and search traffic alike.

Another innovative approach is the automation of operational processes, including intelligent PARCS, which contributes to traffic optimization and minimizes energy consumption. For instance, automated LED lighting and ventilation systems make it possible to reduce energy consumption in unoccupied areas.

Free-flow ANPR systems demonstrate the forefront of innovation. They enable a barrierless, touchless, and cashless parking experience, offering customers a seamless and efficient experience.

EV Charging Infrastructure

The electrification of transport is a decisive factor on the road towards a more sustainable future. Companies like Tesla have greatly accelerated this development by making EVs attractive to a broader public. Sales statistics for EVs in the U.S. show the rapid rise of electric mobility. With an expected increase from 1.08 million EVs in 2023 to 2.46 million in 2028, the demand for EV charging options is also expected to rise. EV charging in parking facilities particularly appeals to
EV motorists in dense urban areas, as their vehicles can charge while parked.

The combination of parking facilities and EV charging infrastructure incentivizes EV drivers. At the same time, EV charging unlocks additional revenue potential for landlords and operators of parking facilities alike. Profitable business models may be established, especially when combined with renewable energy sources such as PV installations on the tops of parking lots.

Making EV charging easy is as important as having sufficient EV charging infrastructure. Motorists are looking for a straightforward way to arrive in a parking lot, charge, and conveniently pay.

Making EV charging easy is as important as having sufficient EV charging infrastructure. Motorists are looking for a straightforward way to arrive in a parking lot, charge, and conveniently pay. The city of San Francisco again serves as a best practice example, as smart parking zones with demand-based prices and EV charging options have existed for several years. This approach optimizes parking space utilization and promotes electric mobility in one of the most congested cities in the U.S.

Therefore, expanding EV charging infrastructure in U.S. parking lots is a matter of strategic alignment to promote electrical mobility and sustainable transport solutions while preparing for an increasing demand for EV charging facilities.

Micro-mobility / Mobility Hubs

With 868 vehicles per 1,000 residents, privately owned cars in the U.S. are responsible for increased traffic congestion in U.S. cities. In Los Angeles, for example, this resulted in an average of 119 hours per person per year wasted in traffic jams (Heinrich, 2022).

Setting up mobility hubs, which link different means of transport, creates multimodal mobility options to reduce urban congestion. Both the integration of micro-mobility and the strategic orientation of the parking industry in the context of ESG are important components. Promoting micro-mobility options such as e-scooters, bicycles, and e-bikes is essential to eco-friendly transportation and simultaneously offers promising growth opportunities. Micro-mobility’s flexibility helps customers avoid traffic jams and overcome short distances more quickly. For example, integrating e-scooters as a “last-mile” transport option in car parks promotes eco-friendly mobility and economic benefits for parking landlords and operators.

By establishing eco-friendly modes of transportation, the parking industry can play a proactive role in shaping an innovative mobility landscape in urban areas. Mobility hubs can create added value for users, but also help to maximize the utilization of parking facilities. This could result in higher profitability due to increased frequency of use and on-demand provision of various mobility services. For example, we see a growing trend towards increased utilization of public transport and micro-mobility in Europe. Thus, in the Belgium city of Brussels cars accounted for 64% of all trips in 2017, but by 2021, this figure has dropped below 50% (Henley et al., 2023).

AVP / AV

Autonomous Valet Parking (AVP) and Autonomous Vehicles (AVs) are innovative solutions that promise greater convenience to users and provide substantial benefits to the parking industry. By integrating AV systems into the parking process, AVP enables the efficient search for a parking space. Users can drop off their vehicles at a suitable location, while the AVP system takes control and autonomously navigates to an available parking space.

This both serves to reduce unnecessary traffic caused by motorists in search of a vacant parking spot but also minimizes the need for large parking areas, as vehicles may be parked in a more space-efficient manner. Thus, by deploying AVP, it would be possible to minimize soil sealing caused by parking spaces and to utilize more valuable urban space for sustainable urban development, such as green areas. German OEM Bosch, for example, has developed the first fully AVP solution, which can be found in Stuttgart, Germany. This service guides the car from the drop-off area to its parking space and makes the parking experience both convenient and more efficient.

Furthermore, existing car parks can be adapted as pick-up points to have packages or groceries delivered. This offers a versatile solution for optimized urban logistics, providing convenient locations for the seamless delivery of various goods.

In addition, integrating intelligent traffic solutions into urban traffic systems enables more efficient traffic management. By connecting with traffic management systems, AVs can use real-time information to choose alternative routes and avoid traffic peaks. This helps to minimize congestion and improve traffic flow.

Challenges, Opportunities, & Recommendations for Action

The successful integration of ESG principles into the parking industry presents challenges and opportunities. In this section, we will examine potential hurdles and offer recommendations for the successful commercialization of ESG in the U.S. parking industry.

Integrating sustainable practices into existing parking infrastructure requires an initial investment and may prove to be rather complex at first sight due to different regulations, standards, and systems. The steady pace of digitization can potentially make investments in new systems risky, as more suitable technologies are being developed rapidly. Installing sufficient EV charging infrastructure, particularly direct current (DC) or high-power charging (HPC), can be very cost-intensive while commercially paying off only in the long run. International studies predict the revenue per EV charging station to increase by 20% within the
next five years.

The development of sustainable multifunctional mobility hubs could be essential. These hubs not only offer space for parking and charging vehicles but also integrate micro-mobility options such as e-scooters, e-bikes, and other small-scale modes of transportation.

Users may initially experience novelty-related difficulties, as these parking technologies are new and, in many cases, not widely known. It is important to familiarize customers with the pertinent changes early on.

Despite these challenges, there are numerous opportunities for the U.S. parking industry. Companies that integrate ESG principles into their parking services can strengthen their reputation and increase customer trust. Introducing sustainable technologies creates room for innovation and differentiation in the marketplace. In addition, long-term cost savings may be realized through more efficient use of resources, space, and operational processes.

The development of sustainable multifunctional mobility hubs could be essential. These hubs not only offer space for parking and charging vehicles but also integrate micro-mobility options such as e-scooters, e-bikes, and other small-scale modes of transportation. Thus, parking facilities may become centers of sustainable urban mobility.

To take advantage of those opportunities and to overcome potential challenges, certain recommendations for action should be seriously considered. Investments in sustainable parking technologies should be made at an early stage to ensure future competitiveness. Simultaneously, the education and sensitization of users are of utmost importance to increase the acceptance of ESG principles.

With a customized ESG strategy, the U.S. parking industry can continue to be a crucial part of the urban mobility transition.

Conclusion

The future success of the U.S. parking industry is deeply associated with the progression toward more innovative, intelligent, and sustainable urban mobility solutions. Integrating ESG principles into the U.S. parking industry opens new business opportunities for environmentally friendly transport solutions and enables the more efficient use of existing parking spaces. The challenges encountered on this path require innovative approaches and strong partners to commercialize the vision of a sustainable parking industry successfully. ◆