Scaling up Solutions for Sustainable Mobility

Discussion Document

2012

A This report was written by Judith Pollock, Deputy Director, Shell Foundation, with contributions from Nancy Kete, former Director of EMBARQ. Our sincere thanks go to Robin Chase, Susan Zielinski, Buddy Polovick, Nirmal Kumar, Aileen Carrigan and Holger Dalkmann for their input Contents and guidance on content, Richard Gomes for his editorial input and Jo Chandler and the Shell Creative Services team for the design and production of this report.

Why did we decide to write this report? i

Executive Summary ii

01 Why Sustainable Mobility Matters 1

02 Targeting Scale and Sustainability 11

Case Study: EMBARQ 15

Case Study: SmartWay 17

Case Study: Zipcar 19

Case Study: G-Auto 21

03 Lessons for the Future 23

04 Looking Forward… What Comes Next? 33

Shell Foundation is an independent charitable foundation which was established in 2000 and is funded by Royal Dutch Shell PLC*. The views and opinions set out in this paper are those of Shell Foundation and not of any other person including Royal Dutch Shell PLC.

*The companies in which Royal Dutch Petroleum Company and ‘Shell’ and Trading Company, p.l.c, directly or indirectly own investments are separate and distinct entities. But in this paper the collective expression ‘Shell’ is used for convenience in contexts where reference is made to the companies of Royal Dutch Shell PLC. Those expressions are also used where no useful purpose is served by identifying a particular company or companies.

© Shell Foundation 2012

All rights reserved. This publication is copyright, but may be reproduced by any method without fee for education and communication purposes, but not for resale. The copyright holder requests that all such use be registered with them for impact assessment purposes. For copying in any other circumstances, or for re-use in other publications, or for translation or adaptation, prior written permission must be obtained from the publisher.

Copies of this report and more information are available to download at www.shellfoundation.org

Shell Foundation is a UK registered charity (no. 1080999)

B Why did we decide to write this report? Executive Summary

The issue of urban mobility in developing countries has emerged over the The issue of sustainable mobility in rapidly growing cities is now last decade as one of the world’s most pressing development challenges beginning to take centre stage as a major obstacle to sustainable – and it is one that Shell Foundation has been working to address at scale economic development. Rapid urbanisation has led to levels of since we were established. congestion and that severely impair the economic prospects of cities and the health and wellbeing of the people that live there. In 2002 we co-founded EMBARQ, a global countries. But, though welcome, this support will network of sustainable mobility experts, with the only go so far. Our experience suggests that while In addition, transport is responsible for 25% of global greenhouse World Resources Institute (WRI). Ten years on – this some innovations in the urban mobility sector do gas (GHG) emissions. work has led to many new partnerships with cities show promise at a local level, rarely do they make and transport practitioners and delivered substantial an impact on a global scale – and even then only With developing countries expected to build more How can we collectively be more measurable results. after many decades. new city areas during the next two decades than efficient at identifying and implementing But more importantly we have gained a realisation This report draws not only on learnings from our all of humanity has built throughout history, these those mobility solutions with the of just how difficult it is to deliver successful work in sustainable mobility these last 10 years but problems have rocketed up the political agenda. potential to benefit billions, not outcomes on a global level. Today the issue of also from finding and scaling solutions to a range of The world’s largest multilateral development banks millions, of people? sustainable mobility remains a critical obstacle to development challenges in that time. Using this lens have made major funding commitments to support we investigate some promising models for scale and sustainable transport in developing countries and development. Transport is now responsible for 25% A MOBILITY LAG of global GHG emissions, and rapid urbanisation consider the missing links that most often prevent increasing numbers of cities, practitioners and has led to increasing levels of congestion and pioneers in the sector achieving their full potential. funders are turning their attention to how to solve Analysing the sector we find it striking that the major obstacle to implementing sustainable mobility pollution that severely impair the social and In writing this report we hope to spur discussion this conundrum. solutions at scale in developing world cities does economic prospects of cities in emerging markets. and collaboration amongst practitioners, investors Shell Foundation has spent much of the last not appear to be a lack of innovation or the right and donors (existing and new) and to discover how At this year’s Rio+20 Summit the world’s largest 10 years attempting to tackle this challenge. technology. Many of the biggest developments collectively we can achieve greater impact at a multilateral development banks committed US$175 Over this time we have noted several viable we have seen were available for decades before faster pace during the course of the next decade. billion to support sustainable transport in developing solutions to mobility challenges having a positive attaining global recognition and uptake. impact at a local level or in individual cities. Take, for example, the rise of (BRT) But we find these examples to be the rare exceptions. systems – now widely acknowledged to be a very cost-effective way of providing high capacity, and Our experience, and those of our partners and therefore low carbon intensity, transport in cities. colleagues in the sector, point to a distinct lack of solutions that have achieved significant success on The first such system was implemented in Curitiba a global scale. We have come to believe that there in Brazil in 1974. Yet it took over 25 years for BRT are crucial missing ingredients preventing the growth systems to be replicated in a significant number of and replication of viable solutions between cities cities. Only now, 40 years on, is it regarded as a and across regions. This report contains our analysis mainstream solution in cities across different continents. of these gaps – and our recommendations on how to fill them. Above all we seek to answer one fundamental question:

i ii ‘The Intermediaries’ – organisations that Another promising initiative is G-Auto – an auto play a catalytic role to develop sustainable fleet co-operative based in , . solutions, mobilise resources, move others G-Auto is working to promote rickshaw usage as to action and create change. These actors a better alternative to private vehicle ownership by focus towards either public institutions or helping drivers to improve customer service, benefit private business, creating the impetus and from insurance and savings products and expand the conditions for governments or the private their markets by offering premium services such as sector to deploy their expertise and funds more ‘dial a rickshaw’ or cleaner transport. The social effectively towards sustainable mobility solutions. business now operates across Gujarat and has strong potential for nationwide and international replication. For example, EMBARQ, a global network of sustainable mobility experts that helps cities to develop and implement effective solutions, has KEY LEARNING helped make improved transport available to over We found that three common lessons can be 3.2 million people around the world each day. drawn from successful interventions across these It has also leveraged over US$1.8 billion into two groups: sustainable mobility programmes to-date. Lesson 1: SmartWay, a public-private partnership run by the A Disruptive, Entrepreneurial Approach US Environmental Protection Agency (EPA), provides technical support and market-based incentives to All the most successful initiatives – both non-profit encourage emissions reductions and fuel efficiency and for-profit – were tackling entrenched problems that had either resisted previous efforts to solve Rapid urbanisation causes congestion and pollution that impairs the economic, social and environmental prospects of cities. in the freight transport sector. Businesses in the programme now account for 30% of US truck miles them or where existing solutions were giving results and, since the programme was launched in 2004, limited to a local level. In all cases their success So why does it take so long for viable The natural conduits to share best practice from emissions reductions will equate to removing three was derived from innovative thinkers looking at the solutions to reach significant scale city to city, such as dedicated intermediaries or million from the road. situation differently: identifying major market failures of impact and be accepted into the businesses which operate across multiple regions, and creating new models to provide better, more mainstream? are few and far between. As well as this, the type ’The Entrepreneurs’ – businesses that efficient services to meet customers’ needs. of patient, long-term financial and non-financial provide sustainable mobility services, often In our view this starts with the nature of urban support needed to create and grow such institutions breaking down barriers by using disruptive or Lesson 2: transport provision, where responsibility for mobility is notably lacking. innovative models. These businesses form an Core Organisational Capacity services rests principally with individual city essential part of the sustainable transport mix To achieve significant global results it is important administrations. Any lack of capacity at a city level by challenging the status quo and innovating TWO DISTINCT MODELS to set out with a clear sense of the size of the will impact the provision of these services, be it and filling gaps in service provision. But they FOR SCALE problem and the ambition to tackle it at scale. will only make a difference at scale if the technical, institutional or financial capacity. The most successful cases we reviewed had In this report we discuss how collectively we might entrepreneur can deliver a robust business invested time and money to build the capacity More importantly this narrow focus on individual tackle these types of structural problems. To approach model that can be applied across many cities. needed to deliver that vision. This means hiring cities means there is a missing driver of replication this from a different angle, we started by identifying the right staff and putting efficient operational between cities and across regions – and even current initiatives that show evidence of scale or There were a number of highly promising systems, controls and infrastructure in place from across different political administrations within the the potential to deliver it, to see if common features businesses in this group. New -sharing models such as Zipcar, that has been hugely popular in the start (such as IT, management reporting, same city. This is where we see a fundamental underpin their achievements. We were particularly interested to see what lessons might be learned on North America and the UK (with over 730,000 finance, HR or communications). Without these, institutional gap. how their journeys to scale could be accelerated. members), has led to widespread replication across operating across complex multiple locations This is reinforced by the nature of support that developed world cities and offers huge potential for becomes extremely difficult. Our first observation is that while evidence of scale cities receive for sustainable mobility. Donors and emerging market countries. is rare – it does exist. Where success has been investors typically channel funding on a short-term achieved we note that these examples frequently project basis, where success is defined at a local fall into two main groups: level. As a result few mechanisms exist to foster wider adoption.

iii iv Lesson 3: support and coordination from investors, funders WIDER CONSULTATION Performance-Driven Implementation and practitioners. The evidence suggests that key Problems associated with mobility in developing stakeholders need to find new opportunities to By pooling our experience While there are many dimensions to achieving this, world cities present major obstacles to sustainable interact and collaborate in order to more effectively it is clear that organisations that take a disciplined development. With city populations escalating there we hope to learn how we support the creation and growth of solutions that approach to the delivery of measurable outcomes, has never been more urgency to tackle them. can deliver impact at scale. can dramatically accelerate and who demonstrate that these are delivered In thinking about how to take this forward we through the cost-effective use of investment or donor It will take a combination of stakeholders with the timeline to bring viable return to the very first observation that came out of subsidy, will stand the best chance of achieving different resources and preferences for risk and this study – solutions to these problems DO exist. sustainable mobility practices ongoing financial support – and hence growing longevity to provide the critical blend of financial Innovation, technology and smart pioneers are out their impact. In addition to building core skills and non-financial support needed to: into the mainstream for them there. The question is HOW to get them to scale and management capacity, the most effective to achieve impact at scale. I identify ‘intermediary’ institutions that can and implemented across cities and regions. organisations have clear incentives in place to drive the growth and replication of successful achieve performance targets, and systems to We view these findings as a first step towards approaches, and new business models that can track progress and enhance efficiency. wider collaboration. Our intention is to examine deliver mobility solutions at scale in ways that and challenge our conclusions with industry experts They also understand and monitor their key risks on are financially viable; (sustainable mobility practitioners, donors and We will test our conclusions with experts and ask a regular basis and develop mitigation actions to I share the start-up risk of proving new concepts, investors) in London this November, and to find them to add their perspectives on how what we address them. and to provide patient and flexible financial ways to turn them into practical action. have learnt can be applied for maximum affect. Demonstrating a performance-driven culture support to allow them to build beyond initial By pooling our experience we hope to learn how The additional ideas, conclusions and and accountability to supporters attracts further success and become established in new cities we can dramatically accelerate the timeline to recommendations from this exercise will then be investment and gives them greater resilience and markets; bring viable sustainable mobility practices into the captured and used to finalise a complete version against the fluctuating levels of funding or outcome I to help these pioneers to integrate a disciplined mainstream for them to achieve impact at scale. of this report. preferences from individual donors. Many promising approach to performance evaluation and initiatives never get beyond small scale and accountability as they grow – based on tracking into the mainstream because they are not able measurable progress of both development to demonstrate the effective application of their outcomes and cost-efficiency. This requires financial and non-financial resources to achieving critical non-financial support such as business verifiable development impact. advice, networks and governance support to help them build core capacity. CATALYSING SCALE These characteristics will not be found in the same AND SUSTAINABILITY organisation. As cities and transport provision There were also marked differences in the specific become more complex and we strive to achieve type of support that these pioneers received to a much greater scale of impact, a new level of build their organisations and sustain achievement. cooperation between a new cast of actors each In each case either new ‘non-traditional’ donors with their own strengths will be necessary: from (such as private foundations) took early-stage risk those capable of taking early stage risks, to others and provided patient, unrestricted funding to build who bring a wider range of non-financial resources capacity, or support was provided by traditional or are able to leverage significant, long-term capital donors (such as governments, aid agencies or for scale. multilateral agencies) but structured in new market- Greater syndication between donors, foundations, based ways, such as the innovative public-private investors, development institutions, intermediaries partnership model adopted by the US EPA in and implementing bodies needs to become the developing their SmartWay programme. norm if we are to succeed. Scale and sustainability are tough things to accomplish for any organisation or business. Trying to achieve this in the challenging environment of cities, run by their own separate city administrations, requires strong As cities and transport provision become more complex, a new level of collaboration will be required.

v vi Urban Population Increase5

WHY SUSTAINABLE MOBILITY MATTERS 01 3.6 billion people living in cities 2011 At the heart of any thriving and prosperous society is the ability to move efficiently, access essential services and transport goods between locations. Yet look around many major cities in the developing world today and you will find sprawling low-income neighbourhoods with no access to public The vast majority of this increase will happen in less transport, and central districts brought to a halt by traffic gridlock. You’ll see developed countries. 6.3 smog hanging over the city skyline and experience the paralysing nature of billion in urban mobility problems. 2050

6 More than half the world’s population now live CO2 Emissions from the Transport Sector in cities1. In 2007, the 220 largest cities in the developing world accounted for over 10% of global Each year as many as 50 2 GDP – yet ironically these engines of economic million people are injured and growth in emerging markets are being strangled as a result of that same growth. over 1.27 million die from

In Lima, Peru, it is estimated that people lose an road accidents. Over 90% of average of four hours every day in – leading these deaths occur in low and to a loss of approximately US$6.2 billion, 10% of 4 3 8.0gigatonnes of CO in that city’s GDP, every year . middle income countries . 2

The health impact of local air pollution and road traffic crashes, high levels of greenhouse gas emissions and an inability to move people and These problems are a result of rapid population 2009 goods effectively are making cities ‘unliveable’ growth, urbanisation and an explosion in vehicle and placing economic growth and productivity ownership rates in developing country cities – trends in jeopardy. The people feeling this impact most that are forecast to continue and accelerate over the keenly are the urban poor who are separated coming years. from employment and exposed to long, hazardous daily commutes. 14.9 1 The Population Division of the Department of Economic and Social Affairs at the United Nations Secretariat. March 2012. gigatonnes in World Urbanization Prospects - The 2011 Revision. 2050 2 McKinsey. 2011. “Urban World: Mapping the Economic Power of Cities. 3 Replogle, M. and Hughes, C. (2012) “Moving Toward Sustainable Transport” in State of the World 2012 –– Moving Toward Sustainable Prosperity. Accessible at http://www.itdp.org 5 The Population Division of the Department of Economic and Social Affairs at the United Nations Secretariat. March 2012. World Urbanization Prospects – The 2011 Revision. 4 World Health Organisation 2009. Global Status Report on Road Safety. 6 International Energy Agency. 2011. World Energy Outlook. OECD/IEA.

1 2 Motorisation Rates7 8 Urban Road Traffic Deaths9

per 1000 in each country 1.2 million road traffic 2009 2030 deaths in2004 INDIA 18 110 2.4 million in2030

CHINA “Soon three quarters of the world will live in cities,” Given the unprecedented scale of the mobility observes Susan Zielinski, Managing Director of challenge there is an urgent need to act before this 47 269 SMART – a university-wide sustainable transport projected growth is realised. Vehicle ownership initiative led by the University of Michigan. in developing countries is still far below that of “Accelerating urbanisation, population growth the developed world, new cities are yet to be and demographic shifts reinforce transport and built and existing settlements yet to be expanded. development patterns that threaten climate, the But city policies and urban plans can still be environment, urban economies and liveability. established. Smarter ’integrated’ urban transport Action for integrated, sustainable and equitable systems can be installed that provide mobility whilst transportation is critically important. But this will minimising negative externalities. USA not be a simple task, with the most populous The next decade represents a turning emerging economies aspiring to motorise as their point when many of these choices can 802 849 economies grow.” be made and action taken – so what can be done to create the best chance of success?

7 Dargay, J., D. Gately, and M. Sommer. 2007. Vehicle Ownership and Income Growth, Worldwide: 1960-2030. 9 World Health Organisation. 2004. The Global Burden of Disease Report. 8 http://data.worldbank.org/indicator/IS.VEH.NVEH.P3

3 4 MAJOR STRUCTURAL FAILURES of private vehicles in a city grew to overwhelm existing routes, supply-side thinking led to more When Shell Foundation examined the issue of Figure 1: Typical Actors Involved in Mobility Provision in Cities road space, but ultimately this made the problem urban mobility back in 2001, we realised that worse not better. Clearly systemic interventions sustainable transportation solutions did exist, but were needed. Finance they were few and isolated. So our starting point in addressing the issue at scale was to try to assess Banks City Taxes The challenge for the city authorities responsible Insurers Equity Investors what stopped effective solutions from being more for transport provision was navigating a highly Multilateral Development Banks National/State Treasury widely applied. complex political landscape. Designing and Public Private Partnerships financing systemic solutions, and implementing Through our analysis and engagement with city them effectively, requires the commitment of many experts, we discovered that one of the root causes actors (see Figure 1). Many simply did not have the National Government Private Sector of mobility problems was that transport providers institutional capacity to foster these collaborations. were focused on how to move vehicles around Equipment manufacturers their cities – rather than people. As the number State Government Construction firms DELIVERY OF Vehicle makers MOBILITY Fuel suppliers SERVICES AND Architects City Administration I NFRASTRUCTURE Developers Construction companies Mayor Entrepreneurs Department of Transport Department of Public Works Department of Environment Department of Finance Department of Planning

Public Transport Operators Operators

Civil Society

Lobby groups Citizens Unions

CREATING EMBARQ: A DIFFERENT APPROACH

Our subsequent efforts were all based on our Crucially, WRI shared our ambition to make a conviction that this lack of institutional capacity difference on a global scale. They were an ideal constituted a major ‘market failure’ in the mobility fit, with networks and pull as an international sector – and that a different type of systemic thought-leader in environment and climate studies intervention at the city level was needed. and practical implementation experience through local operations across the globe. Shell Foundation sought a partner with whom we could build a new intermediary that would Together we created EMBARQ – a global fill this gap. We ran an extensive search for an network of sustainable transport experts that organisation with the right blend of expertise, would work in partnership with cities and their networks and international influence, consulting with stakeholders, across public and private sectors a wide range of industry leaders and experts. This as well as civil society, to identify and implement led to the selection of the World Resources Institute sustainable mobility solutions. (WRI) as a long-term strategic partner in 2002. Systemic solutions are required to address the complex and chaotic reality of mobility in cities.

5 6 There are several aspects of this experience Figure 2 shows, this required significant initial RECOGNISING THE MOBILITY LAG that we believe have wider relevance when investment before any social or environmental impact This experience prompted us to consolidate our One example of this would be BRT systems considering the sector as a whole and some of the was generated. EMBARQ’s first flagship project – a learning but also, recognising the limitation of – essentially high capacity running on structural challenges it faces and we dive deeper (BRT) system in Mexico City – generalisations from a single partnership, to review dedicated lanes to provide a cost-effective, into the details of EMBARQ’s work and its path proved the model could work and demonstrated and engage with partners and colleagues in the low-carbon intensity way of transporting large to scale in the next chapter. But one of the main its potential. This helped secure sizeable long-term sector to see what conclusions we could draw volumes of passengers. Now regarded as a reflections that we have from our partnership is commitments from early movers such as Caterpillar about tackling the sustainable mobility challenge core component of sustainable mobility in many that, although EMBARQ has delivered substantial Foundation, Fedex and Bloomberg Philanthropies at scale. developing world cities, it took over 25 years measurable impact through city-level projects (see which accelerated the growth of the network. from the first proven example in Curitiba, Brazil Figure 2) and is now influencing transport policy We found remarkably few sustainable mobility EMBARQ now works in 58 cities around the world (championed by Mayor Jaime Lerner) before on a global scale – through regional centres in initiatives in operation across large numbers of on range of mobility solutions such as integrated indications of a real growth in uptake was seen. Mexico, Peru, Brazil, India, Turkey, US and China developing country cities or that drove the transfer transport systems, non-motorised transport, urban Only now, almost 40 years on from that first project, – this level of success certainly hasn’t been easy. of best practice solutions from region to region. planning and road safety – but there are still big is BRT being regarded as a mainstream solution. It was also striking that the major obstacle to It has required persistent, dedicated and flexible challenges ahead to break into new geographies implementing sustainable mobility solutions at scale support over a long period of time to build an like China and to move beyond a model focused in developing world cities does not appear to be organisation with the capacity to deal with complex on deep engagement with each city to influence a lack of innovation or the right technology – many problems across different geographies. Shell national and international policy. EMBARQ have of the biggest positive developments we see today Foundation needed to take a risk on EMBARQ achieved a lot but there is still a long way to go were available for decades before attaining global successfully solving a market failure and, as given the size of the problem. recognition and uptake.

Figure 2: EMBARQ Path to Scale Figure 3: Cities with BRT/Bus Corridors

25

125 Key China India UK Colombia Peru 8 4 Guangzhou Jaipur East London Transit Barranquilla Lima SF Core Funding (US$ millions) People served per day Hefei Bucaramange Carbon reduced cumulative (million tonnes) = 3.8 million 20 Brazil Canada Yancheng João Pessoa Mexico Brampton People served per day (millions) Zaozhuang 100 Dollars leveraged cumulative (US$ billions) Estado México

6 3 US Dollars leveraged 15 = US$2.9 billion 75 New Cities 4 2 10 Carbon reduced 50 = 1.8 million tonnes Cumulative Number of Cities

SF Core Funding US$ millions 5 25 2 1

0 0 - 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

EMBARQ founded Caterpillar Foundation Bloomberg Philanthropies becomes strategic partner becomes strategic partner Colombia – Bogotá Brazil – Curitiba (TransMileno)

7 8 So why does it take so long for viable Known strategies and technical solutions which solutions to reach significant scale could make a clear difference are not being WHAT IS SUSTAINABLE MOBILITY? of impact and be accepted into the deployed effectively by a critical mass of Sustainable mobility is about giving people the mainstream? businesses, across different countries or different means to move around a city and to transport modes of transport such as road, rail and In our view this starts with the nature of urban goods and services in ways that: marine transport. transport provision, where responsibility for mobility a) limit negative externalities on the environment services rests principally with individual city and society; and administrations. Any lack of capacity at a city level LOOKING FORWARD will impact the provision of these services, be it To try and identify how we can change this b) are sustainable both financially and in terms of technical, institutional or financial capacity. situation, we now identify a small number of resource use now and in the future. promising solutions and models that are starting to More importantly this narrow focus on individual The approach which underpins all the solutions achieve impact at scale or show promise to do so cities means there is a missing driver of replication referenced in this report is the widely adopted in the near future. between cities and across regions – and even Avoid-Shift-Improve framework10. across different political administrations within the In the next section we present four example case The primary aim of this approach is to promote same city. This is where we see a fundamental studies from which new models, patterns and mobility solutions which significantly reduce institutional gap. It is reinforced by the nature of common themes have emerged. Our intention is greenhouse gas emissions, improve energy support that cities receive for sustainable mobility. that this draft report and its conclusions be the efficiency and reduce traffic congestion, Donors and investors typically channel funding on starting point for a debate on ‘Scaling Solutions creating safer, healthier, more liveable cities and a short-term project basis, where success is defined for Sustainable Mobility’ which Shell Foundation environments. The ASI framework is comprised of at a local level. As a result few mechanisms exist to will host in November 2012. We will test what three core strategies. foster wider adoption. we have learnt with a carefully selected and representative group of key stakeholders from the Natural conduits to share best practice from sector, solicit feedback and together establish: city to city, such as dedicated intermediaries or sustainable mobility businesses which operate I What interventions can significantly increase the A-S-I APPROACH across multiple regions, are few and far between, scale of impact of sustainable mobility solutions and the type of patient, long-term financial and in the future? non-financial support needed to create and grow I What actions can be taken to shorten the such institutions is notably lacking. AVOID SHIFT IMPROVE timeframe to get ideas from the drawing Beyond cities, we observe a similar phenomenon board to mainstream application in cities in industry. Take freight transport, for example. across the world? The movement of goods required to support Additional findings and output from that event will the resource needs of growing urban centres then be added to produce a final report. account for a significant proportion of total Reduce or avoid unnecessary Shift to, or maintain share of, Improve the emissions and fuel GHG emissions from the entire transport sector. travel. Reduce trip lengths. more sustainable modes. efficiency of modes used. While efforts are made by individual carriers and logistics companies to improve their environmental performance, and regional and sectoral initiatives are making progress in selected parts of the e.g. Integrated land use plan- e.g. Attractive mass transit, e.g. Improved vehicles, fuel industry, there is a lack of a coordinated response ning and transport demand shared and non-motorised technology, engine efficiency that could ensure industry-wide change. management reduce the need alternatives encourage a shift and alternative fuels reduce for long trips and encourage away from unsustainable private the environmental impact of non-motorised journeys. vehicle use. transport.

10 Richard Dobbs. “Megacities”. Foreign Policy. Sept/Oct 2010. Last accessed January 2, 2011 at http://www.foreignpolicy.com/articles/2010/08/16/prime_numbers_megacities?page=full

9 10 DEFINING SCALE Throughout our research, ‘intermediary’ organisations stood out for their ability to straddle When targeting impact at scale and looking these borders and to drive the application of best to find examples with the potential for scale it is practice solutions across different geographies – TARGETING SCALE important to articulate exactly what we mean. despite institutional boundaries. In fact, the best In Shell Foundation we assess this using the examples perform a critical function of building following criteria: AND SUSTAINABILITY institutional capacity and knowledge in the 02 I delivering measurable development outcomes organisations and city authorities with that benefit large numbers of people; whom they work.

I operating across multiple countries Intermediaries typically have a primary focus and/or regions; and towards either public institutions or private business, I a management team and organisation with the creating the conditions for either government or For the purposes of this review we have considered the key lessons over the capacity to deliver scale-up. the private sector to deploy their expertise and last 10 years from our partnership with EMBARQ and have also examined funds more effectively towards sustainable For the purposes of this review, that meant looking mobility solutions. the achievements of others over the same time period with a view to asking for initiatives that had already delivered, or had the potential to deliver, significant and measurable Organisations such as EMBARQ and the Institute a simple question: what have been the successes and the key outcomes in sustainable mobility – either through for Transport and Development Policy (ITDP)11 factors that led to those successes? their own growth or through replication by others. work with city authorities to diagnose and design It also meant looking for organisations that were sustainable integrated transport solutions. They building the human capital and organisational ensure that the institutional capacity is built and that Mobility is a large and complex area – and there Similarly, as we have looked for examples of capacity necessary for further regional expansion. public and private money is deployed effectively to are many actors involved – so we do not claim other initiatives showing the potential for impact deliver these. We have included a short case study to have done an exhaustive analysis. But with the at scale we focused on entities that are building on EMBARQ by way of illustration. KEY LEARNING benefit of hindsight we have looked for examples long-term business models to deliver scaleable On the other hand intermediaries focusing on the of solutions and approaches showing evidence of solutions. We looked at for-profit, non-profit and So what did we find? Interestingly, the private sector provide the tools and incentives for impact at scale or the potential for scale. hybrid organisations, but our key focus was to find organisations, enterprises and initiatives that businesses to collectively take action towards more those with the potential to deliver sustainable and caught our attention all fell into two broad groups: From these we have picked out models from both sustainable mobility solutions – where the barriers significant impact. ’Intermediaries’ and ’Entrepreneurs’. the developed and developing world that seek and risks for a single business to step out and bear to explain the replication of effective sustainable Our experience in applying enterprise-based We believe each group can play a critical role the costs of change ‘ahead of the market’ have mobility practices or the acceleration of the timeline solutions to a range of development areas over in creating sustainable mobility solutions with the previously proved too high. They then create the for their application in the mainstream. the last 10 years has emphasised to us that the capacity to go to scale. First, let’s look at the conditions for viable solutions to be taken up at greatest success in achieving scale of impact and characteristics of organisations within these groups scale by the private sector. sustainability is often associated with new types of and consider four examples of the solutions OUR FOCUS: SCALE AND One example would be the US EPA’s SmartWay entities being created or new approaches being they provide: SUSTAINABILITY Transport Partnership. SmartWay enables businesses applied. Simply put, where development problems The Intermediaries: organisations that in the US to act towards reducing emissions from Shell Foundation strongly believes that individual are proving intractable and tried and tested play a catalytic role to develop sustainable freight transportation at a scale that would not have project-based solutions will never significantly solutions have not generated significant impact we solutions, convene stakeholders, mobilise been achieved by individual companies acting in impact large-scale development challenges such as recognise the need to think and act differently. We resources and motivate others to create isolation. It has given rise to the industry initiatives sustainable mobility. For that reason we decided therefore also paid particular attention to disruptive change. based on the same principles – Green Freight in 2002 not to fund a series of short-term transport solutions or evidence of new approaches, to see if Europe and Green Freight Asia Network. ’projects’ but to look for a partner with whom this was a factor for success in sustainable mobility. The provision of mobility services can be we could build an intermediary organisation – exceptionally fragmented between city, state and Each type of intermediary organisation has the ultimately EMBARQ – that would offer a systemic national level, between public and private sectors, potential to influence funds far beyond its own ongoing approach to achieving sustainable and between different transport modes. scale and therefore to drive large scale impact – mobility in cities. it is this that makes them especially interesting to us.

11 www.itdp.org

11 12 The Entrepreneurs: new businesses that of service provision, a desire for low-carbon elsewhere. It is support that is all too often G-Auto, is an service provider provide sustainable mobility services, often alternatives and technological innovation have led lacking in the private sector (more on this in based in Gujarat, India. G-Auto improves the breaking down barriers by using disruptive to the emergence of many new services and non- the next chapter). existing shared use service of auto in or innovative models. traditional business models. Now more than ever India to provide a cleaner, safer, more customer- We have chosen two examples to illustrate it seems there are opportunities for entrepreneurs focused service. It is a very early stage business These businesses form an essential part of the entrepreneurial solutions. Zipcar, is a pioneer in the to be a significant force in the mix of but is of particular interest given the size and sustainable transport mix by challenging the rapidly expanding business of shared use vehicles. mobility providers. importance of the auto rickshaw sector as a part status quo, innovating and filling gaps in service With many car-sharing and bike-sharing schemes of the transport mix in Indian cities, and the provision. We have focused here on examples Starting a new enterprise with a new business now springing up in cities of the developed world, potential for an improved service to retain ridership where significant impact could be achieved model in difficult operating environments is a Zipcar provides an excellent example of a business in this resource-efficient form of transport. by replication or scaling up through difficult and risky process in any sector. These that was innovative in its approach and which has organic expansion. pioneers require significant support to create robust overcome challenges to reach significant scale. businesses, develop crucial market linkages and Car-sharing has yet to take off in the cities of The transport landscape has evolved dramatically expand sustainably across regions and countries – emerging economies and in considering Zipcar’s over the last decade in both the developed let alone to encourage others to replicate success pathway to scale, we aim to uncover learnings that and developing world. Factors such as a lack might be applied successfully in these countries.

The auto rickshaw sector is an important part of the transport mix in Indian cities.

13 14 IMPACT/SUCCESS I Brazil, where EMBARQ’s technical advice in demonstrating a doubling in design capacity Case Study: EMBARQ Since 2002 the transportation projects EMBARQ for the proposed BRT contributed to Rio being has worked on: selected as the host city for the 2016 Olympic I have saved 1.8 million tonnes of carbon Games. EMBARQ are now acting as technical An established intermediary working to emissions from entering the atmosphere; adviser to Rio and three other Brazilian cities – Recife, Belo Horizonte and Porto Allegre – with I now serve 3.8 million passengers per day; catalyse sustainable mobility solutions in cities a combined population of 25.1 million people and across Latin America and SE Asia as they install BRT systems which represent the I have attracted US$2.9 billion in investment. first stage of a national transport policy favouring Established in 2002 The network’s six regional centres have run projects sustainable urban mobility. www.embarq.org in 58 cities across the world – and are now gradually effecting change at national and regional levels. Key successes include:

I Mexico City, where EMBARQ has helped The network’s six regional to replace old, owner-operated microbuses THE CHALLENGE a sustainable solution and convening stakeholders centres have run projects in with a full BRT system operated under a new across government, business and civil society Shell Foundation (SF) and the World Resources commercial model. Working hand-in-hand with 58 cities across the world – to ensure that solutions can come together. Institute (WRI) aimed to make a substantial the local government the project delivered a They then work with the city to build knowledge and are now gradually effecting difference in the way cities addressed their mobility 20-km bus corridor that serves more than and relationships and to ensure high-quality change at national and needs. We were confronted with the messy reality 500,000 per day, cutting travel times by 50% implementation of the resulting projects. of developing country cities: under-resourced public and reducing CO2 by 80,000 tonnes per year. regional levels. transit systems, bicycles, pedestrians, collectivos, EMBARQ’s first action was to establish a locally- This success fostered more projects, with four tuk-tuks and burgeoning numbers of private cars run Centre for Sustainable Transport in Mexico new Metrobus lines now operational in Mexico fighting for road space. City authorities often did not City – one of the most polluted and congested City, six more committed, and further BRT have the power, finances or capacity to design and megacities in the world – to deliver substantial systems installed in Guadalajara and Leon with implement sustainable solutions to these challenges. results that would showcase their model to other plans underway in other Mexican cities. The FUTURE PLANS Those projects that were being implemented were cities. Within three years they had helped to momentum for sustainable transport created by led by what the industry could easily offer a city deliver the first line of Metrobus, a world-class BRT these successes has led to the Mexican national EMBARQ are now scaling further with entry into and focused on moving vehicles rather than people. system that runs through the heart of the city – and government establishing the first national fund for China – a country which is forecast to add 400 by 2012 EMBARQ had grown into an international mass transport, PROTRAM, to which EMBARQ million more urban residents by 2030. They also plan to expand the impact of their work to a much THE MARKET FAILURE organisation with headquarters in Washington, was invited to act as a technical adviser. DC, five regional centres – in Mexico, Peru, Brazil, larger scale by developing key relationships to I India, where EMBARQ and Atal City The partners discovered an institutional weakness Turkey and India – and start-up operations in China. influence policy at a national and regional level – Transport Services Ltd (AICTSL) have established at the heart of the planning and provision of city based on the results they have already delivered an innovative, long-term public-private transport. Responsibility for this was often split across With US$16m of core funding from SF and – and by setting an ambitious target to encourage partnership to set up an integrated transit agency multiple departments, with financing constraints at significant multi-year commitments from other over 200 cities to replicate examples of best that operates and manages Indore’s public city, state and national level and disparate external donors such as Caterpillar Foundation, FedEx and practice in the next decade. stakeholder groups wielding influence. Only through Bloomberg Philanthropies, they have built strong transport system. This has resulted in doubling of working deeply with cities and convening all the institutional capacity and specialist knowledge in the system’s capacity to 220,000 daily trips. relevant stakeholders could they help cities to design areas as diverse as transport engineering, urban and implement sustainable solutions to meet their planning, climate change, communications, finance mobility needs. and policy.

This allows them to offer a comprehensive set THE SOLUTION of mobility solutions to a city including: BRT, SF and WRI established EMBARQ in 2002 as optimising bus operations, cycling and walking an expert intermediary to work with developing infrastructure, improved city spaces and urban country cities. EMBARQ acts as an independent and planning, road safety and air quality measures. honest adviser to cities, focusing on diagnosing the key mobility problems a city faces, designing

15 16 any breakdown or failure of a new, unproven This integrated approach has created strong SmartWay technology would simply cost too much or risk self-reinforcing value in the programme. Being a Case Study: failed delivery commitments. The larger carriers SmartWay Partner has recognised brand value and who could afford to innovate had no means of for some companies – such as IKEA – it is a pre- influencing a wider uptake of these solutions requisite for becoming one of their carriers. An innovative public-private partnership once they had been tested. tackling emissions from freight in the US As a government body, the EPA had regulatory IMPACT/SUCCESS options for emissions standards that could be To date, about 10% of the truck fleet in the US SmartWay is the US Environmental Protection applied to new vehicles but the majority of is enrolled in the SmartWay programme – with Agency (EPA) flagship programme for trucks in use are ‘legacy vehicles’ with very SmartWay Partners representing 30% of US truck Established 2004 long lives. miles as this is weighted towards large carriers. Since improving fuel efficiency and reducing www.epa.gov/smartway 2004, SmartWay Partners have saved 23.6 million metric tons of CO , 478,000 tons of NOx 22,000 greenhouse gases and air pollution from the THE SOLUTION 2 tonnes of PM emissions and 55 million barrels of oil – The EPA decided on a voluntary approach – transportation supply chain industry. the equivalent of removing over three million cars from but realised that it was crucial to build market the road for a year. mechanisms into their programme to create an incentive for businesses to participate. The resulting SmartWay Transport Partnership model is FUTURE PLANS an innovative, public-private collaboration where: Whilst the EPA’s remit is limited to the US, THE CHALLENGE THE MARKET FAILURE SmartWay has begun to advise other countries I carriers commit to providing data on their Freight movements are critical to a thriving When the EPA came to look at this issue in 2003 wishing to replicate similar freight sustainability own fleets and to incorporating fuel/emissions economy in the US. But within the transport sector they identified a number of market failures that programmes. SmartWay has been adopted reductions technologies and strategies into their the trucking industry contributes disproportionately blocked attempts to tackle the problem at scale. by Canada, which is now using the same operations; to fuel use and pollution – emitting 22% of all There was a notable lack of fuel efficiency and performance benchmarking tools, methods and transportation GHG emissions in that country. emissions performance data for trucks, and I shippers commit to moving the majority of metrics. The success of the SmartWay programme Despite the availability of cost-effective technology shipper customers had no reliable or credible way their goods with SmartWay carriers and are has also contributed to the recent establishment solutions, the fuel economy and emissions to benchmark the performance of their chosen incentivised to select carriers with the best of two other regional green freight programmes – from heavy duty vehicles remained static for carriers. What was not measured was unlikely environmental performance; and Green Freight Europe and the Green Freight Asia many years. Increased pressure from society to be improved. The market was particularly I logistics providers and transporters Network. These are both voluntary membership and consumers for companies to reduce their fragmented with shippers, whose goods were commit to improving the performance of their programmes based on the SmartWay model, environmental footprint was not translating into being transported, having different incentives to (subcontracted) fleet and to recruiting more carriers but are run by independent non-governmental any measurable change in the freight industry. carriers, third-party logistics providers and the to the programme. secretariats. manufacturers of the actual trucks. There was little reliable information from credible, neutral The EPA provide the tools to capture data from Although the SmartWay model is very promising third-parties on the performance of available participant ’Partners’, helping them benchmark, there will still be significant challenges ahead technologies, and a fair degree of confusion track and improve their own fuel efficiency and to drive a higher proportion of the US trucking and lack of confidence in new and ranking operators into environmental performance industry to adopt SmartWay practices, to achieve unproven technologies. bands. They provide a platform for Partners to share cross-border consistency and co-operation best practices and profile Partners’ achievements. with other regional initiatives impacting wider In addition the industry was dominated by a They also manage complementary programmes to geographies, and to achieve co-operation with high proportion of small trucking companies verify new cost-effective technologies for emissions other freight modes such as marine and air freight (the individual ‘mom and pop’ operators). reductions and facilitate financing to companies for shipping which will allow shippers to reduce the Operating in a very competitive landscape the uptake of these. The SmartWay brand is used carbon footprint of end-to-end freight journeys. with thin margins they had a low risk tolerance as a mark of excellence for qualifying partners and toward trying new technologies, and little helps provide further market incentive as an indicator capital to invest in improvements. Even if fuel of cleaner, more sustainable transportation options for savings promised to cover the capital outlay, business and consumers.

17 18 THE MARKET FAILURE IMPACT/SUCCESS Case Study: Zipcar The market lacked a model where the convenience In its 12 years of operations Zipcar has grown to and flexibility desired by the user could be a company of 730,000 members sharing 11,000 provided to them in a way that was coupled with vehicles in the USA, Canada and the UK. It is now secure access to shared vehicles and sufficiently a publicly listed company with revenues of A pioneering car-sharing company in the high utilisation rates to make the service viable. US$242 million in 2011 and has reached developed world with strong potential model profitability. for replication in developing countries THE SOLUTION As for the initial neighbourhood in Boston that was Robin Chase, the co-founder of Zipcar, says her home to the first three Zipcars, the same two city Established 2000 Eureka moment was “realising that there was a blocks are now home to 18 shared cars provided by three different companies. Recent studies show www.zipcar.com huge demand for car-sharing without the constraints of the companies and that wireless that each of those shared vehicles will displace internet could send information to cars to allow between nine and 13 privately owned-vehicles. remote access.” FUTURE PLANS That spark led to Zipcar, a membership-based, car-sharing company where members use an Zipcar is at the forefront of a new breed of THE CHALLENGE online website to find and book cars parked in car-sharing companies. Today over 1.2 million Cities are increasingly choked by the large number means travelling to a central location to pick up and their own neighbourhood for increments as short individuals share nearly 32,000 vehicles as part of of vehicles on their roads, leading to congestion drop off a vehicle, and hiring for daily periods is not as an hour – in as little as 30 seconds. Members organised services provided by both for-profit and and parking problems. Yet people are still caught a cost-efficient option for the urban user. walk to the reserved vehicle and unlock it at the not-for-profit schemes. Car-sharing is well established between the choice of owning a car (and therefore booked time with an electronic card. The entire in approximately 1100 cities around the world, in Car-sharing models did try to offer a solution access to its convenient on-demand availability) and transaction is complete within a short time and is 26 nations and on five continents. – such as the car clubs started in Europe in the not owning one (relying on for the done autonomously taking the ‘transaction hassle’ 1980s – but never took off at scale as access to Analysts are predicting exponential growth, with majority of their mobility needs). out of car-sharing and making it almost as easy as Frost & Sullivan projecting that global car-sharing vehicles at convenient locations and the problems using your own car. The latter rarely meets their full needs – failing to of picking up and dropping off keys meant that the membership will hit 20 million by 202012. cover journeys end-to-end or provide flexibility service was not sufficiently convenient or flexible. Technological developments meant Zipcar could New innovations like peer-to-peer services promise to transport goods, or to allow people to take The concept itself was branded as a cheaper monitor and invoice the use of their cars remotely more convenient, affordable forms of shared the occasional journeys that are not well-served make-do solution to the preferred option and online booking systems meant the need for mobility, particularly in less dense urban and by public transport. But buying a vehicle is an of car ownership. staff was low. With a model that was viable suburban locales. expensive alternative and means paying to own a and scaleable, investment was secured and pilot In addition, multinational companies are increasingly resource that you will only use for a small proportion operations began in 2000 with a fleet of three entering the field. Hertz, Enterprise, Daimler, and of the time. Car hire, as the next best alternative, cars in Boston, Massachusetts. BMW all have invested heavily to launch new car- Significant challenges still had to be worked out sharing brands and Volkswagen recently announced to get the business off the ground, particularly plans to re-enter the market. around insurance, access to personal data such as proof of driving license from users, and optimising utilisation rates and vehicle placement to allow financial viability. But these were worked out and Zipcar continues to grow as a viable and successful business.

12 Frost & Sullivan. “Car sharing – Driving the Way to a Greener Future”, February 18, 2010. Accessible at http://www.frost.com/.

19 20 THE SOLUTION IMPACT/SUCCESS Case Study: G-Auto G-Auto was started by Nirmal Kumar and the Since its inception in 2009 G-Auto has grown to Nirmal Foundation in 2009 to provide a collective- employ more than 10,000 auto rickshaw drivers based fleet auto rickshaw service with its first and has operations in Ahmedabad, Baroda, operations in Ahmedabad. Under the brand Gandhi Nagar and Rajkot – cities in Gujarat state An early-stage auto rickshaw co-operative G-Auto, drivers are provided with professional with combined populations of over 7.5 million. customer service training, access to social benefits improving service and retaining ridership in They have aggressive growth plans with ambitions such as death and accident insurance, and loan to scale to all ‘A class’ cities in Gujarat, followed the Indian sector facilities to purchase and upgrade vehicles. by country-wide expansion. Established 2009 In return they provide customers with a courteous, professional service on an approved meter-based FUTURE PLANS www.g-auto.org . Disputes over and destinations drop rapidly as a result. The collective approach also Although G-Auto is a young enterprise they have allows G-Auto to steadily introduce improvements shown impressive growth and continued expansion to the fleet service to the benefit of passengers plans. The key to achieving this will be developing a financially viable model to support it. The Nirmal THE CHALLENGE The opportunity exists for the auto rickshaw sector and the city environment. An innovative dial-up Foundation currently contributes grant funding to to be upgraded, providing a safer, cleaner more service where auto rickshaws can be booked has Auto rickshaws, or tuk-tuks, form a vital part of subsidise the model – but some city funding has convenient form of transport and enhancing its role been introduced and options for vehicle upgrades the mobility mix in many south east Asian cities been secured and value-added services such as in providing a vital intermediate transport service are being assessed. In Rajkot, in partnership with and especially in India. They serve key roles in advertising on rickshaws are being developed. – connecting people to mass transit systems and EMBARQ and the Rajkot Municipal Corporation, providing last-mile connectivity, ensuring people G-Auto is providing the city’s first fleet auto rickshaw giving them accessible, point-to-point mobility Building a more business-based approach and can connect to public transport hubs and providing services whilst the city itself is providing dedicated without the need for private cars. organisational capacity to deliver at scale will door-to-door transport services – ensuring people’s infrastructure for auto rickshaw stands at key give G-Auto the potential to significantly multiply mobility needs can be met without a reliance on transport hubs and for vehicle maintenance facilities. private vehicles. THE MARKET FAILURE its impact and to incorporate more sophisticated technologies into their services. Like Zipcar, The sharply increasing demand for urban mobility The nature of the auto rickshaw market in Indian the G-Auto model shows sizeable potential for led to a doubling in production of these motorised cities, where the vast majority of vehicles are run replication by others in addition to the growth of three-wheelers between 2003 and 2010. by individual owner-drivers making thin margins, their own operations. However, negative perceptions abound of the means that neither the needs of the customers nor auto rickshaw sector – with safety of vehicles, the drivers are best served. Economies of scale personal security and emissions all key concerns. cannot be enjoyed and there is no effective In addition, the disorganised nature of a sector mechanism to introduce widespread vehicle dominated by individual owner-drivers means that or service improvements. services are not optimised and large numbers of Drivers’ income is typically unreliable and they have kilometres are driven by drivers searching for fares no source of social benefits, access to finance or – deadheading, as it is known. opportunity to provide a more professional service. Customers are reliant on hailing a vehicle at the side of the road and negotiating a fair price with the driver if he is willing to take them to their desired destination. Reports of disagreements and assaults are rife, while vehicles have no safety improvements and are often old and polluting.

/)]\WLZQ^MZ[OIQVNZWU\ZIQVQVOIVLIKKM[[\W[WKQITJMVMÅ\[IVLTWIVNIKQTQ\QM[

21 22 Let’s consider each of these points in more detail.

Lesson 1: LESSONS FOR A Disruptive, Entrepreneurial Approach Earlier we discussed that our experience as with a long lifespan to run. They also realised a foundation tackling a variety of global that businesses would not buy-in to a regulatory THE FUTURE development challenges had shown us the solution that they felt was being imposed on 03 importance of new or disruptive approaches them – but could be more effective as active to achieving success. This emerged again as a partners in helping EPA achieve fuel saving and significant factor in the sustainable mobility arena. emissions reduction goals. The SmartWay design Simply doing ‘more of the same’ will not lead therefore incorporated market incentives into a new to the step change needed to achieve model creating buy-in and mutual wins for their greater impact. core customer groups of freight shippers, carriers When looking for successful sustainable mobility solutions it isn’t hard and logistics providers. This has led to a strong The successful initiatives we found had chosen to identify individual projects or cities that have had success or single partnership where industry and the EPA are both to take on problems that had resisted previous benefitting from reduced emissions, fuel usage and businesses that have an impact in their local neighbourhood. But to find attempts at solutions, or where existing solutions operational costs. instances where solutions are scaled to benefit many cities either through the were yielding results limited to individual local catalytic effect of an intermediary or through the growth and/or replication instances. In all cases their success followed from The importance of new approaches was again applying a new approach to the problem or apparent when we looked at entrepreneurs. of an entrepreneurial social business is much rarer, particularly in developing setting up a new type of organisational model to Zipcar’s model was technology driven, with address it. The key to developing these ‘disruptive’ countries. So we attempt here to distil some common lessons from the wireless internet allowing remote access to cars innovations was a clear understanding of the successful and promising examples we have found. and enabling them to bring a new car-share failure or gap that prevented earlier progress service to market. The market need was there, and effective identification of key stakeholders or but innovation was required to provide convenient, Intermediaries and entrepreneurs are quite different This means hiring the right staff and putting ‘customers’ for the new service. A new approach flexible access to shared vehicles for users in a in nature – but both groups share three common efficient operational systems, controls and then stemmed from addressing the gaps and way that was almost as ‘hassle-free’ as owning factors which appear to underpin their ability to infrastructure (such as IT, management reporting, meeting the needs of the target customer base. their own vehicle. It was a major departure achieve scale of impact across many cities and finance, HR or communications) in place In the case of intermediaries such as EMBARQ from previous car club models and much more contribute to the mainstreaming of sustainable from the start. Without these, operating and ITDP it was critical to recognise that the market financially viable and scaleable – and for that mobility practices. across complex multiple locations becomes failure was not in providing technical solutions – reason it has now been widely replicated. extremely difficult. I A Disruptive, Entrepreneurial Approach but in the lack of institutional capacity at city level Developing country entrepreneurs such as All the most successful initiatives – both non-profit I Performance-Driven Implementation to conceive and deliver sustainable solutions. G-Auto are already demonstrating the potential of and for-profit – tackled entrenched problems that Organisations that take a disciplined approach This was an area that was not being addressed thinking differently. G-Auto’s offering delivered a had either resisted previous efforts to solve them to the delivery of measurable outcomes, and by others. Both organisations developed new service to a key part of the Indian transport or where existing solutions were giving results who demonstrate that these are delivered intermediary models to address this weakness mix that had seen little change over many years. limited to a local level. In all cases their success through the cost-effective use of investment or with city authorities as their main clients. Each has Auto rickshaws were operated by individual was derived from innovative thinkers looking donor subsidy, will stand the best chance of developed a practice of close partnership with owner-drivers with no clear incentive to make at the situation differently: identifying major achieving ongoing financial support and hence cities through which they deliver flagship projects service improvements or access to finance to market failures and creating new models to growing their impact. In addition to building and, in so doing, work hand-in-hand to develop do so. Using the co-operative model, Nirmal provide better, more efficient services to meet core skills and management capacity, the most capacity within city organisations. Kumar of G-Auto is able to deliver both social customers’ needs. effective organisations have clear incentives The US EPA applied the same entrepreneurial and environmental benefits to auto rickshaw in place to achieve performance targets, I Core Organisational Capacity thinking to create an innovative public-private drivers and also take advantage of ‘fleet scale’ and systems to track progress and enhance To achieve significant global results it is partnership for the SmartWay Transport Partnership, to introduce service improvements for their efficiency. They also understand and monitor important to set out with a clear sense of the by recognising and responding to the limitations passengers. Seeing the potential to manage auto their key risks on a regular basis and develop size of the problem and the ambition to tackle it of a more traditional regulatory approach in the rickshaws in this way has enormous potential to mitigation actions to address them. at scale. The most successful cases we reviewed sector. Regulation could only effectively target new modernise this service and retain ridership in an had invested time and money to build the vehicles in the truck fleet but would be unable existing shared transport mode. capacity needed to deliver that vision. to deal with the large amount of existing trucks

23 24 ENTREPRENEURS: ADDITIONAL FEATURES Lesson 2: Core Organisational Capacity

For entrepreneurs two additional characteristics stand out as being The organisations that had already delivered markets quickly and reduce the incremental effort important in creating and scaling new ‘disruptive’ models: significant outcomes across many regions, or to do this. This core capacity also underpins a high showed the greatest potential to do so, all set out quality experience for their users, enabling them to from the start with the intention to achieve impact attract and retain customers. Approaching Innovation from a Risk Tolerance and the at scale. For G-Auto, their ability to offer a high quality Business and Customer Perspective Patience to Make Markets It can be especially difficult in the early days to service to auto rickshaw passengers is entirely Bringing new services to a new market means that All start-up entrepreneurs have to overcome find funding and time to enhance the performance dependent on people, i.e. the drivers in the fleet a business has to sell a solution that its customers significant challenges. They need to step out and of an organisation as a whole, as opposed to collective. Their ability to attract, train and manage have little experience of. For this to be successful take risks, working persistently to remove barriers to focusing all resources on short-term initiatives their human resources is crucial to the service they the business model has do more than just work for viable growth. In a sector such as urban transport or single projects. Yet without the right blend of are offering. They have developed the capacity the entrepreneur – it has to bring the service to the there are long-standing structures and regulatory skills, management capability, financial processes to do this for their current operations – but as they customer in a way that is appealing and meets frameworks in place largely geared towards and risk controls to optimise the efficient use of target greater scale through expansion to more their needs. Considering this challenge from both the traditional models of public transit systems resources it is extremely hard to operate effectively cities it will be increasingly important to develop the perspective of the business and the customer is or private car ownership – making it particularly across a wide and diverse geography. the management team and systems to manage large numbers of drivers effectively across multiple critical to models that show success. difficult for anyone trying to innovate. The examples As Nancy Kete, the former director of EMBARQ, locations. Fit-for-purpose business systems and we have chosen not only highlight this appetite observed, “You have to use initial grant finance For Zipcar this meant offering shared car services processes will also be required to manage this for risk and necessary persistence in their early to build capacity. Only once we had a credible, that their members could book quickly and growth and to start to introduce higher grade years, but also point to a continued need for these established business model and were recognised seamlessly online and placing vehicles in locations technology offerings – like their dial-up service – qualities at all stages of expansion. in a number of key markets could we really deliver convenient to their homes that could be unlocked at scale. and driven with the touch of a card –making it For Zipcar, initial success in the US and UK was a customer value proposition“. almost as simple and convenient as owning your hard won, particularly with respect to finding Shell Foundation’s long-term unrestricted financial own vehicle. affordable, accessible insurance for their car- support to EMBARQ allowed them to establish sharing model and the right access to personal For G-Auto, it meant working for the benefit of both their ’network’ model. This meant identifying and data. Obstacles preventing widespread expansion passengers and drivers. Drivers see the benefits attracting expert staff in a number of specialist into new markets remain for both the car-sharing of insurance, savings schemes and access to fields, and developing sound governance and model espoused by Zipcar and the newer Peer-to- shared facilities such as maintenance yards for their business decision-making processes supported by Peer (P2P) models offered by companies such as rickshaws in return for providing improved service global IT, financial and management reporting Buzzcar and Whipcar. to passengers. Currently these are services such as systems. This provided a model which could dial-up reservations and metered fares but that could For G-Auto, Nirmal Kumar had to establish high easily be rolled out and localised – a foundation grow to include green vehicles in future years. quality ‘fleet services’ using drivers who previously for expansion into new markets that dramatically had little incentive to offer quality customer services increases their reach and impact. It required and who were their own bosses – in cities where patience and understanding from supporters that organised fleets are seen as a threat to drivers’ there would be a time-lag between the up-front livelihoods and thought of as wielding too much investment in capacity and the full results in terms of power for political comfort. social and environmental impact.

Having overcome these obstacles, Nirmal’s For entrepreneurs, building a strong organisational business is still forced to run as a co-operative of capacity was also core to establishing their individual owner-drivers because local regulation reputation for delivery and enabling growth. prevents actual fleet ownership of auto rickshaws. Zipcar’s expansion to 17 major metropolitan This is a barrier still to be conquered – as it was for areas, offering car-share services to over 730,000 taxi fleets in – before the full benefits of members, would not have been possible without upgraded auto rickshaw services can be realised best-in-class business processes, IT systems, superb at a larger scale. customer interfaces and customer management processes – all of which continue to form the basis Shell Foundation’s support enabled EMBARQ to provide of Zipcar’s ability to expand to new cities and a model which could be easily rolled-out and localised.

25 26 INTERMEDIARIES: ADDITIONAL FEATURES Lesson 3: Performance-Driven Implementation

Devoting scarce resources to build core capacity can pose a risk when an organisation Demonstrating a performance-driven culture and Buddy Polovick of the SmartWay Transport is establishing a new business model or testing a new market. We discovered that the financial accountability to supporters attracts Partnership at the EPA explains: “The success of the intermediaries we spoke to had developed two specific additional characteristics to further investment and gives them greater resilience public-private partnership is enhanced significantly ensure such steps translate into effective delivery. against fluctuating levels of funding or outcome through high-profile awards and recognition preferences from individual donors. Many programmes rewarding measured performance – promising initiatives never get beyond small-scale increasing the visibility of the partnership and the and into the mainstream because they are not able partners’ achievements. These efforts create even Neutrality and Credibility Taking the Global Local to demonstrate the effective application of their more incentive for ongoing improvement and drives To play the role of expert adviser and convener Transport interventions will succeed or fail financial and non-financial resources to achieving competition in the industry.” of relevant stakeholders effectively an intermediary depending on whether they take account of the verifiable development impact. For EMBARQ, which is a network of not-for-profit needs to gain the trust of all the parties involved. local context, physical conditions, cultural norms This is easy to say but very tough to achieve. centres, increasing financial support to scale up Being seen as a neutral party not beholden to any and institutional environment. For intermediaries It was clear from the examples we chose that their their operations and ensure a robust future is an one set of interests and having credibility is critical. working for scale across many regions it is continued and growing success was dependent ongoing task. It is made possible by the large- crucial not only to be able to bring technical When EMBARQ started their first Centre for on their ability to attract ongoing investment and/ scale, measurable impact they continue to create expertise and best practices but to apply them Sustainable Transport in Mexico City and began or donor funding – and this required disciplined in cities that funders value and the capacity they appropriately in the local context. This requires a work on plans for a new BRT system they were monitoring and evaluation of the right performance have built to deliver this in a cost-efficient, strong organisation set-up to hire not only staff with able to make progress on key elements – such targets, a system of incentives to achieve them targeted way. the best technical expertise but also with strong as establishing a new commercial model for BRT and robust feedback loops based on this data local knowledge – and to foster development and To do this they established and tracked robust Key operations and roles for the owners of the 350 to inform decision-making, enhance efficiency integration of both these skillsets. Performance Indicators to monitor their impact, for old microbuses which would be retired – precisely and mitigate risk. example CO emissions reduced, people served because they sat neither on the side of government In Guangzhou, China, a world-class BRT was 2 For SmartWay, which is government funded, and travel time saved. As well as monitoring the nor the private sector. recently developed with the capacity to carry the continued success and expansion of the outcomes they deliver, EMBARQ use these metrics 800,000 passengers per day. One of the For the development of the SmartWay programme, programme’s impact is strongly linked to delivering to set ambitious, yet realistic targets for future unique features of the system was its integration the EPA knew that they had strong technical value that can be monetised for their business growth. This rigour and attention to verifiable with a new bike-sharing scheme comprising credibility in environmental matters but recognised partners. The underlying model of government results have given added credibility to EMBARQ’s 5,000 bikes and 113 stations. Sustainable the need to establish a distinct identity for subsidy carries the risk of funding being reduced work and enabled them to secure long-term, multi- transport intermediary ITDP brought experience of SmartWay, separate from their other regulatory or withdrawn – but the more robust the value that year funding such as a US$30 million, five-year international best practice in bike sharing, cycling enforcement programmes. Neutrality and credibility can be realised directly by participating businesses commitment from Bloomberg Philanthropies. infrastructure and BRT systems to this project were key. SmartWay achieved this by working in through fuel savings and monetising environmental coupled with local staff and partners to create this For entrepreneurs, long-term sustainability means conjunction with the American Trucking Association improvements, the more able the programme will first of its kind project in China. achieving viability and finding suitable investors and the Business for Social Responsibility group, be to create sustainable long-term impact. to help them grow their businesses. For an representing their core constituents of freight carriers Like EMBARQ, ITDP is structured as a network To ensure this value, SmartWay made it a priority entrepreneur tackling a social and environmental and shippers. organisation with local staff based at in-country to include robust measurement tools and targets challenge such as sustainable mobility this means centres but able to share best practices and against which its partners’ performance can Both organisations have built into their working ensuring that value delivered in those areas is knowledge across its entire network. be tracked. practices ways of ensuring that the core values of balanced with a lean and cost-effective business neutrality and credibility are protected as integral SmartWay then used this measured impact model that can reach profitability – and finding to their brand and continuing success. to grow its membership base – rewarding the investors that support this blended value. successes of its members, both shippers and The examples of Zipcar and G-Auto illustrate carriers, in adopting SmartWay practices by very different stages of this journey to financial highlighting their reductions in fuel consumption independence, but both have a keen focus on and emissions (which also promote the financial financial viability as an important component benefits to other members) through an ‘excellence’ of delivering impact at scale and a strong awards programme backed by their rigorous understanding of the need for a disciplined, capture of data. cost-effective use of resources.

27 28 Since its launch in 2000, Zipcar has achieved All of these examples illustrate the importance WHAT DOES THIS MEAN FOR both substantial scale and profitability, and has of focusing early on a disciplined use of both INVESTORS AND DONORS? been the subject of a successful IPO in 2011. financial and non-financial resources. The ability Having established these three common factors ii) Providing patient support and sharing early-stage This has required persistence and patience support to demonstrate and measure financial prudence to success at scale, and accepting that none is risk with that partner are necessary to support as they grew from a start-up to a point where as well as impact helps attract the vital support easy to achieve with the limited resources of a any start-up entity or bring a new solution to they could access commercial debt and capital. needed to deliver sustainable development new endeavour, we turn our attention to a critical market. Often these solutions need to be ‘sold in’ Their data-led approach allowed them to track the outcomes at scale. follow-up question: how can investors, donors to cities or customers who have not considered profitability and viability of all their vehicles and and supporters best contribute to these key areas them before so it is vital to persist through the establish key parameters (such as utilisation rates) to increase an initiative’s chances of success and market-building phase. There will also be barriers that would drive a successful scaleable business – eventual scale-up? along the way, not just in reaching an initial level giving confidence to potential investors. of success but also at different stages of growth Support for sustainable mobility as a development such as entering new markets or developing area has historically been very limited. But this new services. is changing fast, with cities in emerging markets becoming an increasing focus for investors and the Many investors and donors will exit from a issue of urban mobility increasingly recognised as partnership once the initial ‘proof of concept’ a key development challenge. The world’s largest stages of a model are done and once the multilateral development banks, for example, interesting and ‘sexy’ work is finished. committed US$175 billion at Rio+20 to support But patient and persistent funding is required for sustainable transport in developing countries. an initiative to deliver large-scale outcomes to allow the organisation to build for the long-term. The challenge now is how to spend that money well – and how to leverage new types of support As Holger Dalkmann, Director of EMBARQ says: so that best practices can be mainstreamed in “For us, having funding partners, emphasis on cities across the developing world. ‘partner,’ has been catalytic. It has enabled us to advance sustainable mobility solutions that With this in mind, we have drawn three improve the quality of life in cities. Those funders considerations from our research that may be who spend the time to work with us and get to relevant to investors and donors who seek to know our issues and opportunities provide the catalyse large-scale sustainable mobility outcomes best advice and the right skills and resources through intermediaries and entrepreneurs: at the right time – and that has resulted in i) It may sound obvious but choice of partner improved performance.” really is critical to achieve the biggest impact for your investment. Identifying a partner who shares the same vision for scale from the outset, who has the ability to spot underlying market The world’s largest failures and opportunities, and who has (or multilateral development can develop) the leadership competencies necessary to build an international organisation, banks committed significantly increases the chances of achieving US$175 billion at Rio+20 to impact at a global level. support sustainable transport in developing countries.

Fleet auto rickshaw services are a promising model for providing last-mile connectivity in cities.

29 30 iii) Innovators and pioneers require significant non-financial support such as business advice, EMBARQ has been instrumental in the development of networks and governance support to integrate a Metrobus, which now moves 690,000 passengers per day disciplined approach to performance evaluation in Mexico City. and accountability into their organisation as they grow – based on tracking measurable progress of both development outcomes and cost-efficiency and using these measures to help guide future plans.

Buddy Polovick recognises the value not only in demonstrating benefits to partners at the outset of the programme but also in the partners’ role in helping EPA understand key drivers through aspects of the model that they most valued: “We learned early on from our Charter Partners that we needed to identify freight sustainability solutions and demonstrate that they get at the bottom line. Companies needed to understand the win/win value proposition of fuel and cost savings, in addition to the quantifiable environmental benefits.

For us, having funding partners, emphasis on ‘partner,’ has been catalytic. It has enabled us to advance sustainable mobility solutions that improve the quality of life in cities.

Holger Dalkmann, Director of EMBARQ

31 32 THE CHALLENGE REMAINS

First we recognise that during the 10 years we New modes and technologies such as car-sharing, have been working in the area of sustainable ,15 electric cars and bicycles LOOKING FORWARD… mobility the challenge of moving people and are springing up in other parts of the world. goods has become much bigger and more Smart card systems and IT options are providing ? pressing. We are very much in at the start of users with transit information at their fingertips WHAT COMES NEXT addressing the problem. (or mobiles) and allowing them to make smarter 04 choices, saving time and money. But these types Developing countries alone are expected to build of promising new models need to be widely more new city areas during the two decades implemented – and fast. Waiting decades, such as leading up to 2030 than all of humanity has built the 40 years it took before BRT systems became a throughout history13. China and India, leading the mainstream solution – will risk missing the potential trend, are expected to add at least 600 million to benefit billions, not millions, of people. In the course of this report we have examined some of the major challenges new urban residents by 2030,14 more than the to delivering impact at scale in the sustainable mobility sector, identified current populations of the US and Brazil. And The world is on the cusp of explosive urban some rare examples of innovation with the potential to go to scale and the number of cities with populations of over growth. In just a few years time hundreds of 10 million, known as megacities, is expected millions of people will be living in cities that have considered different types of investment and support that are needed to to jump from 23 today to 37 by 2025. yet to be built – and large new sectors will be annexed to existing cities. Urbanisation rates catalyse and replicate further solutions. As city sizes grow, the challenge of congestion and vehicle ownership in countries such as India and the distance that people need to travel To complete this review, we now consider how these solutions might come and China are still significantly lower than the grows with them. The problem of providing larger developed world. There is still time to shift away together over the next decade. concentrated populations with the goods they from the ills of low-density sprawl and high private need from an increasingly global resource base vehicle ownership by designing more sustainable increases, and the combination of decentralisation urban patterns and mobility systems from scratch. of vital services and low-density sprawl at city limits make accessible mobility solutions more Taking this opportunity will require a wide difficult to provide. range of stakeholders thinking, behaving and acting differently. We will need to build the right These trends will present different challenges institutional capacity and new models for delivery, for existing yet growing cities and megacities to set urban plans and incorporate transport compared to new cities and satellite towns facing systems that will lead to better land use and low- explosive growth rates. carbon intensity and sustainable mobility in these Existing cities, particularly those in emerging new city areas. economies will continue to struggle to provide high quality mass transit and accommodate burgeoning numbers of cars, bikes and pedestrians on their streets unless new approaches are found. Their challenge will be exacerbated by rapid geographic expansion and new migrant populations.

13 Eco2 Cities: Ecological Cities as Economic Cities. The World Bank, 2010. Accessed March 30, 2011 14 Richard Dobbs. “Megacities”. Foreign Policy. Sept/Oct 2010. Last accessed January 2, 2011 at http://www.foreignpolicy.com/ articles/2010/08/16/prime_numbers_megacities?page=full 15 Personal Rapid Transit is a mode of transport that involves small automated vehicles (pods) operating on a network of purpose-built guide ways. Its applications to-date have mainly been in confined areas such as university campuses, industrial parks or complexes.

33 34 INTEGRATED SOLUTIONS WIDER COLLABORATION practitioners, investors and experts from around the AND NEXT STEPS world to discuss how we can achieve far greater Clearly we need a step-change in the scale at trip for the user. The next generation of urban impact in the next decade. which we deliver sustainable mobility outcomes. transportation is about connecting transportation Shell Foundation’s review suggests that both We stand a better chance if these solutions are modes, services, technologies and infrastructures, intermediaries and entrepreneurs will be important The aim will be to challenge the conclusions of this well-integrated within individual cities to maximise bringing diverse innovators together in ways that actors in delivering substantial impact in the area report, solicit the views and opinions of others and their collective impact. For example, the benefits work significantly better for people, economies, of sustainable mobility. Key characteristics of establish its validity. We will then share these wider of a car-sharing scheme will be much greater if it and the planet.” organisations most likely to succeed in achieving contributions as part of the final study. provides good integration to mass transit options large scale impact are: Which leads us to arguably the most important in a city. This means that existing and emerging questions of this report: I actors will need to forge deeper alliances and entrepreneurial, disruptive approaches to existing challenges; interact with each other in new ways. How can we identify the right By learning from each other integrators and innovators? I core institutional capacity to deliver impact; and “Recognising that no single solution will save the – and establishing practical I day for transportation in this rapidly urbanising Which organisations new and old disciplined performance-driven implementation. connections – we hope to and increasingly complex world, a panoply can support them in overcoming the For the best chances of success, these organisations identify ways to dramatically of sustainable transportation solutions is arising obstacles ahead and help them deliver will benefit from patient, long-term support from worldwide,” says Sue Zielinski from SMART. on a global scale? investors and donors willing to take risks with them, accelerate the time needed willing to invest in building organisational capacity “However, these innovations are rarely linked and How can these organisations work for scaleable interventions and able to provide business advice and support as optimised in ways that can provide a convenient, together to best leverage their well as financial resources. to move from an idea to practical, affordable and sustainable door-to-door resources... ? The resulting new sustainable mobility services will mainstream practice. need to be integrated with each other and into the existing fabric of the cities where they are deployed. This will require the different actors involved to form alliances and relationships in new ways: donors and development banks will need to work with the THREE FOCUS AREAS new intermediaries and innovators but also with city In addition to seeing how these broad authorities; private, public and concessional finance lessons resonate with our colleagues in will need to work with each other and service the field, we will also seek insight and provision may come from a host of players, not just the traditional operators but new platforms such as opinion on three of the high-potential the peer-to-peer sharing companies or IT providers. areas of innovation we have identified in this report – to see how others view the But this is just our analysis. challenges that pioneers in these markets We view this report as a work in progress. Rather face and to identify specific paths that than simply disseminating it and moving on, we will they might take to overcome them and now test these findings with sustainable mobility achieve scale...

Can car-sharing services be replicated successfully in emerging economies?

35 36 Shaping the City for Sustainable Mobility – Shared Transport Services Transit Oriented Urban Development Shared transport services play a key role as part of the mobility mix in cities. They provide last-mile KEY QUESTIONS: Key mobility indicators such as ‘distance travelled’ connectivity and ensure people can reach public or the number of journeys accessible by walking, KEY QUESTIONS: transport hubs and make door-to-door journeys What future models will preserve or cycling and mass transit in a city are most without the need for individual private vehicles. increase the use of shared transport fundamentally influenced by urban planning, both What will it take to mainstream But in developing countries, traditional shared modes in developing cities whilst offering a at a city and neighbourhood level. The location of Transit-Oriented Development such as auto rickshaw and para-transit services high-quality, modern service? businesses, residential areas and critical services practices in emerging economies? are increasingly perceived as polluting unsafe and What will it take to modernise and lays the template for people’s mobility needs. undesirable, threatening their ridership. Which actors and models will drive improve existing shared services to Designing streets to prioritise non-motorised and this change? achieve this goal? mass transit journeys over private vehicles facilitates sustainable mobility. Planning a city’s growth by Could new models such car-sharing concentrating urban development around high and bike–sharing services that are capacity transit corridors can prevent the sprawl reaching a significant scale in the that leads to high private vehicle use. developed world be replicated successfully in emerging economies? At the intersection of transport and urban planning, these ‘transit-oriented development’ practices will play a crucial role in keeping future cities moving – minimising their environmental footprint and creating liveable neighbourhoods. Yet uptake of these practices is still in its infancy in developing country cities.

37 38 Moving Goods – Green Freight and Logistics NOTES

The movement of goods by road, air, rail and sea is a growing global business and a major source of KEY QUESTIONS: both pollution and GHGs. Cargo owners are under increasing pressure from customers and investors to What interventions are needed to address their carbon footprint. Yet to-date the uptake mainstream emissions reduction of even simple and available technologies and measures in the freight industry? strategies to address this has been limited. How can these be aligned with the needs and incentives of businesses supply chains to create the greatest chance for impact at scale?

39 40 NOTES

ABOUT SHELL FOUNDATION

Shell Foundation is an independent charitable foundation that was established by the Shell Group in 2000 to catalyse scaleable and sustainable solutions to global development challenges. We apply business thinking to a range of social and environmental issues linked to the energy industry – seeking to harness links to Shell where possible to deliver greater development impact.

Over the last 12 years we have developed an ‘enterprise-based’ approach to: identify the market failures that prevent products and services that can support sustainable development from reaching the poor; co-create new business models with long-term ‘social enterprise’ partners to service these markets; and to provide extensive business development support to help these partners develop the skills, capacity and incentives to operate at scale and achieve financial independence.

By applying this approach to major global challenges such as job creation through small and medium enterprises, access to modern energy, urban mobility, cleaner cooking solutions and sustainable supply chains – and by learning from both success and failure – Shell Foundation have created several strategic partners that are now delivering large-scale impact in multiple countries across Africa, Asia and Latin America.

www.shellfoundation.org

41 42