Cities around to world compete furiously to attract high-profile cutting-edge corporations. When cities place a high value on sustainability they are particularly interested in attracting companies that produce products and services that are essential to a sustainable future. Companies like that can be picky about where they land.
In 2014 the sustainable products and services division of Panasonic Corporation landed in Denver, Colorado. It remains there to this day. The story of how this match occurred and why it continues to succeed can provide a template for what sustainability-oriented cities need to do to attract businesses that reflect their aspirations, and what sustainability-oriented companies need to do to find the perfect home.
While traditionally known as a consumer electronics giant, making TV’s, refrigerators and cameras, who has been around 100 years (previously as Matsushita), today’s Panasonic has become a coveted B2B partner supplying expertise, services and advanced technology to globally leading companies. The $70B+ global behemoth employs a quarter of a million people around the world, but what may not be known is the company still retains its founder’s vision rooted in sustainability and looking out for its people and the environment around them.
Well-deserved recognition for Panasonic’s reputation as one of the most environmentally conscious companies in the world has come in many forms including:
- For the twelfth consecutive year, Panasonic Corporation was named in 2016 to the Dow Jones Sustainability Indices (DJSI World), one of the world’s most renowned socially responsible investment (SRI) indexes.
- Panasonic Corporation has been listed for eighteen consecutive years in the FTSE4Good Index, one of the world’s leading socially responsible investment (SRI) indices.
- Panasonic Corporation has been a constituent of the MSCI ESG Leaders Indexes (formerly MSCI Global Sustainability Indexes), one of the world’s leading indexes for enterprises focusing on environmental, social and governance factors, for eight consecutive years.
- The company has been also named to the MSCI SRI Indexes (formerly MSCI Global SRI Indexes) for six consecutive years.
- Panasonic was awarded the Bronze Class distinction in the Sustainability Yearbook 2017 by RobecoSAM, one of the most highly recognized asset management companies focused on sustainability investments.
A perfect example of what such sustainability leadership can produce can be found in Fujisawa, Japan. In 2007 this wonderful seaside community, thirty miles south of Tokyo, was home to a recently defunct Panasonic refrigeration factory. In typical Japanese fashion, turning a negative into a positive was the only option. The factory site was scraped clean and corporate leadership was tasked with leveraging multiple divisional capabilities to produce a community-of-the future at a single build site, across forty-seven acres, and with the aspirational goal of creating the most sustainable and resilient town in the world.
In order to achieve such lofty goals, it became immediately apparent that our approach had to be comprehensively different. Panasonic, having hundreds of factories across the globe, was no stranger to a traditional build plan. We were also conversant in environmental building standards throughout the world. But Fujisawa as conceived presented an entirely different objective. It was not simply a single building, nor a small community of “eco-friendly” houses. No, it needed to become nearly fifty acres of the most advanced sustainability and resiliency objectives ever conceived.
As we began the difficult work of internal coordination, a more imminent challenge surfaced, aligning external stakeholders. Major utilities, finance companies, and real estate developers typically work at arm’s length, passing contracts and documents back and forth but not really working together. The challenge was in getting these key stakeholders, who would ultimately make Fujisawa a success, (including the Tokyo Gas, Tokyo Electric Power Company, Sumi Trust, Mitsui Fudosan Group, NTT East, Gakken, and of course, Fujisawa City) to come to the table and work as one team with the single combined goal of developing the world’s most sustainable and resilient smart town.
Those who have not been employed by Panasonic, and in particular, have not traveled to Japan as a Panasonic employee, would find it difficult to describe the level of impact this company has on the island nation. K?nosuke Matsushita, the founder of Panasonic, was Steve Jobs and Elon Musk combined. Mr. Matsushita not only built the most significant company in Japan, but was a prolific inventor personally holding more than 100 patents. He authored the modern autonomous management system called the “Divisional System” in 1933 at the age of 38, allowing large companies to be successful at scale by educating, then relying upon management rather than a single decision-maker. Mr. Matsushita had extraordinary vision beyond the times, insisting, religiously, that Panasonic be an ecologically minded, environmentally conscious, and human-centric company, as early as 1922. His achievement and connections made it easier to align stakeholders behind a project like Fujisawa in Japan than anywhere else in the world.
Back to 2007–Panasonic and Fujisawa City began to formulate a partnership and by 2010 had aligned the key stakeholders, internal and external, and begun the process of building the most sustainable and resilient town in the world. The silent achievement was the clarity of each critical stakeholder, not merely participating, but rather fully engaging and focusing on their specific task within the ecosystem.
Consortium-based thinking often results in more chaos than clarity, more positioning than execution, and in the end, more “business as usual” than transformational progress. The beauty of what was designed and executed by Panasonic at Fujisawa was that each of the stakeholders had perfect clarity of vision and purpose, perfect understanding of their role, and complete trust that Panasonic would deliver on the collective dream. This trust was, without doubt, resting on the legacy of Mr. Matsushita.
In 2014, Fujisawa SST TM (Smart Sustainable Town) opened, with 400 families moving in over the first two years. The results were staggering with a 70% reduction of Co2, a 30% reduction in water usage, 30% energy returned to the grid, and a 25% home value increase juxtaposed to the house across the street. A collective use of solar, battery storage/micro-grid technology, build angles allowing every house took advantage of ocean breezes; the streets were lined with advanced LED lighting, smart street lights that brighten and dim automatically. Residents have access to multi-modal solutions including mass transit, ride share, car on-demand services, and dedicated bicycle lanes – these all come together in a single residential community.
In the typical Fujisawa home, there is real time access to all energy and utility use via a dedicated channel allowing the homeowner immediate feedback on energy use, water consumption, solar efficiency and battery storage levels, as well as a real time summary of the community as a whole. In the US, our energy and water bills are sent after usage, thus disallowing any action in real time to increase conservation. In Fujisawa SSTTM, having access to real time energy and utility information “nudges” residents in the right direction. The results are transformative.
Fujisawa SSTTM also delivers on resiliency. In the event of a disaster, the community can be self-contained for five days. Energy, water, food, and communication are on reserve, so they can be available to everyone. By 2019, Fujisawa SSTTM will achieve its goal to be resilient for seven days in the face of an earthquake, tsunami, or any other event that would otherwise render the community helpless and exposed.
So how did the Fujisawa experience in Japan lead Panasonic to Denver?
The massive success of Fujisawa SSTTM facilitated more Panasonic-led communities including, Tsunashima SSTTM, and Shioashiya SSTTM, each yielding the same sustainability and resiliency results, and being recognized globally as embodying thought and implementation leadership in the (now) Panasonic trademarked “Smart Sustainable TownTM” space known as Smart Cities. In late 2014, Panasonic began considering how to leverage and scale this model globally. Selecting an international HQ for our Smart City division was the decision, for we only had one chance to get this right. If we failed to make an impact in the first city where we would put a Smart Sustainable Town outside of Japan, our new headquarters would essentially close the business before we had a business.
Relying upon all that was learned since 2007 from an execution perspective would not be enough. Clearly, we would be able to take advantage of our internal divisional expertise and bring in the expansive network of partnerships to a development, but what truly allowed the success of SSTTM? The answer was clear: The stakeholders, more specifically, our process of aligning stakeholders. Our selection of a headquarters city would be predicated on the ability to bring together and align stakeholders, not money or tax incentives.
We traveled to more than twenty US cities (that shall forever remain nameless), but Denver, and Denver alone, resonated. Under the leadership of Colorado Governor John Hickenlooper and Mayor Michael B. Hancock, Denver simply offered what other cities didn’t even discuss – a cross-political environment, and a strong leadership group that collectively understood the value of collaboration, and a shared vision. Moreover, it was clear that Denver had a laser focus on executing projects that had a direct and positive impact on the citizens of Colorado. Its leadership also recognized the unique challenges Denver and Colorado were facing. At the time, Denver was the fastest growing city in the US. As such it was contending with congestion, traffic, affordable housing, access to transit, equity, and the very many pains that growth inevitably brings.
We quickly identified why Denver was so desirable. Aside from the obvious draws – nature, the mountains, an outdoor lifestyle, and an ever-evolving business community – Denver International Airport (DEN) was the fifth busiest in the US, having multiple non-stops to critical global locations, including to Tokyo-Narita. DEN’s CEO, Kim Day, was remarkably succinct in her vision for DEN. She wanted it to be the most innovative, intelligent, and travel-friendly airport in the world. It would connect both coasts, provide multiple non-stops around the world, and become a showcase for enjoying not only traveling, but the airport itself.
The local transit agency, RTD, had invested $1B in the A-Line, a train running from Union Station in the heart of downtown Denver to the airport. Fortuitously, we were looking at a 386 acre build site for our HQ at Peña Station, the last stop on the A-Line before the airport. The land was owned by the Fullenwider, Smith Family Trust. The Trust and DEN provided a forward-thinking mixture of partners who were united on the Mayor’s vision of an “Aerotropolis.” More than 75% of Panasonic’s North American employees at our headquarters in Newark, NJ used mass transit to get to and from work. Despite the fact that folks west of the Mississippi River are less inclined to use mass transit, we aspired to create a true Transit Oriented Development (TOD) headquarters. Our project, which we call Peña Station NEXT, would provide a truly unique opportunity to offer readily available mass transit to our employees, one stop from a world-class airport, and five stops from downtown Denver. In a word, magic.
To realize our vision, we needed a strong electric utility partner. Denver’s investor-owned utility, Xcel Energy, although headquartered in Minneapolis, has its largest install base in Colorado, and is the US leader in utilizing wind technology. In our initial meetings with David Eves, then President of Xcel’s Colorado region, it was clear they had invested meaningfully in being sustainability leaders, would continue to reinvest in modernizing their grid, and were committed at the highest level to implement solar and wind at scale. Additionally, Xcel was highly interested in exploring battery storage and micro-grid technology, solar gardens, and other emerging solutions to give Coloradan’s both clean energy and industry-leading innovation. Given our success in utilizing solar and battery storage at our SST’sTM, Xcel represented, once more, how very unique Colorado would be in providing what we needed to realize our vision.
In addition to a strong utility partner, Panasonic needed a strong mobility partner. The staff at the Colorado Department of Transportation (CDOT), led by Shailen Bhatt at the time, were proven innovators. Faced with the challenge of tremendous growth, stressed roadways, and a limited budget, CDOT’s leadership thought outside the conventional “building our way to reduce traffic” mode. That antiquated approach to managing roadways had long ago been debunked, but CDOT was among the very few DOT’s leading the way through innovative technology, exploring all available solutions to address the challenges facing Colorado’s roads. With Panasonic’s deep roots in automotive and roadway operations, this was a promising partnership worth exploring.
Adding to CDOT’s vision of a connected highway, Mayor Hancock outlined his own Mobility Action Plan for Denver. With the inclusion of dedicated bike lanes, equitable access to mass transit, simplified payment platforms for ease of travel throughout the city, and most importantly, the very same shared vision CDOT and RTD espoused, Denver would be open for business, keen for innovation, and poised to take action.
The Mayor’s team was an impressive group of leaders who (again) shared the Governor’s and Mayor’s notion that Colorado should remain politically agnostic when advancing innovation and progress that positively affect their constituents. Having traveled to many cities on our quest, our group could attest first hand that this was truly unique. Another unique feature in Denver was its annual “Sustainable Denver Summit”, described elsewhere in this issue, where regional engagements and partnerships come together to pledge specific sustainability commitments and initiatives. As such, it is among the most impressive collaborative efforts that illustrate the unique stakeholder alignment Denver enjoys.
All of the above factors, and many more I’m unable to fit into this article, made Denver the only choice for Panasonic. In June 2015, Mayor Hancock outlined a Proclamation naming Panasonic as an official “Technology Partner” of Denver. The Proclamation included specific mention of what Panasonic calls its “CityNOW Pillars”: Energy/Utilities, Smart Mobility, City Services/Security, Built Environment, and Health/Well Being. Through our stakeholder alignment process (Pillar Process), co-chairs were assigned to each Pillar, and began work to implement projects and pilots of significance. Moreover, Peña Station NEXT was to be used as a place where we, the City and other partners could test and vet potential solutions to municipal sustainability challenges before implementing them elsewhere in Denver. This innovative P3 (Public-Private Partnership) model has allowed for transformative activity to occur with great alacrity.
Since the proclamation, the coalition of stakeholders has methodically implemented project after project starting with the first microgrid in Colorado history approved by the PUC (Public Utility Commission). The project consists of a 1MW/2MWh battery, an islanding switch, and 260kW PV on Panasonic’s rooftop. It works in conjunction with a 1.6MW solar carport which isn’t technically part of the microgrid as it is in ‘front of the meter’ yet contributes to making the development net carbon neutral. This particular project is worth explaining as it is the epitome of the success that stakeholder alignment unleashes.
The stakeholders in this project included Xcel, CCD, DEN, L.C. Fulenwider and Panasonic who all came to the table to make tradeoffs to do what was best for the development. The airport brought the land and steel structure it had already allocated for a covered parking lot. Xcel purchased the battery and the solar PV on top of the airport’s steel structure. And Panasonic brought its expertise in operation and maintenance as well as some of its own solar panels for the Panasonic roof array. Everyone brought their balance sheets which enabled flexibility in coming to final design approval. By having everyone aligned, the project of 15 separate contracts completed in 17 months. In the end, the airport now runs a parking lot with much desired covered spaces, Panasonic has reliable backup power with the ability to operate off-grid indefinitely when required, and Xcel can experiment with multiple value streams such as PV smoothing, energy arbitrage, peak demand reduction and voltage regulation. The work done and lessons learned on this project will greatly reduce costs on future microgrid deployment, make it easy to connect additional buildings to this microgrid and enable the possibility of having the entire community powered in a similar fashion.
Another note-worthy project we are just wrapping up is the Carbon Neutral District Energy Plan1 that creates a cost-effective integrated plan to achieve carbon neutrality across all 100 buildings in the development. Yet another partner was brought in, this time for their specialized expertise and access to lots of computing power. The National Renewable Energy Lab (NREL) was selected to team with Xcel and integrate a 3D utility distribution model with a 3D commercial building energy efficiency model in order to make tradeoffs in the energy plan and achieve maximum energy savings while considering price inflection points and numerous built-environment options such as insulation thickness, window glazing options, and solar penetration/density.2 From a business perspective, the tool will give utilities like Xcel the data to file a ‘resiliency tariff’ so they can invest in PV, storage and other distributed assets and receive a guaranteed return on the CAPX investment. The vertical developers / tenants will pay a very small OPEX premium in exchange for greater resiliency and lower CAPX. And from a livability perspective, new residents will get the comfort and conveniences of a modern neighborhood while knowing they are not impacting the climate for future generations.
The same stakeholder-engaged pillar process was repeated across a multitude of traditional master planning projects producing many more advanced solutions such as smart, connected and safe street lights, electric vehicle charging, smart building controls, and local transit guidelines. The result is an infrastructure built to serve the future tenants in ways not imagined before and with greater sustainability and resiliency than parallel projects designed elsewhere.
The success of the Peña Station NEXT coalition has allowed Panasonic to expand beyond the local development. The visibility of the local success has resulted in the award of a 5 year state-wide deployment of Connected Vehicle Technology that is the first of its kind in the country. It was announced December 4th, 2017 on Connected and Autonomous Day almost four years since the original meeting with Governor Hickenlooper and Mayor Hancock, showing further evidence of the true value and meaning of long-term partnerships. That deployment is closely being followed by another project being carried out with EasyMile North American in the first deployment of autonomous shuttles connecting a bus stop to train stop on a city street. This first/last mile connection to transit rolling out December 13, 2018 will benefit Peña Station NEXT near term but eventually enable this same level of service at transit hubs around the world.
As the successes only continue to multiply, you might expect a company to revel in its recent success or boast about what it has done. Nothing could be further from the truth as Panasonic seeks additional partners amongst the next set of cities, utilities and real estate developers who want to bring their citizens and customers the efficiencies, quality of life, and long term value of a sustainable and resilient neighborhood. We could not have achieved what we have without the cooperative environment and open and honest conversations we can have with our city and our partners. Cities wishing to attract progressive companies and retain existing ones can help themselves by creating a welcoming and cooperative environment themselves and providing an apolitical environment, strong leadership that collectively understands the value of collaboration, and a shared vision for how new businesses will contribute and participate. Progressive, sustainably-minded companies looking to maximize success and accelerate initial engagement in the local community when relocating may do well to look a little deeper into the culture and leadership principles of both the local city government and key business and real estate partners. Identifying unique teams like those in Denver helps give an added advantage and streamlines the ramping process for success in the new market.
1. National Renewable Energy Laboratory (NREL). Developing a zero-energy, transit oriented campus in Denver, Colorado [online] (2018) https://www.nrel.gov/docs/fy17osti/68998.pdf
2. Pless, Shanti and Polly, Ben. Communities of the Future: Accelerating Zero Energy District Master Planning [Online] (2018)