While all Performance Standards are applicable to this investment, IFCs environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
In this Project, potential adverse E&S impacts may arise at the level of the Suppliers. While all IFC Performance Standards are applicable to this investment, IFC’s due diligence has focused on Homex’s systems for management of E&S performance of their Suppliers; therefore the investment will have impacts which must be managed in a manner consistent with the Performance Standard 1.

Suppliers under this transaction provide a variety of services and goods to Homex including construction materials such as tiles, plumbing, lighting and water fixtures, concrete, windows, appliances, etc and specialized construction labor force (e.g. electrician services, finishing services, etc). Most of the suppliers are small Mexican enterprises.

The potential risks, where encountered, are both manageable and site specific. This is therefore considered to be an E&S Category B project.

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives. The most common E&S risks associated with these suppliers include labor management and working conditions, in particular occupational health and safety

Homex has in place a policy for the selection and assessment of suppliers, which is well documented through internal procedures. One of the core documents of the company is its ethics code which provides guidance on the policies regarding different stakeholders, including the suppliers. The company has an internal process for the selection of suppliers. Materials and the suppliers undergo an accreditation process and the sub-contractors are pre-selected and included in a database.

Homex considers the selection of the materials a fundamental part of the projects’ development, and has a well defined mechanism to select and authorize the use of approved materials. The specification of the concrete, lighting fixtures, water fixtures, appliances and other goods is subject to review and approval by the company. Homex defines the quality and environmental specifications and performance goals to be met by the products. In addition, Homex through the assessment of suppliers considers the environmental aspects of the company producing the goods; for example, Homex considers the existence of management systems, efficient use of resources and management of waste in its Suppliers. Homex has in place guidelines to assess sustainability and environmental performance of the suppliers, which is initiated through a questionnaire. At present the assessment is used as a tool to encourage the suppliers to incorporate environmental and sustainable practices in the operations. Requirements regarding quality are stricter and it is expected that the supplier achieved at least 85% of positive responses to be selected as a Homex supplier. As part of the engagement with IFC, Homex will enhance the E&S screening of the suppliers to incorporate criteria aligned with IFC’s performance standards. The company has positive relations with the suppliers and performs visits and reviews, such information will be documented and E&S criteria considered in future visits to the suppliers.

Homex requires sub-contractors to follow the local law (Ley Federal del Trabajo) in relation to labor and working conditions. Homex has a department in charge of bidding processes and contracts, this unit screens potential suppliers and preselect those that qualify as acceptable suppliers, based on quality, capacity and alignment with Homex policies. In the pre-selection process the company confirms that the company is legally registered in Mexico and that the company is affiliated to the workers compensation systems (covering occupational safety aspects). The contractual agreements have explicit requirements to contribute with the legal fees to the Mexican social security system (Instituto Mexicano del Seguro Social) and other institutions (e.g. Fondo Nacional para la Vivienda) as defined by national law. These controls ensure that all workers are registered in the social security system, therefore that the sub-contractors’ employees are in compliance with minimum age of employment, have formal contracts and are paid according to Mexican law. Homex will review the contracts to ensure that clauses are aligned with IFC’s performance standards 2 requirements, including provisions for worker’s organizations.

Specific requirements designed to protect the health and promote safety of contract and sub-contract workers employed on housing construction are included in the contractual arrangements Homex has with its contractors. A detailed set of safety rules are integral part of the contracts and are enforced on site through the project manager.

Homex track greenhouse gas (GHG) emissions from its housing projects, considering the materials used and therefore selecting suppliers that provide materials that facilitate a reduction on the GHG emissions. A monitoring system is in place to estimate GHG emissions.

Homex has actively participated in initiatives to support sustainability and overall corporate social responsibility among its suppliers. Homex participated in a project led by Universidad Anáhuac and supported by the Inter-American Development Bank, to help SMEs in their respective supply chains to implement corporate social responsibility (CSR) measures, thereby increasing small business competitiveness and sustainability. In addition Homex is active member of “AccionaRSE” an association of companies aiming to promote corporate social responsibility among small companies in Sinaloa. The small companies being environmental and socially responsible have greater chances to become suppliers of key companies in the region, including Homex.

Homex releases annually a sustainability report and has adhered to the UN Global Compact initiative to implement principles related to human rights, labor, environment and anti-corruption practices in its operations. Homex has been recognized as a socially responsible Company by the Centro Mexicano para la Filantropía (CEMEFI). In addition the company is aligned with the proposed policies of PROFEPA (Procuraduría Federal de Protección al Ambiente) and its interest to promote environmental performance in small enterprises to enhance competitiveness.

Homex has agreed to expand its existing assessment of suppliers in order to monitor additional labor and social criteria aligned with the Performance Standards and to screen for activities defined in IFC’s Exclusion List. Additional elements to be considered might include possible E&S related court cases or fines imposed on suppliers, suppliers’ management of community relations including E&S complaints; and possible history of significant adverse E&S events such as fires, explosions, fatalities, large scale spills, etc. In addition the company will consider a specific approach to sub-contractors or suppliers of services to confirm full compliance with the requirements of IFC’s Performance Standard 2 “Labor and working conditions.”

Homex will document the “sustainability” score achieved by the suppliers and this score will be calibrated to distinguish those suppliers in material compliance with Performance Standards from those that are not. Only suppliers in material compliance with Performance Standards will be part of the IFC’s finance program.

Homex will update the internal procedure for the selection of suppliers to document the sustainability and environmental assessment and to establish the periodicity to update the information of the suppliers and undertake follow up measures when suppliers are not in compliance. Homex will update the clauses in the sub-contractors agreements to reflect compliance with IFC’s Performance Standards. As needed, corrective action or actions plans to improve supplier E&S performance will be agreed between Homex and the supplier. It is expected that through implementation of these action plans supplier will improve E&S performance, to an extent that will be reflected in the score, such that the supplier will be able to access the finance program.

Following the implementation of the Suppliers rating procedure, Homex will review the effectiveness of the program and will enhance it as appropriate in coordination with IFC.

In addition to the corporate social responsibility initiatives described before, Homex have a variety of social programs to strength social values among residents of the projects developed. It includes providing communal spaces, training on vocational activities, formal education and integration activities for the residents. In addition employees are invited to participate in voluntary activities.

At the supplier level the management of external communications will be considered within the assessment of suppliers performed by Homex.

This ESRS will be disclosed locally at Homex’s offices in Mexico and at Prime Revenue offices in Mexico:

Desarrolladora Homex, S.A.B. de C.V.
Blvd. Alfonso Zaragoza Maytorena 2204, Fracc. Bonanza
C.P. 80020 Culiacán, Sinaloa, México

E Factor Network, S.A. de C.V.
Mol de Valle
Calzada del Valle 400 Local 60
Colonia del Valle, San Pedro Garza Garcia
N.L., Mexico CP 66220

Broad Community Support is not applicable for this project