Vinte Viviendas Integrales, S.A. de C.V.

Environmental & Social Review Summary

This Environmental and Social Review Summary is prepared and distributed in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental and Social Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.

Project number	26292
Country	Mexico
Sector	Construction and Real Estate
Department	Global Manufacturing & Services
Company name	Vinte Viviendas Integrales, S.A. de C.V.
Environmental category	B
Status	Active

Date ESRS disclosed	October 26, 2007

Previous Events	Invested: February 20, 2008 Signed: December 14, 2007 Approved: December 7, 2007

View Summary of Proposed Investment (SPI), click here

Overview

Category & Applicable Standards

Key Issues & Mitigation

Community Engagements

Client's Documentation

Overview of IFC's scope of review

IFC provided an environmental and social information questionnaire which was duly completed and submitted by the company. On the basis of the completed questionnaire IFC staff traveled to Mexico to visit three housing states in the vicinity of Tecamac in the State of México, interviewed company executives and review supplemental environmental and social information. The information thus gathered was reviewed vis-à-vis IFC’s policy and performance standards, as well as general environmental, health and safety guidelines.

Project description

Vinte Viviendas Integrales (Vinte or the company) is a mid-sized vertically integrated housing developer that targets the medium and low income segments of the population within the Metropolitan area of Mexico City, the area with the largest population density and housing demand in the country.

The company has approached IFC for assistance in providing a $15 million equivalent Mexican peso revolving facility (the IFC Revolving Loan) to finance its working capital requirements for the construction of low income housing developments in Mexico City and other growing cities such as Pachuca, Playa del Carmen, Monterrey, Guadalajara and Queretaro.

Key environmental and social issues and mitigation

The proposed IFC investment will provide working capital financing to a housing construction company currently engaged in housing developments in the Metropolitan area of Mexico City. To be in compliance with IFC’s environmental and social standards, the company will be required to adapt its current environmental policy to IFC’s Policy and Performance Standards (PPS) on Social and Environmental Sustainability. Furthermore, the company shall design all its future projects to meet IFC’s PPS and applicable guidelines.

The paragraphs which follow describe how the company will mitigate potential environmental and social risk in compliance with PPS and local requirements.

- PS1: Social and Environmental Assessment and Management Systems:

- With respect to the company’s management of its environmental, social and health and safety performance during design, development construction, operation and maintenance of their housing developments, the company follows Interplan’s standards, (Interplan is a subsidiary of Vinte) which are consistent with generally accepted good practice, and has received the government’s “Mexican Housing Award”. However, the company is aware that they need to implement a more comprehensive Environmental and Social Management System as required by IFC, and have agreed to do so.
- The social and environmental assessment of the impacts of new projects, were analyzed by means of a full EIA as required by Mexican law.
- Vinte complies with environmental and social requirements stemming from the EIA, as well as other national and local permitting requirements; and
- The company representatives participate in the development of the local housing development plans and systematically engages with local communities regarding environmental, health and safety performance, and any corporate social responsibility efforts as appropriate. Vinte has agreed to upgrade its social and environmental assessment and management structure in through a series of actions documented in the attached Environmental and Social Action Plan.

- PS2: Labor and Working Conditions:

- The company complies with Mexican and IFC requirements with regard to fair, safe and healthy working conditions in construction and maintenance of their operations.
- The company has an equal opportunity policy, favoring local workers and a gender-wise balanced workforce.
- Vinte currently employs 1,752 staff plus a number of subcontracted workers.
- With regard to Vinte’s own staff, the number of accidents over the past 12 months has diminished significantly from the previous year. However, the company has committed to develop and implement procedures to ensure the health and safety of its own and subcontracted workers, and to a continual improvement consistent with OHSAS 18001 standards.

- PS3: Pollution Prevention and Abatement:

- The company is compliant with applicable IFC requirements with regard to control of dust and noise arising from construction activities, erosion and sediment control; as well as the safe storage, handling, application and disposal of hazardous materials used in the construction activities. Vinte´s general approach is to design its developments with separate piping for sewage, which is discharged to municipal sewers, and stormwater, which is infiltrated to the aquifer in suitable infiltration ponds, as required by local authorities. For discharge into natural bodies of water, the law requires prior treatment by developments or by the municipality as appropriate. The company adapts this approach according to site circumstances and local regulations. Vinte´s procedures will be improved as part of the implementation of an integrated management systems as described under PS1 above.
- The company’s initiatives on efficient use of housing utilities (water, gas, electricity); treatment and discharge of domestic effluent; emergency preparedness and response; and solid waste management were found to be appropriate. The company is gradually installing low-energy light bulbs and low water consumption showers and toilets as new houses are being built. Houses are delivered with a “user´s guide” which explains how to use the energy and resource efficient devices and encourages their use. The company´s houses are for low to mid-income dwellers and do not have air conditioning or other high-energy demanding features. Double glazing and AC are not essential for Vinte´s masonry houses under weather conditions in the area. Vinte is offering solar heaters to buyers in the new development of Solar del Cid, and intends to do the same in other housing estates under development.

- PS 4: Community Health, Safety and Security:

- The company gives due consideration to impacts of design, construction and maintenance activities, including:

- life and fire safety in design, construction and maintenance;
- impacts of construction camps, movement of vehicles to and from construction sites, operation of construction equipment, containment of dust, noise and other nuisance factors;
- control of public access to construction sites; and
- emergency preparedness and response: developments are subdivided in several closed communities (privadas) fitted with closed circuit cameras at its entrance and in common areas to enhance security and monitor children at play. The images from these cameras can be viewed at the computer provided by Vinte in every house as part of the company’s internet connectivity program.

- PS 5: Land Acquisition and Involuntary Resettlement:

There are no issues with regard to the potential displacement of occupants and/or users of land acquired for future projects. The location of Vinte’s housing estates is regulated by state and local development plans. When an area is designated for urban development areas under communal ownership (ejidos) formerly used for limited agricultural production are legally subdivided and sold to developers under a willing seller-willing buyer arrangement. Land whose use is changed from agriculture to urban development rapidly increases in value, which amply compensates for any improvements the ejidatario might have done and is paid at the market price. Illegal land occupation is a feature in Ecatepec and parts of Tecámac. However, Vinte only purchases land in areas zoned for urban development and fully titled. Land invasions of housing developments and their neighboring lands are extremely rare.

Depending upon project circumstances, issues covered by the following Performance Standards may also be encountered from time to time:

- PS 6: Biodiversity Conservation and Sustainable Natural Resource Management:

By company policy, Vinte does not acquire land that could have adverse impacts upon natural or critical habitats.

- PS7: Indigenous Peoples:

While the company does not have an indigenous peoples’ policy, Vinte has committed to comply with Mexican government regulations pertaining activities that may affect indigenous communities.

- PS 8: Cultural Heritage:

The company has agreed to develop a chance finds protocol providing appropriate protection in the event of unexpected discovery of items of cultural heritage, and the contractual right to apply such a protocol if necessary.

Upon completion of the appraisal review, staff identified compliance gaps and designed adequate mitigating measures to be included in the attached Corrective Action Plan (CAP). Performance reporting requirements will also be established as appropriate.

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