National Housing Fund INFONAVIT

National Housing Fund INFONAVIT Energy efficiency in housing and construction February 2020

INFONAVIT is a social security instituion The largest mortgage Mexico 5 million mortgages 7% GDP

bank in

Mutual Institution Members´ mandatory contribution of 5% of their salaries to finance other member’s mortgages

If members choose not to invest in housing their savings are invested with a minimum guaranteed rate of return 66 million housing savings accounts USD 60 billion AUM

Collects mandatory contributions Mortgage origination

Mortgage collection Asset management Guaranteed yield (SCV)

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Energy consumption in Mexico Final energy consumption by type of energy

In Mexico, housing represents 15% of final energy consumption • 77% is for climate control (A/C)

Housing

Transport

Industry

Public and commercial

Source: National Energy Balance 2014, Ministry of Energy

Agriculture

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Construction regulation in Mexico Municipalities (autonomous) have the authority to enact construction regulation. •

Most local regulations do not address energy efficiency so its adoption is voluntary

•

Federal government issues technical regulation known as NOM (Official Standards) for efficient use of energy in buildings (natural lighting, adequate ventilation, or restrictive use of glass) however they are

not

currently included in the local construction regulations.

.

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Sustainability policies in INFONAVIT INFONAVIT is the biggest mortgage bank in Mexico, issuing around 350k mortgages per year, thus we take advantage of our size and scope to create a conforming market • We have implemented mortgage-origination policies to promote energy efficiency in construction • New housing that intends to be financed through Infonavit must comply with certain construction criteria.

Green Mortgage

Environmental performance evaluation 5

Green Mortgage Objectives Houses financed through Infonavit must fulfil some energy efficiency criteria in their construction materials and characteristics (baseline), otherwise they are not eligible for credit.

Infonavit grants an additional loan amount added to the mortgage to buy a house with energy-efficient technologies.

Benefits • Savings by reducing the consumption of water, gas and electricity.

• Increase in house equity value.

Base Line (Not Financed) Energy savings: • Saving Lights (FCL) + LED • Roof thermal insulation • Gas heaters

Water Savings • Ecologic grade toilet • Ecologic grade watering can

Additional technologies (Green Mortgages additional amount) Energy savings : Water Savings • A/C • Rainwater collection • Fridges system • Washing machines • Stove Heat reduction measures • Thermal insulator in 1 or 2 walls • Reflective coating on roof and wall • Double glazing windows

Green Mortgage Number of “Green Mortgage� loans originated (million of credits, cummulative)

$ Currently, every mortgage has the baseline

Green Mortgage component.

3.5 3.2 2.9

Newly-built houses are financed by Infonavit only if they comply with a baseline

2.5

of energy

2.2

efficient technologies.

1.8 1.4

1.1 0.7

Over 3.5

million green mortgages have been issued since 2007.

0.001 0.002 2007

2008

0.1 2009

0.3

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

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SISEVIVE (Environmental performance evaluation) SISEVIVE is a tool to evaluate environmental performance of houses financed with our loans.

The tool compares efficiency of an specific house vs a Base line • Evaluate thermal comfort and its impact on

energy demand • Estimate water consumption based on devices that use water (toilets, shower, washing machine, laundry room)

SISEVIVE provides a bigger rating to those houses with lower demand of energy and water compared to a reference home.

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SISEVIVE Global Performance Index (GPI) SISEVIVE

315,511

D (42)

Houses evaluated with SISEVIVE (december 2019, cummulative) Average GPI

Measures energy-efficient design and savings in water consumption.

Next steps

• •

Linking additional amount of credit lines depending on the SISEVIVE evaluation.

Differenciate financial conditions (interest rates) on mortgages with an outperforming SISEVIVE evaluation 9