Addressing Global Population Growth:Affordable Housing Solution - Echale a tu Casa

Andrew Jackson andrew.j.chem@gmail.com

WU Vienna Executive Academy 2

• Background• Strategy• Conflicts between company and cause• Measuring progress• Creating shared value• Recommendations

Agenda

WU Vienna Executive Academy 3

Vertically integrated housing company with a unique self-build business model.

• Echale a tu Casa (Eschale) was founded by Francesco Piazzesi over 25 year ago.

• It began as a NPO set up to help low-income families to improve safety, health and hygiene in Mexico.

• Echale has since changed to a for profit business model focused on savings, credit, subsidies and housing development.

• The company has built 26,000 homes, generated over 130,000 temporary jobs, and generated $65 million of income.

Background

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Provide multiple solutions to develop a sustainable model for low-income housing.

• Educate: Benefits of sustainable housing and budgetary finance• Finance: Help families find affordable finance• Design: Homes using sustainable

technologies• Solar water heating • Bio-digestion• Less wood stoves

• Build: Reduce construction costs.• Hire local work force • Low cost local material (“Adoblocks” use 90% local

earth)• Sell: Product to customer at a profit.

Strategy

Educate

Save

Design

Build

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Addressing a fundamental human need while and making a social impact.

• Echale provides adequate and sustainable housing for people who before could not afford it. • The sense of community pride is

strengthened. • Local economy is boosted by hiring local

workers during the building activities. • Environmental health conditions

are improved for inhabitants, by ecological waste and water solutions. • Eliciting community and customer

participation positively impacts those involved.

Impact

$

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Pricing is a substantial point of tension for the company.

• The company needs to make a profit in order to provide its products. • The company struggles between

making profits and selling to a financially restricted segment. • If the product is sold too cheap, the

company goes out of business.• If the product is priced too high, then

they risk of alienating their customers.

Conflicts: Company v. Cause

ProfitPricing

Company

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Eshcale looks at social, economic and build numbers to define its level of success.

• Build • 8.9 million housing deficit in Mexico• Built 30,000 homes to date• 150,000 home improvements

• Economic• Trained and employed over 200,000

temporary builders.• Local economic spill over from

projects• Social• Building stronger communities• Enhance future prospects of children

Measuring Progress

Progress

HomesBuilt

$Economic

ImpactSocial

Impact

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Echale collaborates with government of Mexico to provide avenues for financing.

• Mexican government set up Community Financial Society (SOFINCO) • SOFINCO allows family savings to be

used as collateral for commercial bank loans. • Echale uses SOFINCO structure and

connects clients with financial collaborators.

Government Engagement

Income

• Must earn 3x min. wage

Save

• Set up savings w/ Echale SOFINCO

• Must save 10% total cost

Loan

• Connects w/microfinance

• Credit product w/ no fees

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Developing low-income communities by providing affordable housing.

• Echale does not claim to use CSV as part of its approach.• Mission: “Echale builds sustainable

human habitats in communities which translates into:” • Affordable housing• Community cohesion• Environmental protection • Economic growth

• Its model touches on all three aspects of ESG: • Environmental• Social• Governance

Creating Social Value (CSV)

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Echale needs to develop strategic partnerships to grow its business and help its cause.

• To extend Echale’s strategy we recommend: 1. Building out a financing division to

insource credit business2. Partnering with the Government to

provide an alternative to help slow rapid urbanization.

3. Franchising its model to other in other parts of the world with affordable housing crisis (Brazil, India, etc.)

• The best way to measure progress:1. Number of houses built as a percentage

of regional housing deficit. 2. Track community economics before and

after Echale projects.

Recommendations for Echale

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Echale needs to develop strategic partnerships to grow its business and help its cause.

• Relevant Readings: 1. Creating Shared Value - Kramer & Porter

• Echale’s business model creates “win-win” opportunities between it and society.

2. The Performance Frontier – Eccles & Serafeim• Eshale has identified ways to increase

value for itself (private firm) through innovative approaches to finance and low-cost building

• This has increased its affordability to the customer and helped to boost the financial return to the company through low cost structure.

Recommendations

Creating

Shared Valu

eSustainability

Compliance

Competitive Advantage

Thank You