Climate Change Data

Environmental Metrics

ESG Focus Areas

• Food Safety
• Employee Development
• Community Engagement
• Environmental Sustainability

Environmental Achievements

• Reduced greenhouse gas emissions by 8,100 tons, equivalent to 875 homes' energy use for one year.
• Reduced electricity consumption by nearly 12,000 MWh.
• Saved over 148,000 tons of water.
• Saved about 8,000 tons of paper and over 1,100 tons of plastic in 2017 through sustainable packaging initiatives.

Social Achievements

• Launched the CNS-Yum China Dietary Health Foundation to promote balanced diets.
• Celebrated the 10th anniversary of the One Yuan Donation Program, raising nearly RMB 20 million and distributing over 37.4 million nutritious meals.
• Supported over 600,000 left-behind children through the KFC Little Migratory Birds Fund.
• Provided close to 14 million training hours for crew members at KFC and Pizza Hut.
• Granted stock ownership to over 6,000 qualified Restaurant General Managers.
• Opened 20 KFC Angel Restaurants providing employment opportunities for people with disabilities.

Governance Achievements

• Joined the SSGA Gender Diversity Index.
• Implemented a comprehensive ethics and compliance program based on a Code of Conduct.
• Conducted internal review of all data and assertions in the report.

Climate Goals & Targets

Environmental Challenges

• Reducing environmental footprint across a large and growing restaurant network.
• Ensuring food safety across a vast supply chain.
• Meeting the needs of a diverse workforce.
• Addressing poverty and inequality in communities.

Mitigation Strategies

• Implementing green building standards in new restaurants.
• Developing stringent supplier qualification and management processes.
• Investing in employee training and development programs.
• Launching community engagement initiatives like the One Yuan Donation Program and KFC Little Migratory Birds Fund.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier Code of Conduct, Procurement Terms and Conditions, CSR audit program

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI G4 Sustainability Reporting Guidelines

Certifications: LEED Gold (6 KFC restaurants)

Third-party Assurance: Internal review by Yum China subject matter experts and Leadership Team

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Company of the Year at the China Annual Conference on Philanthropy
• Outstanding Contribution Award by the China Foundation for Poverty Alleviation (CFPA)
• Social Value Co-Creation China CSR Excellence Award from the SIMENG CSR Promotion Center
• 2017 Annual Public Service Enterprises by China Philanthropy Times

Environmental Metrics

ESG Focus Areas

• Food
• Environment
• Community

Environmental Achievements

• Reduced average restaurant energy consumption by 8.3% and GHG emissions by 8.6% from 2017
• Reduced average restaurant water consumption by 5.6% from 2017
• 100% of newly-built company-owned restaurants met Yum China's Green Building Standards
• Saved over 8,000 tons of paper and 1,000 tons of plastics through packaging reduction initiatives
• Converted all the 666,465 kg of used cooking oil in Chengdu KFC restaurants into biodiesel

Social Achievements

• Signed the United Nations Women’s Empowerment Principles (WEPs)
• Selected for 2019 Bloomberg Gender Equality Index (GEI) for two consecutive years
• Female share of total workforce 61.5%
• RGM turnover rate dropped to 8.2% after the implementation of the RGM "3-Year Plan"
• Launched the One Yuan Donation program, raising over 18 million yuan

Governance Achievements

• Certified as a "Top Employer China" for two consecutive years by the Top Employer Institute
• 10 of 11 directors are independent

Climate Goals & Targets

Environmental Challenges

• Climate change and extreme weather events
• Plastic pollution
• Food safety risks across the value chain
• Emerging industry challenges such as animal welfare, food-borne diseases, pesticides and veterinary drug management, food additives and GMO
• Manpower shortage in the industry

Mitigation Strategies

• Adopting the Sustainability 4R Principles (Reduce, Reuse, Recycle and Replace)
• Employing digital and intelligent technologies to improve energy efficiency and reduce carbon footprint
• Exploring more eco-friendly materials and designs to reduce single-use packaging
• Establishing a comprehensive and holistic governance system for food safety
• Developing Yum China Animal Welfare Policies
• Implementing the VTA energy conservation project
• Expanding the testing of the electrostatic thawing tank
• Introducing sophisticated kitchen equipment and AI technology for precise production forecasting

Supply Chain Management

Supplier Audits: Nearly 400 suppliers were covered in Yum China’s CSR audit in 2019

Responsible Procurement

• Yum China CSR Audit covers all critical suppliers
• Only purchase RSPO-certified palm oil
• Refuse to purchase paper products from suppliers that knowingly cause deforestation
• Yum China Supplier Code of Conduct

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards, Dow Jones Sustainability Indices (DJSI), GB/T 36000-2015, UN 2030 Agenda for Sustainable Development

Certifications: ISCC certification for used cooking oil, Top Employer China

UN Sustainable Development Goals

• SDG 1
• SDG 2
• SDG 3
• SDG 4
• SDG 5
• SDG 6
• SDG 7
• SDG 8
• SDG 9
• SDG 10
• SDG 11
• SDG 12
• SDG 13

The report identifies how Yum China's initiatives contribute to these SDGs.

Sustainable Products & Innovation

• Reusable serving baskets
• Vegetarian burger

Awards & Recognition

• Top Employer China
• Bloomberg Gender-Equality Index
• Dow Jones Sustainability Indices (DJSI)
• Greater China Best Investor Event (Large Cap)
• Restaurant Chain Innovation
• First Chinese Restaurant Company in China to Receive International Sustainability and Carbon Certification (ISCC) certification
• China Benefit Corporation
• Brand of the Year for the Catering Industry
• Innovative Public Welfare Project of the Year
• 3 Gold Cannes Lions Awards
• China CSR Excellence Award
• Global CSR Awards™ Best Community Program

Environmental Metrics

ESG Focus Areas

• Food Safety and Quality
• Climate Action
• Circular Economy
• Supply Chain Sustainability
• People

Environmental Achievements

• Reduced plastic packaging by 9,300 tons in 2021
• 100% of customer-facing plastic based packaging is recyclable
• 100% of purchased palm oil is RSPO certified
• All newly built restaurants comply with Yum China Green Building Standards
• Achieved 10% reduction of average restaurant water consumption compared to 2017 baseline

Social Achievements

• Launched 'Fruit and Vegetable 100+' program to promote balanced diets
• Upgraded medical insurance coverage for ~100,000 frontline employees and their families
• Named a Top Employer China for the fourth consecutive year
• Offered gainful job opportunities to employees with disabilities ('Angel Restaurants')
• Expanded 'Food Bank' program to 120 KFC restaurants in 27 cities

Governance Achievements

• Released Yum China Human Rights Policy and Occupational Health and Safety Policy
• Established a comprehensive whistleblower mechanism
• 30% of directors are women

Climate Goals & Targets

Environmental Challenges

• Climate change impacts on supply chain and restaurant operations
• Food waste
• Plastic pollution
• Talent shortage in the restaurant industry
• Ensuring food safety across a complex value chain

Mitigation Strategies

• Committed to Science Based Target initiatives (SBTi) and net-zero value chain GHG emissions by 2050
• Developed a decarbonization roadmap
• Launched Green Pioneer Stores
• Implemented various programs to reduce food waste (Food Bank, etc.)
• Developed a holistic food safety and quality management system, leveraging digital technologies (iFS, eQA, iQA, SCDI)

Supply Chain Management

Supplier Audits: 400+ CSR audits in 2021 (100% of critical suppliers)

Responsible Procurement

• Supplier Code of Conduct
• CSR audits
• Sustainable sourcing of raw materials (e.g., RSPO-certified palm oil)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes
• Market shifts towards sustainability

Opportunities

• Development of energy-efficient products and operations
• Renewable energy adoption

Reporting Standards

Frameworks Used: GRI Standards, TCFD, SBTi, CDP

Certifications: ISCC (for UCO conversion), ISO/IEC 27001:2013 (information security), RSPO (palm oil)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• SDG 2
• SDG 3
• SDG 4
• SDG 5
• SDG 7
• SDG 8
• SDG 9
• SDG 12
• SDG 13
• SDG 15

See 'Contribution to United Nation Sustainable Development Goals' section

Sustainable Products & Innovation

• Plant-based meat products
• 'Carbon zero' oat drink

Awards & Recognition

• Gold Class Award in the Sustainability Yearbook 2022 by S&P Global
• Inclusion in DJSI World and Emerging Markets Indices
• Inclusion in Bloomberg Gender-Equality Index
• Top Employer China certification

Environmental Metrics

ESG Focus Areas

• Food Safety and Quality
• Climate Action
• Circular Economy
• Supply Chain Sustainability
• People
• Community

Environmental Achievements

• Set near-term Science-Based Targets (SBTs) approved by SBTi, aiming to reduce absolute Scope 1 and 2 GHG emissions by 63% and Scope 3 emissions from purchased goods by 66.3% per ton by 2035 from a 2020 base year.
• Achieved 15% reduction of average restaurant electricity consumption compared to 2021.
• 100% of Roundtable on Sustainable Palm Oil (RSPO)-certified palm oil purchased.
• 100% of Forest Stewardship Council (FSC)-certified paper packaging.
• Recycled ~16,000 tons of CO2e in 2022.
• First restaurant company in China to pilot packaging waste recycling (150 tons recycled in Shanghai).

Social Achievements

• Maintained a workforce with at least 50% female representation, across hiring, training, promotion, and retention.
• Employed staff with disabilities, accounting for over 1.5% of full-time positions.
• Established the ‘Yum China Employee Mutual Aid Fund’ to offer financial assistance to employees in need.
• Upgraded medical insurance coverage for Restaurant General Managers (RGMs).
• Employees recorded over four million hours of volunteer time.

Governance Achievements

• Incorporated ESG as a key performance evaluation criterion for each leadership team member.
• Exploring opportunities to incorporate ESG metrics and results into the broader employee incentive program.
• Established a comprehensive whistleblower mechanism.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to the COVID-19 pandemic.
• Climate change impacts on the food system and water resources.

Mitigation Strategies

• Developed a digitalized and intelligent supply chain management system.
• Implemented energy-efficient technologies and explored renewable energy opportunities.
• Upgraded water-saving facilities and equipment.
• Developed alternative sourcing strategies.

Supply Chain Management

Supplier Audits: 100% of critical suppliers covered by CSR audit in 2022

Responsible Procurement

• Yum China Supplier Code of Conduct
• CSR audits
• Yum China GAP (Good Agricultural Practices)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products and operations
• Renewable energy investment

Reporting Standards

Frameworks Used: HKEX ESG Reporting Guide, GRI Sustainability Reporting Standards, SASB restaurant industry reporting framework, TCFD framework

Certifications: ISO 14001 (implied), ISO 45001 (implied)

UN Sustainable Development Goals

• Goal 2: Zero Hunger
• Goal 3: Good Health and Well-being
• Goal 7: Affordable and Clean Energy
• Goal 8: Decent Work and Economic Growth
• Goal 12: Responsible Consumption and Production
• Goal 13: Climate Action

Initiatives contributing to these goals are detailed throughout the report.

Sustainable Products & Innovation

• Plant-based menu items
• Eco-friendly coffee cups

Awards & Recognition

• Best score in Restaurant & Leisure Facilities Industry in S&P Global ESG Score for 3 consecutive years
• Member of DJSI World and Emerging Markets Index for 3 consecutive years
• Top 1% S&P Global ESG Score
• 'AA' rating in MSCI ESG Rating
• 'Low Risk' by Sustainalytics ESG
• Bloomberg Gender-Equality Index for 5 consecutive years
• Equileap's Top 100 Companies Globally for Gender Equality
• Hong Kong Corporate Governance and ESG Excellence Awards
• Bloomberg Green's ESG Pioneer Award
• Top Employer in China for 5 consecutive years
• China Best ESG Employers Award from Aon
• ESG China Awards - ESG Report of the Year

Environmental Metrics

ESG Focus Areas

• Food Safety and Quality
• Climate Action
• Sustainable Supply Chain
• Employee Well-being
• Community Engagement
• Circular Economy

Environmental Achievements

• Inaugurated the first 100% renewable energy cold-chain logistics center in China.
• Shifted nearly 8 million kilowatt-hours of energy consumption to renewable sources, reducing GHG emissions by approximately 4,500 tons.
• Built five coffee grounds disposal centers across the country to recycle used coffee grounds.
• Recycled ~20 tons of coffee grounds.
• Achieved a 26% reduction in energy indirect GHG emissions per company-owned store in 2023 from a 2020 base year.
• Achieved 100% of newly built restaurants complying with Yum China Green Building Standards.

Social Achievements

• Recognized as a Top Employer China for six consecutive years.
• Awarded Restricted Stock Units (RSUs) to over 13,000 restaurant general managers.
• Expanded medical and accident insurance coverage for eligible employees' family members.
• Hosted the third Food Safety Culture Festival, attracting 450,000+ participants.
• Expanded KFC China's 'Little Migratory Bird Fund' to a broader group of children.
• Provided over RMB 3 million in financial assistance and tens of thousands of meals to those affected by Typhoon Doksuri and the Gansu earthquake.

Governance Achievements

• Joined the United Nations Global Compact (UNGC).
• Strengthened sustainability governance and incorporated ESG targets into leadership teams' performance metrics.
• Released Yum China Zero Tolerance: Anti-Discrimination and Anti-Harassment Policy.
• Updated Yum China Responsible Marketing Policy.
• Updated Yum China Supplier Code of Conduct.

Climate Goals & Targets

Environmental Challenges

• Reducing GHG emissions across the value chain.
• Reducing food waste.
• Managing water resource risks.
• Reducing the environmental impact of purchased goods.
• Deforestation risks in the soy-based animal feed supply chain.

Mitigation Strategies

• Committed to net-zero GHG emissions by 2050 (submitted to SBTi).
• Implemented initiatives such as whole chicken utilization to minimize food waste.
• Partnered with WRI to assess water resource risks and upgraded water-saving facilities.
• Established Yum China DPV & VPPA Alliance with 40 key suppliers.
• Adopted the LEAP assessment method (TNFD) to strengthen soy raw material traceability and identify deforestation risks.

Supply Chain Management

Supplier Audits: 387 suppliers subject to CSR audits in 2023

Responsible Procurement

• Yum China Supplier Code of Conduct
• CSR audits
• Supplier training
• Local sourcing
• Sustainable sourcing standards

Climate-Related Risks & Opportunities

Physical Risks

• Average temperature rise
• Water scarcity

Transition Risks

• Policies and regulations
• Market trends

Opportunities

• Renewable energy investment
• Circular economy initiatives
• Low-carbon agricultural models

Reporting Standards

Frameworks Used: GRI Standards, SASB, HKEX ESG Reporting Guide, UNGC, SBTi, TCFD

Third-party Assurance: Independent assurance agency (limited assurance)

UN Sustainable Development Goals

• Goal 2: Zero Hunger
• Goal 3: Good Health and Well-being
• Goal 7: Affordable and Clean Energy
• Goal 8: Decent Work and Economic Growth
• Goal 12: Responsible Consumption and Production
• Goal 13: Climate Action
• Goal 17: Partnerships for the Goals

Yum China's initiatives contribute to these SDGs through various programs related to food safety, nutrition, renewable energy, employee well-being, community development, and sustainable supply chain practices.

Sustainable Products & Innovation

• Eco-conscious baskets and trays made from recycled coffee grounds.
• Plant-based products and drinks.

Awards & Recognition

• Top Employer in China (6 consecutive years)
• Bloomberg Gender-Equality Index (5 consecutive years)
• Dow Jones Sustainability World Index and Emerging Markets Index (4 consecutive years)
• S&P Global CSA Score
• Fortune's 2023 'Companies Changing the World' list
• Bloomberg Green Finance ESG 'Annual Responsibility Pioneer' award