We firmly support the long-term goals of the Paris Agreement to limit the global average temperature increase to 1.5°C above pre-industrial levels and fully endorse the Chinese government's commitment to reach peak carbon emissions by 2030 and achieve carbon neutrality by 2060. In 2021, we submitted our Business Ambition for 1.5°C Commitment Letter to Science Based Targets initiative (SBTi), demonstrating our determination to reach net-zero value chain GHG emissions by 2050. In 2022, Yum China set near-term SBTs, becoming the first restaurant company in China to have its near-term targets approved by the SBTi. Additionally, we committed to establishing a long-term net-zero target, demonstrating our alignment with the Paris Agreement's aspiration of limiting global temperature rise to 1.5° C, aiming for net-zero value chain GHG emissions by 2050. In 2024, we completed a thorough inventory of FLAG-related GHG emissions within our value chain based on the SBTi FLAG Guidance and the Greenhouse Gas Protocol (GHG Protocol). This effort allowed us to identify key decarbonization opportunities, laying the foundation for further reductions.
To realize our abatement targets, we have outlined three strategic pillars to achieve its 2050 net-zero commitment: improving energy efficiency, driving the transition to renewable energy, and building a low-carbon supply chain. We have set a systematic mechanism to support the achievement of this goal.
Our sustainability priorities place climate action at the forefront. Achieving our ambitious goals will demand substantial effort and require us to collaborate closely with stakeholders throughout our value chain.
We have taken a systematic and methodical approach to measure GHG emissions across our entire value chain, in accordance with GHG Protocol and SBTi manuals. Our GHG emissions inventory covers our own operations and 12 out of 15 relevant Scope 3 categories across the value chain, effectively helping us identify the main sources of GHG emissions and continuously track the abatement progress.
Energy Efficiency
Renewable Energy
Supplier Engagement
Energy-efficient operations of our restaurants have been a long-term priority in our efforts to reduce GHG emissions. We continuously develop and deploy high-efficiency equipment and facilities and apply technology to develop digital, automated, and smart restaurants. Meanwhile, our effective management practices also help to improve the energy efficiency of our own operations.
Yum China recognizes the importance of utilizing renewable energy to bolster our climate resilience and support our low-carbon transition. We are actively exploring and implementing reliable, affordable, and scalable renewable energy solutions across Yum China's over 16,000 restaurants and 33 logistics centers nationwide, continuously optimizing our energy structure.
Based on the local energy policies and the accessibility of renewable energy in various provinces and cities across the country, as well as the different features of our restaurants and logistics centers, we have developed a multi-pronged energy transition strategy:
1. For restaurants eligible for independent green power trading, we tailored our approach to align with provincial policy variations, ensuring green energy procurement without additional cost;
2. For restaurants without direct market access, we pioneered collaborative models with landlords to facilitate green power purchases on our behalf. Furthermore, we are partnering with local governments to explore innovative green power trading models;
3. Beyond restaurants, we are advancing rooftop DPV deployment and green power trading at our own logistics centers, while pursuing joint green power procurement and shared DPV initiatives with owners of leased logistics facilities.
Over two-thirds of Yum China Scope 3 GHG emissions come from the carbon footprint of our purchased goods. We therefore prioritize supplier engagement in low-carbon development to achieving our value chain net-zero commitment. However, our diversified raw material demands
involve complex and extensive supply chains, while practical experience reveals varying levels of awareness and implementation capabilities among our suppliers on low-carbon practices. To address this, we developed and implemented the 3E strategy (Engage, Educate, Empower), encouraging suppliers at different stages and with varying capabilities to collectively participate in climate action.
To reduce energy-related GHG emissions, Yum China provides technical advice based on suppliers' energy efficiency improvement practices, supporting their systematic transformation. We also actively share the successful experiences from our DPV deployment and green eletricity trading pilots. By collaborating with more suppliers, we enable resources and knowledge pooling to collectively drive renewable energy transformation, thereby advancing low-carbon development across the entire value chain. By the end of 2024, over 40 suppliers have joined the Yum China DPV & VPPA Alliance. The Alliance has collectively achieved ~270,000MWh renewable energy usage.
Most of our supply chain partners operate in land-intensive industries. Therefore, approximately 80% of the GHG emissions from the goods provided by our suppliers are Forest, Land, and Agriculture (FLAG) related. In 2024, we conducted a systematic review of FLAG-related GHG inventory and explored abatement opportunities, and establish, for the first time, a comprehensive FLAG-related GHG inventory for Yum China. Based on that, we are developing and refining the Yum China's Nature-based Solutions (NbS) Framework, which encompasses advanced emission reduction technologies and best practices from domestic and international sources across various product categories, as a guide to help suppliers effectively implement agricultural and production-related emission reduction initiatives. To further support our suppliers, we developed a regenerative agriculture practice maturity assessment tool, which focuses on four key management stages (planting management, breeding management, energy consumption, and waste disposal). This tool serves as a diagnostic, optimization guide, and best practice reference for suppliers adopting regenerative agriculture practices.
