99.2% of our suppliers were
in China, playing a positive role in boosting local economic
development, employment, and taxation.
Yum China Supplier CSR Audit
We require that all suppliers should acknowledge and sign the Yum China Supplier Code of Conduct before working with us to ensure that they are legally compliant with all applicable laws and regulations, and to fulfill their corporate social and environmental responsibilities. In 2023, we updated our Supplier Code of Conduct, raising our expectations for suppliers' environmental impact, freedom of association and collective bargaining, and anti-competitive behavior.
Since 2017, Yum China has been promoting supplier Corporate Social Responsibility (CSR) audit, outlining social and environmental compliance requirements for suppliers to address risks across the supply chain. We also engage professional third-party auditing firms to conduct CSR audits annually.
Yum China supplier CSR audit framework and evaluation criteria are developed with reference to applicable national laws and regulations and international standards. It covers areas such as child / minor labor, forced labor, working hours, wages and benefits, health and safety, security, and environmental management. The framework and evaluation criteria are reviewed and updated regularly as appropriate.
Yum China Supplier Code of Conduct
Yum China Supplier Code of Conduct—ESG
CSR Audit Compliance Training
We offer training prior to audits to help our suppliers fully understand compliance requirements. Suppliers would be audited by a third-party auditing firm according to CSR audit framework and evaluation criteria annually. After receiving a rating based on non-compliance issues identified during the audit, suppliers are required to submit detailed corrective and preventive action plans (CPAP) for continuous improvement. In 2022, 100% of suppliers submitted CPAP after audits. Suppliers' CSR and Business Continuity Management (BCM) are also key priorities in our supply chain management, together with other KPIs such as innovation, cost optimization, quality, and safety, which are also regularly evaluated and summarized in our business review. In 2023, 387 suppliers were subject to CSR audits, an increase of 8% compared to last year. The audits covered 100% of our key suppliers, with a 92% pass rate in the first review.
CSR Ratings: A-grade
- Score ≥ 90/100 AND without any critical issue
- Valid for 24 months
CSR Ratings: B-grade
- 80/100 ≤ Score < 90/100 AND without any critical issue
- Valid for 12 months
CSR Ratings: C-grade
- Score < 80/100 OR with any critical issue
- Requires immediate remediation and a re-audit. If the supplier is still graded C in the follow-up audit within three months, it is considered high risk, and Yum China carefully reviews the partnership.
Local Sourcing
Yum China is working to increase local sourcing to build a more efficient, resilient and sustainable supply chain, as well as to actively shoulder our social responsibilities. We proactively cooperate with local suppliers, and also encourage overseas suppliers to expand operations in China to ensure the consistency of product quality while improving our cost competitiveness in the local market. At the same time, we also hope to drive local economic development and bring positive impact to society through our local sourcing.