YUM China Details How It Plans to Reach Net Zero by 2050

(Solar panels atop the KFC Green Pioneer Store. Credit: Yum China)

Yum China Holdings today released its first climate-focused report in accordance with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations. Aligned with Yum China's commitment to driving towards net-zero value chain GHG emissions by 2050, the company outlines in the report its approach to addressing climate-related risks and opportunities and highlights key progress it has made on climate action.

The report is structured around the four TCFD pillars: Governance, Strategy, Risk Management, and Metrics and Targets.

• Governance – Yum China's systematic and comprehensive sustainability governance mechanism helps ensure that climate-related matters are managed from the Board to the operations teams.
• Strategy – Yum China has identified transition and physical risks and conducted climate-related scenario analysis to assess the potential impact of those material risks on the company's businesses under hypothetical climate futures. In turn, this helps guide the company's strategic planning and risk management.
• Risk Management – Yum China has conducted risk screening and disclosed how climate-related risks are effectively addressed within its existing risk management measures in four aspects: restaurants, supply chain, logistics, and product and services.
• Metrics and Targets – Yum China has developed a GHG emissions inventory across the entire value chain including upstream, downstream, and own operations, in accordance with the latest Greenhouse Gas Protocol. The Company uses the GHG emissions inventory as the basis to develop GHG emissions reduction targets. On June 8, 2022, Yum China submitted its near-term science-based GHG emissions reduction targets to Science Based Target initiative for validation.

Specifically, regarding decarbonization, the report states the following:

Yum China has increased efforts to enhance energy efficiency in restaurants. The company has been exploring new technologies such as photovoltaic generation, Internet of Things (‘IoT’) systems, Tubular Daylighting Systems, Big Data, and Artificial Intelligence, which are expected to drive additional efficiency improvements. While new investments require capital expenditure, adapting new technologies can help to reduce exposure emissions, which consequently lowers its sensitivity to changes in cost of carbon.

In 2021, Yum China continued to expand the Value-added Technology Application (‘VTA’) system in newly-built and remodeled restaurants. The VTA system is equipped with real-time monitoring of CO2 concentrations and automatic fresh air volume control, contributing to the reduction of air-conditioning energy consumption while ensuring a comfortable environment. In 2021, the VTA system was installed in over 1,050 restaurants, leading to electricity savings of approximately 12,670 MWh in the year. The company is also incorporating IoT-enabled features as part of our efforts to develop ‘intelligent restaurants,’ and plans to roll out this initiative nationwide as appropriate.

The company has also taken an important step to pilot Distributed Photovoltaics (DPV) installation in the first batch of KFC Green Pioneer Stores in Beijing and Hangzhou in early 2022. The installed rooftop solar panels generate about 10,000 kilowatt-hours of clean electricity a year for the restaurant, and it plans to further improve the restaurant’s energy efficiency by incorporating energy storage technology. Compared with the average GHG emissions of KFC stores in 2020, Green Pioneer Stores are expected to further reduce GHG emissions by approximately 15% per year.