As environmental factors become an increasingly important issue for businesses, consumers, and the government, we incorporate them into our analysis of potential investments. Yum China is a leading quick-service restaurant operator in China. The company’s strong focus on sustainability has proven to not only be good for the environment, but also good for business.
We have engaged with the company’s management team and explored their plans to reduce greenhouse gases (GHG), water usage, and electricity usage within Yum China’s operations. Over the last three years, overall Scope 2 GHG emissions have been reduced by 15%, hitting the company’s 2025 GHG target five years early. This was done through various initiatives such as reducing plastic packaging, removing plastic straws, and moving to wooden cutlery versus plastic. The company has saved over 8,000 tonnes of paper and 1,200 tonnes of plastic annually over the last three years. Any plastic packaging that is used is 100% recyclable.
Yum China is also targeting reduction in water usage per restaurant and has seen 20% reductions over the last three years through initiatives such as new dishwashers that save 0.9 tonnes of water per day and using thawing cabinets that use air versus water.
The company has also reduced the average electricity consumption per restaurant by 15% with more energy-efficient equipment and lighting as well as intelligent stores that are using artificial intelligence to automatically switch off equipment and lighting. Within the supply chain, smarter route planning and more new energy vehicles will also help to reduce emissions and make the operations more sustainable.
One strength of Yum China has been its operating efficiency and ability to manage costs. Through the reduction of water usage, electricity usage, and GHG, Yum China is also able to save money and drive greater operating efficiency.