Yum! Brands
YUM:US US9884981013
Key Information
HQ:
United States
Market Cap:
$37.47bn
Primary Markets:
North America, Asia
Meat Sourcing Engagement
Analysis Breakdown
Board oversight
Is the board briefed by management on the company’s strategies for mitigating environmental risks associated with their meat and dairy supply chains on at least an annual basis?
The CEO has ultimate responsibility for climate-related and water-related issues and the Audit Committee of the Board of Directors is updated annually on the company's environmental commitments and progress. The company explicitly discusses climate risks and mitigation strategies relating to meat and dairy supply chains, but for water it is unclear what risks are discussed.
*No change
Partial
Have company representatives presented to the Board on physical/transition risks from climate change impacts on commodity sourcing?
While Yum! Brands do not plan to publish a formal low-carbon transition plan, they have completed a TCFD-aligned climate risk assessment of global restaurants and suppliers - making the company aware of the risks on commodity sourcing. The Board is informed on Environmental, Social, Governance (ESG) issues on annual basis through the Audit Committee. However, the company was scored partial as it is unclear whether the risks in meat and dairy supply chains are explicitly integrated into this as Yum! Brands do not provide much detail on which climate and water-related issues are briefed for the board. The company have not updated their response since the Phase 2 assessment.
*No change
Partial
Supplier policy
Does the company have a publicly-available supplier policy that addresses the climate, deforestation, water use and quality impacts of its commodity suppliers?
Yum! Brands' supplier policy says suppliers must comply with the company's sustainability policies including its sustainable animal protein principles. The principles state that the company is working with suppliers to implement and maintain sustainable and integrated livestock production systems that are mindful of water quality, land use and GHG emissions. The company's supplier code of conduct includes some language on environmental management, but it is not clear whether these translate into quantifiable requirements. The code states the company expects suppliers to develop environmental management systems, monitor and report performance against improvement targets, meet or exceed environmental standards and demonstrate year-over-year progress towards reducing the relative environmental footprint of their operations. This code of conduct has not been updated since June 2019.
*No change
Partial
Does the company have a supplier monitoring and verification system that ensures that direct and indirect suppliers meet the company’s environmental requirements?
Yum! Brands works to minimise risk throughout their supply chain by requiring that suppliers follow its Supplier Code of Conduct and by engaging in periodic risk assessments and audits. The Code of Conduct states the company reserves the right to conduct its own assesments and audits, but this does not seem to be an established monitoring and verification system. Violations may lead to disciplinary action, which may include corrective action or termination of the relationship. However, given the Code lacks specific environmental performance criteria, it is difficult to assess what kind of supplier actions would trigger the non-compliance protocol beyond regulatory noncompliance. Yum Brands' subsidiary Pizza Hut (Europe and UK) states that it undertakes independent and third-party audits of suppliers' sites and through self-assessment questionaries. Similarly, KFC (Western Europe) has the same policy. There has been no change in the supplier code of conduct since June 2019.
*No change
Partial
Does the policy include a non-compliance protocol that specifies specific criteria (e.g. violation of no-deforestation pledge or major pollution incidents) that would trigger the suspension or termination of contracts and facilitates development of time-bound action plans for suppliers to return to compliance?
The Code of Conduct states the company reserves the right to conduct its own assessments and audits, but this does not seem to be an established monitoring and verification system. Violations may lead to disciplinary action, which may include corrective action or termination of the relationship. However, given the Code lacks specific environmental performance criteria, it is difficult to assess what kind of supplier actions would trigger the non-compliance protocol beyond regulatory noncompliance.
*No change
Partial
Does the policy specify that suppliers address all major emissions sources, including those related to land use change and deforestation, enteric emissions from animals, and emissions from manure and chemical fertilisers?
The code states the company expects suppliers to develop environmental management systems, monitor and report performance against improvement targets, meet or exceed environmental standards and demonstrate year-over-year progress towards reducing the relative environmental footprint of their operations, but this is not a requirement. Despite setting SBT specific to animal agriculture, the code of conduct has not been updated since 2020's assessment to specify that suppliers must address major emissions sources and there is no reference to animal agriculture.
*No change
No
Does the policy ask direct suppliers to measure, report and reduce the greenhouse gas emissions associated with their direct operations and agricultural supply chains?
The supplier code of conduct has not been updated to reflect the company's SBTi approved targets. There is no specific reference to direct suppliers measuring, reporting and reducing GHG emissions, instead, there is a general reference to the company expecting suppliers to develop environmental management systems, monitor and report performance against improvement targets, meet or exceed environmental standards and demonstrate year-over-year progress towards reducing the relative environmental footprint of their operations, but this is not a requirement.
*No change
No
Does the policy specify that direct and indirect suppliers address all major sources of water pollution and waste in the animal protein supply chain, including slaughtering and processing activities, animal production (CAFOs), and feed production?
The code states the company expects suppliers to develop environmental management systems, monitor and report performance against improvement targets, meet or exceed environmental standards and demonstrate year-over-year progress towards reducing the relative environmental footprint of their operations, but this is not a requirement. The supplier policy does not specify that suppliers are required to address all water pollution and waste in the animal protein supply chain. Yum Brands' CDP response indicates it requires key suppliers to participate in food safety quality assurance programs that include water-related requirements, but the details of the requirements are not disclosed and there was no specific mention of animal proteins.
*No change
No
Does the policy encourage suppliers to set science-based and/or context-based targets on water?
While suppliers must prevent discharging wastewater that harms the environment, there is no requirement for suppliers to measure, reduce and report on water quantity or quality impact. The company follows government regulations relating to monitoring but does not seem to go beyond regulatory compliance levels. Yum! Brands recognise the need to evaluate water use but do not globally systemically track supplier sustainability initiatives.
*No change
No
Does the policy ask direct suppliers to measure, reduce (beyond regulatory compliance levels) and report on the water quantity and quality impacts of their direct operations and agricultural supply chains?
The company does not disclose information in its supplier policy regarding context-based water targets.
*No change
No
Does the company have a time-bound, quantifiable zero deforestation/conversion-free policy that covers the entire supply chain for soy, cattle and palm commodities?
The company is a signatory to the New York Declaration on Forests and aims to end natural forest loss 2030 and halve the rate of natural forest loss by 2020. The commitment applies to timber, palm, soy and beef. The company had further committed to eliminating deforestation its palm oil supply by the end of 2018.
For beef, the company's strategy to ensure zero deforestation is to source from low-risk deforestation areas. The company estimates that 93% of its beef is sourced from areas at low risk of deforestation. Despite the approach to source lower risk of deforestation beef there is no timebound target set to achieve the sourcing of zero deforestation beef.
The company does not fully report progress against soy: it states that in 2020, 100% of Brazilian feed mills in its supply chain were audited as compliant with the Amazon Soy Moratorium, but this does not cover Yum!'s full soy supply chain, hence scoring partial points. Additionally, the company's work with the WWF on soy and beef is focused in Brazil only, not the entire supply chain.
*No change
Partial
Targets
Has the company set a time-bound, quantitative reduction target for Scope 1 + Scope 2 GHG emissions?
Yum has set a science-based target to reduce GHG emissions (Scope 1,2 and 3) by 46% by 2030 in line with keeping warming to 1.5 degrees celsius and achieve net-zero emissions by 2050. The target is absolute for its scope 1 and 2 emissions.
* No change
Yes
Has the company set a time-bound, quantitative emissions reduction target that explicitly address Scope 3 emissions?
The company states one of the focus areas for its reduction goals is beef, poultry,and dairy in its supply chain. The target is absolute for its scope 1 and 2 emissions and for its scope 3 emissions from franchises. However its emissions from beef, poultry, dairy and packaging is intensity based.
*No change
Yes
Has the company set time-bound quantitative targets to reduce water use in direct operations?
Having met its 2017 goal of reducing water consumption by 10% from a 2005 baseline, the company extended its efforts and aims to achieve an additional 10% reduction by 2025. It appears that these targets do not apply to franchises. Yum! Brands completed a water risk assessment for its restaurants in 2019 using the WRI Aqueduct Water Risk Atlas and identified more than 150 restaurant locations in high-risk water basins globally.
*No change
Yes
Has the company set time-bound quantitative targets to reduce water quality impacts in direct operations?
Yum! Brands complies with regulations regarding water quality for its own operations. However, there are no mention of targets to reduce water quality impacts.
*New category
No
Has the company set time-bound quantitative targets that explicitly address water use and quality impacts in the supply chain?
There is no mention in Yum! Brand's CDP report or Citizenship report of targets that address water impacts in its animal protein supply chain.
*No change
No
Risk assessment/Scenario analysis
Has the company committed to undertaking and publishing a scenario analysis in line with TCFD recommendations?
Yum! Brands has completed a TCFD-aligned climate risk assessment of restaurants and suppliers; the scenario analysis used to inform strategy is both quantitative and qualitative. However, the public version of the executive summary of the TCFD climate risk assessment does not provide detail of the different climate scenarios and neither does their CDP response.
*No change
Yes
Has the company conducted a water risk assessment across its direct operations?
Yum! Brands completed a water risk assessment in 2019 using the WRI Aqueduct tool for all their 50,000 restaurant locations. It identified that 17% of locations in different basins across the globe were considered to be "high risk" (8,000 restaurants). It is not clear whether this assessment examined both water scarcity and water quality risks, but it is implied that both were taken into account. The results of the WRI risk assessment have not been made public.
*No change
Yes
Has the company conducted a water risk assessment of suppliers & major commodities?
Yum! Brand's recent TCFD climate analysis - which covered restaurants and suppliers - found that 12.6% of global supplies are at risk of impacts from climate change such as drought and water stress. However, they found that this did not reach the threshold of concern due to the company's agile nature. The company's 2019 WRI Aqueduct Water Risk assessment does not cover the company's supply chain, and there is no explicit mention of major commodities, except for forest commodities. The company states that it does not track supplier sustainability initiatives in a systematic way.
*No change
Partial
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Workstream Information
Last Updated:
14 June 2022
2022 Resources
Phase 3 | Progress Briefing Report Meat Sourcing Engagement