1.

General Introduction of the Industry

1.1. Significant environmental and social problems

Fast Food is no longer a strange concept in today's busy modern life. Fast food has become a culinary
trend in the world when people's needs are increasing and living conditions, living environment, etc.
gradually change. According to statistics, there is over 200.000 different fast-food businesses exist in the
United States, Americants spend about $1,200 on fast food in a year on average and the average fast
food consumption grow 2.2% annually. Besides the benefits that fast food brings such as: cheap,
convenient, saving time, fast food is also one of the most significant environmental problems.

1.1.1. Important Resources Used

1.1.2. Features of Production Technologies

1.2. Major accidents/special sustainability problems characteristics to the industry

1.2.1. Environmental Risks in the Industry

a. Packaging and food waste

All food packaging has an impact on the environment, directly or indirectly, whether it is considered
‘environmentally friendly or not. In manufacturing, packaging, and delivery of fast food products,
businesses and brands need to use many types of packaging: Bags, Boxes, Straws, Wrappers, etc.
According to statistics, The average lunch order had four packaged items, including sandwiches, chips,
and snacks as a result of a study of 1,200 workers. This implies that a typical person who purchased their
lunch every day from a grocery store, fast food restaurant, or other takeaway services may produce up
to1000 separate pieces of trash per year. In the UK, it’s estimated that 2.2 million tonnes of plastic
packaging are produced each year. These packaging types of fast food are the primary source of litter in
the US, adding up to 49%.

These types of packaging are created using a range of synthetic and manufactured materials, such as
glass, rigid plastic, paper, and paperboard. Fast food packaging has problems from the moment it is
made. To make any type of packaging, a lot of resources are needed, including energy, water, chemicals,
petroleum, minerals, wood, and textiles. In addition to wastewater and/or sludge containing harmful
chemicals, its manufacturing frequently releases air emissions of greenhouse gases, heavy metals, and
particles. The worst thing is what? These materials decompose in landfills very slowly, and only 46% of
plastic packaging is recovered for recycling, much of it being non-recyclable.

The fast-food sector also produces a lot of food waste in addition to packaging. The United States wastes
more food than any other nation in the world: close to 40 million tons (or 80 billion pounds) of food
annually, compared to the world's 1.4 billion tons. That amounts to 219 pounds of trash per person and
is thought to represent between 30 and 40 percent of the whole US food supply. That's the equivalent of
every individual in America putting more than 650 apples of average size directly into the trash, or rather
directly into landfills as most food waste is disposed of there. In fact, accounting for 22% of municipal
solid waste, food is the single greatest component taking up space in US landfills (MSW). 85% of food
waste in the US from outside the home belongs to fast food restaurants.

b. Emission of greenhouse gases (GHGs)

The FAIRR analysis cited greenhouse gas emissions (GHGs) as one way the fast-food business harms the
environment. The intensive resources needed to produce even a standard cheeseburger, from growing
the wheat to make the buns to feeding the cattle, and eventually their slaughter, and even the energy
required to pickle the cucumbers, —result in astonishing consumption converted into CO2 emissions of
between 1 and 3.5 kg. By 2050, it is anticipated that the livestock industry would account for around 70%
of all permitted greenhouse gas emissions (McGrath, 2019). These emissions include carbon dioxide
(CO2), methane (CH4), and ammonia (NH3) which are naturally released by animals such as cows, pigs,
and chickens (Dopelt, Radon and Davidovitch, 2019). Additionally, the manufacturing of animal products
results in significant water contamination and waste. Runoff from these farms into nearby bodies of
water that contains manure, antibiotics, hormones, fertilizers, and pesticides contributes to water
contamination (McGrath, 2019). One of the worst agricultural products for the environment is beef (or
cows), which is the primary meat source for fast food. The production of beef has the highest water
footprint as seen in the figure below. Not only that, a farm with 2500 milking cows is thought to create
as much garbage as a metropolis with 411,000 inhabitants (Dopelt, Radon and Davidovitch, 2019).

Average Water Footprint of Beef, Pork and Chicken (McGrath, 2019)

c. Energy use

About 19% of the energy utilized in the United States each year goes toward producing food. A large
portion of that goes to the fast food business.

Fast-food brands are very popular for a business model with thousands of restaurant chains around the
world: King of fast food- McDonald's brand has a chain of 35,000 restaurants in more than 118 countries,
and KFC has more than 20,000 restaurants in 109 countries and territories. At the same time, Burger
King is more modest with 18,700 locations in more than 100 countries.

In the fast-food industry, energy is used not only in the production of products but also during the
operation of restaurant chains: Lights, stoves, fryers, and other electronics take significant energy. The
Department of Energy of US estimates that compared to most other commercial building types,
restaurants consume around 2.5 times more energy per square foot. Restaurants use a lot of power,
which can be attributed to the energy-intensive procedures in the kitchen as well as the cost of heating
and cooling. According to the graph below, refrigeration accounts for around 45% of the energy used in
restaurants. Following that come cooking or meal preparation at 18% energy use in restaurants, followed
by heating, cooling, and ventilation at 25% energy use. The remaining energy use is made up of lighting
and the back office.

Source: EIA.gov
Fast Food Restaurants use average of 81 kilowatt-hours (kWh) of electricity and 174,000 Btu of natural
gas per square foot each year (DTE Energy). This combined with the production of restaurant materials
and transportation creates a large carbon footprint.
2. Introduction of selected companies within the industry

2.1. Main activities, markets, size, other important general features

2.1.1 KFC

KFC is an American fast-food restaurant chain that specializes in selling fried chicken and is known
to have diversified the fast-food market by challenging the dominance of the chicken burger.
However, upon entering the Chinese market, In addition to Original Recipe Chicken and other
chicken products, KFC has an extensive menu featuring beef burgers, pork, seafood, rice dishes,
congees, fresh vegetables, desserts, coffee, tea and many other products to suit Chinese taste. This
is also one of the reasons why KFC is successful in China.

KFC is the leading and largest quick service restaurant (QSR) brand in China in terms of 2021
system sales. KFC started in its first location in China on 12th November 1987 in Beijing, the capital
of China. According to GlobalData, Yum China’s KFC is the leading brand in the quick service
restaurant (QSR) channel, with value sales of CNY49.2bn ($7.1bn) in 2020, accounting for a 13.5%
share of the country’s QSR market. As of the end of September 2022, this brand has grown to over
8,600 KFC restaurants in over 1,700 cities across China which contribute about 27% of KFC's
(Global) revenues. Thay vì áp dụng mô hình nhượng quyền như các nhãn hàng khác hay thậm chí các
cửa hàng KFC ở các nước khác, KFC own 90% of its outlet.

KFC's main target audience is Children. They quickly found that it appealed strongly to children. They
tried to change its logo to a playful cartoon character dubbed "Chicky” and developed play areas, child-
height sinks, smaller furniture, and settings for birthday parties to entice children.

2.1.2 McDonald's

Sau sự thành công của KFC tại trung quốc, On October 1990, McDonald’s entered Shenzhen as its first
location in the Chinese market. This brand đã nhanh chóng mở rộng và In 2021, China had the most
number of McDonald's restaurants throughout the Asia-Pacific region and Middle East with
approximately 4.4 thousand stores phục vụ hơn  1 tỷ khách hàng mỗi năm và sử dụng hơn
180.000 lao động.

The key activities of McDonald's are to franchise their restaurants, operate their restaurants, and sell
food items such as burgers, fries, and shakes. Cũng giống như KFC, McDonald’s China luôn cố gắng
incorporate local flavors and traditional dishes into customer favorites and McDonald’s classic burgers và
mở rộng menu với những món chỉ có ở McDonald’s China: Congee, Red Bean Boba Tea, Taro Pie,..

McDonald's also has shown to appeal strongly to children to the extent that there would be areas in
McDonald's called “children’s paradise”. As a result, McDonald's has cemented themselves as a
significant childhood memory.

2.1.3 Burger King

While the two "big-brothers" KFC and McDonald's have participated and achieved a lot of achievements
in the Chinese market, it was not until 2005, Burger King mới opened their first chain in Shanghai. Since
2012, BK China has opened more than 1330 restaurants in 200 cities (TFI, 2022)

When entering the Chinese market, Burger King encountered a big obstacle when Burger King has failed
to play up the advantages of its traditional beef dishes. Burger King faced challenges in the domestic
market as a significant portion of the population preferred chicken over beef when it came to meat
options. As the Whopper was the flagship burger for Burger King, they were forced to adapt to local
tastes.

Burger King’s targeted demographics are young and trendy, as well as sophisticated, diners. Its Beijing
restaurant features an MP3 music corner that offers the latest music hits from the West, and an art
gallery wall to display works by Sino-American artists that could impress young diner.

2.2. Environmental and social challenges faced by the company

2.2.1 Environmental challenges

a. KFC

Chinese demand for chicken, pork, and beef drives deforestation in South America.

As a fast food chain specializing in fried chicken products served in a "chicken bucket" - has become
a special highlight of KFC. While the company does not publish specific figures, media reports
suggest that YUMC buys around 1 billion chickens (16 to 24 percent of overall Chinese chicken
consumption) per year according to Chain Reaction Research (CRR) estimate. Brazilian soy is an
essential ingredient of feed for chicken, pork, and beef in China-the world’s largest animal feed
producer and the largest importer of Brazilian soybeans. China’s meat production is therefore linked
to high levels of deforestation through embedded Brazilian soy. For example, China is a
leading importer of soy produced in the Matopiba region of the Cerrado, a hotspot for soy-driven
deforestation. Between 2005 and 2016, 76 percent of the total area of native Cerrado vegetation cleared
for soy cultivation occurred in Matopiba (at the intersection of Maranhão, Tocantins, Piauí, and Bahía). In
total, China was exposed to a total deforestation risk of 460 square kilometers in 2017, or 5.6Mt CO2e, in
relation to its soy imports from the Cerrado biome.

In addition, the company also sources paper and packaging as well as palm oil-based cooking oil
which also are the reasons of deforestation.

Environment polution due to packaging and food waste

With China's online delivery services generating up to 45 billion USD in 2020, fast food chains like
KFC were quick to introduce app-based ordering. Delivery through these apps can bring an order to
the doorstep in less than an hour. The apps integrated digital payment rather than only accepting
cash, bringing a new level of convenience. The apps offer coupons with every order, incentivizing
customers to order delivery more often. There fore, the cost of convenience with these food delivery
apps comes from the environment in the form of waste. With takeout becoming more popular,
packing waste increased ninefold from 2015 to 2017. The plastic waste produced from takeout have
be a source of concern, with China banning single-use plastics at the end of 2020 and calling for
businesses to use sustainable packaging. Food delivery apps use vehicles to deliver food, so carbon
emissions will also increase with the higher demands of food delivery. The most wasteful would have
to be delivery from restaurants nearby.

Moreover, KFC also blasted by China for ‘causing unnecessary food waste’ through its campaign to
celebrate the franchise’s 35th year in the country. KFC boosts sales by offering ramdomly toys with every
meal. A few people have even bought more than 100 meals at once, spending almost 10,500 yuan
(about $1,650) in an attempt to collect the full line, the watchdog said. KFC boosts sales by offering
ramdomly toys with every meal.

b. McDonald’s

Khác với KFC thì nguồn thịt chính trong các sản phẩm của McDonald là thịt bò. Each year, McDonald’s
buys as much as 1.9bn lb of beef into patties for millions of Happy Meals, Quarter Pounders, Big Macs,
Triple Cheeseburgers and other popular beefy sandwiches served across the globe. And, Big Mac
hamburger has become the company's most popular beef burger in China over 50 million Big Macs were
sold in China in the year 2017.

As we mentioned before, beef cattle being the largest emitters of greenhouse gas emissions in animal
agriculture (UNFAO). Beef cattle require 28 times more land and 11 times more water than other farm
animals on average, and emit five times more greenhouse gas. Cattle production’s carbon footprint also
includes the greenhouse gases from growing and fertilizing feed corn, as well as manure-related
emissions. McDonald’s cũng sử

McDonald’s is facing more brand damage in China after one of its suppliers was slapped by Beijing’s
largest environmental protection fine for violating water pollution regulations.Beijing Simplot Food
Processing, the primary supplier of frozen French fries and potato products to McDonald's in China has
been fined a total of 3.9 million yuan ($629,000) for having been caught releasing polluted water into the
city's primary water pipes. McDonald’s is facing more brand damage in China after one of its suppliers
was slapped by Beijing’s largest environmental protection fine for violating water pollution regulations.

Now, China has become McDonald's second-largest market in the world, the world's fastest-growing
market, and the world's largest franchise market outside of the United States. The large number of
outlets along with the huge number of customers as well as the number of orders delivered (more than
1 billion customers per year) means that a huge amount of packaging and food waste is generated by
this brand.

c. Burger King

Tương tự như trường hợp của McDonald’s, Burger King sử dụng thịt bò như là nguyên liệu chính cho các
sản phẩm đồ ăn nhanh của họ. Không chỉ tạo ra lượng lớn greenhouse gas, Beef production also can be
considered as the world’s biggest driver of tropical deforestation. In some regions, beef causes twice as
much damage to forests as any of the next three biggest culprits: soy, palm oil and wood products,
according to the Union of Concerned Scientists (UCS).

2.2.2 Social challenges

The rapid expansion of China’s FF industry will likely have many public health consequences, while some
have already become alarming as indicated by increasing obesity. FFC may also increase the risk of other
chronic diseases such as cardiovascular diseases and diabete. As the most populous country and the
second-largest economy in the world, China has experienced a rapid increase in obesity rates in the past
three decades, with almost half of adults and more than one-fifth of school-age children being either
overweight or obese (Dong et al., 2019; Gao et al., 2020b; Song et al., 2019; Wang et al., 2006, 2016).
Tsung Cheng at George Washington University Medical Center, “fast food and physical inactivity” are the
two most important factors fueling childhood obesity in China.

Compared to the traditional Chinese diet (predominately consists of vegetables and grains, and features
plant-based protein, high in fiber, and low in cholesterol and fat), FF often consists of more meats and
very limited vegetables, and thus is high in energy density, fat, protein and sodium, and prefers deep
frying to boiling.

2.3. The different environmental and social measures undertaken by the companies

2.3.1 KFC

Yum China Holdings, Inc. operates China’s leading restaurant concepts, including Taco Bell, Little Sheep,
and Pizza Hut, as well as KFC.

Yum China's itself recognizes their operations have substantial economic, social, and environmental
impact as the largest restaurant company in China. They are actively doing their part to address global
topics, such as climate change, plastic pollution, food safety, and social responsibility.

Their sustainability strategy is core and fully integrated into the Company's long-term business growth
strategy - 'Sustainable Platform for Growth'. Their contributions toward a sustainable ecosystem are
reflected by the commitments and initiatives within their three strategic pillars of Food, Environment,
and People.

Yum China has an established governance mechanism on sustainability matters from the Board to
Operation Teams.

At the Board level, the Food Safety and Sustainability Committee assists the Board in its oversight of the
Company's sustainability matters, including environmental, supply chain, and food nutrition and health.

Yum China also established a Sustainability Committee, which is a management committee responsible
for evaluating sustainability risks and monitoring the implementation of key initiatives and regularly
reports to the Food Safety and Sustainability Committee. The Sustainability Committee members meet
quarterly to track the implementation of material topics, evaluate sustainability risks, and develop risk
management strategies and measures.

To effectively assist the Sustainability Committee in implementing sustainable initiatives, Yum China's
Sustainability Task Force was established, which includes cross-functional teams and a sustainability
team. The Sustainability Task Force monitors current and emerging climate-related regulations, develops
sustainability action plans, and promotes the implementation of key sustainability initiatives. The
Operations Teams are responsible for implementing projects and initiatives relevant to sustainable
restaurants, sustainable supply chain, and sustainable community to support Yum China's sustainability
strategy.

2.3.2 McDonald’s

In McDonald’s, it has board-level oversight of sustainable-related issues with:

Board-level committee: Board of Directors' Sustainability and Corporate Responsibility Committee (the
“Committee”) reviews and monitors the Company's strategies and efforts to address sustainability and
resiliency through its performance as a sustainable organization, including environmental and social
issues. This includes updates and discussion on the Company’s climate change strategy, risk management
practices, commitments and progress. The Committee also reviews and monitors the development and
implementation of performance metrics with respect to the Company’s sustainability priorities. The
Committee regularly reports to the full Board and, from time to time, other Board committees regarding
its activities, and the full Board receives reports on the Company’s sustainability efforts as circumstances
warrant.

Chief Sustainability Officer (CSO): The Company's Executive Vice President (EVP) Chief Global Impact
Officer and reporting Vice President (VP) Chief Sustainability Officer are responsible for overseeing
performance, actions, and goals relating to climate change and climate-related issues. They serve as the
executive sponsors of McDonald's aspirations to source all food and packaging sustainably, and develop
and operate the most environmentally sustainable McDonald's restaurants.

Other CSuite Officer: The Company’s EVP Chief Global Impact Officer and VP Chief Sustainability Officer
serve together with the EVP Global Chief People Officer, EVP Chief Supply Chain Officer, Senior VP Chief
Global Marketing Officer, Senior VP Global Restaurant Development & Restaurant Solutions Group, and
General Counsel and Corporate Secretary as a cross-functional leadership team, leading McDonald’s
Impact Strategy, which ensures the organization fulfils its overall global sustainability performance,
including goals and actions relating to climate-related issues.

2.3.3 Burger King

The Board of Directors oversees the management of ESG topics and receives an update from
management at least twice annually. The chief Corporate Officer is jointly accountable for the
sustainability framework and strategy and reports to Chief Executive Officer, who provides
oversight.

A managing sustainability corporate-level team tracks stakeholder expectations and trends,

identifies sustainability initiatives to support the business strategy, and highlights best practices
across the group. The team maintains regular contact with senior leadership, guiding them on
long-term social and environmental trends and the expectations of global stakeholders,
engaging them to incorporate sustainability priorities as part of their business objectives. They
also guide the company’s sustainability reporting, and work with a number of other business
lines to oversee the preparation of sustainability disclosures.

2.4. The environmental policy/mission and environmental management systems used by the
companies; goals and tools to achieve them

2.4.1 KFC

Yum China has been committed to reducing the adverse environmental impacts from the operation of
our restaurants nationwide, as well as from their upstream and downstream activities. Their goals of
'reaching net zero value chain GHG emissions by 2050' and 'zero deforestation supply chain'. To
implement these goals, they continue to promote green restaurants, facilitate the low-carbon transition
of suppliers and responsible raw material procurement, and advocate a sustainable lifestyle with our
customers. Driven by the concept of circular economy, they strive to strengthen waste management and
resource utilization, develop innovative solutions of sustainable packaging, and continuously explore
green and sustainable consumption in the restaurant industry.

Yum China Environmental Management System: As I mentioned before, Yum China have had a
Sustainability Committee comprised of selected Leadership Team members, the Sustainability Officer,
and cross-functional teams. The Sustainability Committee members meet quarterly to track the
implementation of material topics, evaluate sustainability risks, and develop risk management strategies
and measures.
Minimize Environmental Footprint

The Sustainability 4R Principle (Reduce, Reuse, Recycle, and Replace) serve as clear guidance across the
value chain of Yum China, which are adopted to set relevant environmental goals accordingly.

Climate Action: reduce GHG emissions and the ambition to reach net-zero value
chain emissions by 2050.

Low-carbon Operations:

Green Building: They benchmark their buildings against the Leadership in Energy and Environmental
Design (LEED) criteria and formulated the Yum China Green Building Standards for restaurant design to
build high-standard green buildings by using environmentally friendly materials, energy-saving facilities,
and thermal comfort control systems

Energy Efficiency: 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. They developed the Transportation
Management System (TMS) to improve transportation efficiency and to reduce GHG emissions. Yum
China piloted the use of electric vehicle (EV) fleets in Shenzhen, as part of our continued exploration into
new energy vehicles to support our extensive distributionsystem.

Water Efficiency: upgrading of water-saving equipments in water-stressed or water-scarce areas, such as

thawing cabinets and tailor-made dishwashers

Renewable Energy: pilot Distributed Photovoltaics (DPV) installation in the first batch of KFC Green
Pioneer Stores in Beijing and Hangzhou in early 2022

Supply Chain Decarbonization: Over two third of Yum China's value chain GHG emissions come from the
purchased goods, and our supply chain is complexly structured with a wide range of categories and our
suppliers have different readiness for low-carbon operations. Yum China encourage their suppliers to
develop energy management systems to track and monitor energy and resource consumption, and to
deploy energy-efficient facilities and technologies to reduce GHG emissions from their operations.

Low-carbon Lifestyle Promotion

Circular Economy: explore circular solutions to tackle the sustainability challenges of food waste and
packaging

Food Loss & Waste: They are working towards the 2030 goal of reducing per restaurant food waste by
10% as compared to 2020 baseline by exploring innovative initiatives for food loss reduction across
different stages of the value chain.

Sustainable Packaging: The use of disposable packaging is a common challenge to

the restaurant industry. Yum China sets a series of goals and commitments, and officially released the
Yum China Packaging Strategy in 2021. Through a variety of initiatives, such as design optimization,
material replacement (plastic and paper) and innovative solutions on multiple-use packaging ( Use of
FSC-certified Paper), a total of 91 packaging items have been optimized.

Supply Chain Environmental Impact : achieving a zero-deforestation supply chain in collaboration with
suppliers

Palm oil: commit to only purchasing palm oil that meets the eight principles and criteria of the RSPO

Soy: developing soy traceability systems in collaboration with our upstream suppliers and traceable and
environmentally friendly soymilk powder comes from Northeast China

Cattle: follow relevant laws and regulations related to imported meat products, including the List of
Registered Meat Productsm Enterprises Exporting to China.

Timber: purchase forest-friendly products and refuse to purchase paper products from suppliers that
knowingly cause deforestation.

2.4.2 McDonald’s

As communities around the world experience the impacts of climate change, McDonald's China believe
we need to be part of the solution and set an ambition to achieve net zero emissions by 2050 and
“tackle

Deforestation” – a goal from 2020

Environmental Management System

climate action:
McDonald's China prioritizing action across the areas that contribute most to our enterprise carbon
footprint, including restaurant energy, supply chain, and packaging and waste.

Restaurant Energy: Investing in areas such as renewable energy, LED lighting, energy-management
systems and energy-efficient kitchen equipment and taking steps to procure and use renewable
electricity.

Water Efficiency: McDonald’s China is working to conserve water, use it responsibly and efficiently, and
build resiliency. Moreover, Water stewardship practices are embedded in their sourcing requirements
that expect suppliers to proactively manage, measure and minimize the environmental impact of their
own operation, including through responsible water use and disposal.

Regenerating soils: supporting regenerative agriculture initiatives to encourage awareness and adoption
of management principles that improve soil health and climate resiliency while sequestering carbon.

Supplier emissions: focuon reducing energy usage at supplier facilities, sourcing renewable energy,
transportation efficiency and reducing waste.

Packaging, Toys & Waste: Strategy is based on the following five focus areas:

- Eliminating unnecessary packaging and streamlining materials for easier recovery in addition to
innovation for new materials, testing reusable solutions and creating opportunities for behavior
change to reduce usage.
- Transitioning away from virgin fossil fuel-based plastics in our primary guest packaging to 100%
renewable, recycled or certified sources by the end of 2025 and to drastically reduce virgin fossil-
fuel based plastics in our Happy Meal toys.
- Advancing a circular economy through the implementation of many tools to improve recycling
and repurposing of materials, making it easier for customers to recycle, and reduce the waste
coming out of our restaurants.
- Increasing the use of recycled materials throughout our System to drive global demand for
recycled content – including in packaging, toys and design materials for restaurants and facilities.
- Partnering to increase scale and impact of a circular economy approach to packaging and waste.
By engaging in strategic partnerships with brands and nongovernmental organizations (NGOs),
we can increase adoption of circularity across our industry.

Supply Chain Environmental Impact: Eliminate Deforestation

Beef – McDonald’s requires that all the beef we source meets the requirements of our Deforestation-
Free Beef Procurement Policy and Commitment on Forests.

Soy (for chicken feed) – We require that all soy sourced for the feed of chicken used in McDonald’s
products is either sourced from low priority regions or, when sourced from high priority regions,
including Argentina (Chaco biome), Brazil (Amazon and Cerrado biomes) and Paraguay (Chaco biome),
must support responsible soy production.
Palm oil – Palm oil sourced for McDonald’s restaurants or as ingredients in McDonald’s products must
meet the requirements of RSPO certification.

Coffee – McDonald’s requires coffee sourced from Honduras, Indonesia and Vietnam to be Rainforest
Alliance Certified.

Fiber – McDonald’s requires that our primary fiber supply is sourced from Forest Stewardship Council®
(FSC®) certified or FSC controlled wood sources, with full chain of custody certification when the country
of fiber origin includes Argentina, Cambodia, China, Indonesia, Laos, Malaysia, Russia or Vietnam.

2.4.3 Burger King

Continuously Reducing Environmental Footprint to protect the planet for future generations and for the
sustainability of business. The key areas of influence within company commitment to the planet are:
climate action, packaging and recycling, as well as responsible sourcing, including protecting forests, and
animal health and welfare. Most of actions still are in progress and planning.

Climate Action: Planning long-term target to achieve net-zero emissions by 2050, limiting global
warming to 1.5°C by this date. In the interim, and reducing greenhouse gas (GHG) emissions by 50% by
2030.

Transitioning to Renewable Energy: Procure renewable energy for 100% of electricity use for our directly-
controlled and corporate owned or leased and operations globally.

Operating Sustainable Restaurants: Pilot Green Building Standards at corporate and franchise
restaurants but still in progess of determining the types of equipment and approaches to test based on
geography, brand and store format.

Packaging and Recycling:

Reduce Packaging: Increase the use of reusable packaging alternatives and Find opportunities to reduce
material volume through innovative design and restaurant policies

Make Responsible Material Choices: Increase the use of renewable and recycled materials, source paper
fiber-based packaging from recycled or certified sources, Reduce problematic or unnecessary plastic -
those which are difficult to recycle or compost due to their format, composition, or size.

Design For Circularity: work to make packaging reusable, recyclable, or compostable.

Recover And Recycle: Recycle guest packaging in restaurants where commercially viable and where
infrastructure is available

Protecting Forests: eliminating deforestation within industry and in promoting sustainable forest
management practices for commodity sourcing around the world.

Palm Oil: prioritize the responsible sourcing of palm oil( not contribute to deforestation13 nor
agricultural development on peatlands) due to the inherent deforestation risk associated with its
production. Palm oil directly sourced and supplied through a Roundtable for Sustainable Palm Oil (RSPO)
certified supply chain

Fibre-Based Packaging: work with supplier to ensure that our fiber-based guest packaging comes from
certified or recycled sources in all restaurants.

Beef: all approved raw material suppliers of beef sourced from Brazil maintain active policies
on illegal deforestation in the Amazon Biome.

Soy In Poultry Feed: work with approved suppliers who share our
goal of eliminating deforestation in our supply chains and
advancing solutions that can serve the industry due to high
deforestation risk of soy.

2.5.1 KFC

Environmental impact  Unit Indicators

GHG Emissions tCO2e Direct (Scope 1) GHG Emissions Energy Indirect (Scope 2) GHG
Emissions Average Restaurant Energy Indirect GHG Emissions
Other Indirect (Scope 3) GHG Emissions
Electricity Consumption MWh Total Electricity Consumption
Average Restaurant Electricity Consumption
Water Consumption  tons Total Water Consumption
Average Restaurant Water Consumption
Packaging Usage  tons Total Amount of Packaging Usage*
  (Plastic Packaging & Paper Packaging)
Total Amount of Plastic Packaging Usage
Total Amount of Paper Packaging Usage
Packaging Usage per Sales (in million yuan)
Total Packaging Savings (Plastic Packaging & Paper Packaging)
Palm Oil  Percentage (%) Percentage of RSPO-Certified Palm Oil

2.5.2 McDonald’s

Environmental impact  Unit Indicators

Energy Management Quantitative Total energy consumed

Gigajoules (GJ), Percentage grid electricity
Percentage (%) Percentage renewable
Water Management Thousand cubic Total water withdrawn
meters (m³), Total water consumed, percentage of each in regions
Percentage (%) with High or Extremely High Baseline Water Stress
Food Waste Management Metric tons (t), Total amount of waste
 Percentage (%) percentage food waste
percentage diverted
Packaging Waste Metric tons (t), Total weight of packaging
Management Percentage (%) Percentage made from recycled and/or renewable
materials
Percentage that is recyclable, reusable, and/or
compostable
2.5.3 Burger King

Environmental impact  Unit Indicators

Energy Management Quantitative Total energy consumed

Gigajoules (GJ), Percentage grid electricity
Percentage (%) Percentage renewable
Water Management Thousand cubic Total water withdrawn
meters (m³), Total water consumed, percentage of each in regions
Percentage (%) with high or extremely high baseline water stress
Food Waste Management Metric tons (t), Total amount of waste
Percentage (%) Percentage food waste
Percentage diverted
Packaging Waste Metric tons (t), Total weight of packaging
Management Percentage (%) Percentage made from recycled and/or renewable
materials
Percentage that is recyclable, reusable and/or
compostable

2.6. Environmental marketing practices of the companies

2.6.1 KFC

KFC Launched A ‘Be Natural, Be You’ Sustainability Campaign

In December 2020, KFC China launched a ‘Be Natural, Be You’ sustainability campaign to enhance
consumers' awareness of environmental protection and encourage more sustainable lifestyles, including
reducing the use of disposable plastic packaging and better waste sorting.

KFC responded to the national plastic ban by launching a range of plastic packaging reduction initiatives
nationwide since 2020. By the end of 2020, all KFC restaurants in China had stopped using plastic straws
and over 90% of KFC restaurants had replaced disposable plastic cutlery with wooden cutlery for dine-in
and takeaway. Over 50% of KFC restaurants had replaced non-biodegradable plastic bags used for
delivery and takeaway with paper bags or biodegradable plastic bags. By the end of 2025, all KFC
restaurants will phase out non-biodegradable plastic bags and cutlery in China.

KFC's Marketing Campaign to Spark a Sustainable Lifestyle

In December 2021, KFC introduced an interactive section on its Super App to increase public awareness
on topics such as 'Exploring Carbon Reduction' and 'The Journey to Carbon Neutrality', aiming to
promote carbon reduction actions. KFC has introduced a green rewards program with special coupons
that encourages and incentivizes behaviors such as mobile ordering and in-store pickup, opting out of
using disposable cutlery, reducing food waste, and waste sorting. The program covered over 7,900 stores
nationwide and strived to inspire 320 million KFC members to participate in and contribute to the
sustainable development of society and the environment.

In addition, KFC launched an oat drink on its breakfast menu, its first 'carbon zero' product. The whole
lifecycle carbon footprint of the oat drink was certified by a third-party institution in accordance with ISO
14067. To offset the GHG emissions of the oat drink, KFC joined hands with the China Green Carbon
Foundation to plant trees and launched the KFC Carbon-neutral Forest Program in Baoshan, Yunnan
province.

KFC, a Supporter of WWF Earth Hour for 13 Consecutive Years

Since 2009, KFC has been supporting WWF's Earth Hour to inspire individuals and communities to take
tangiblenenvironmental action. On the last Saturday of March every year, KFC restaurants proactively
participate in the Earth Hour activity. During the hour, all exterior lights are switched off. We hope to
advocate the public to practice a low-carbon lifestyle and build a green future together.

2.6.2 McDonald’s

Green restaurant

As the second largest market for McDonald's in the world, McDonald's China plans to open more than
1,800 green restaurants from the end of 2018 to 2022, accounting for more than 95% of all new
restaurants. All
of these restaurants will meet LEED (Leadership in Energy and
Environmental Design) certification standards in the "Interior Design &
Construction" (ID&C) category, issued by the United States Green Building
Council.
For existing restaurants, McDonald's China has also continued to transform and optimize
energy management, including the use of LED energy-saving lamps, more efficient air
conditioners and kitchen equipment. The goal is to further reduce the average energy
consumption by 11% compared with 2018 in 2022.

green packaging
McDonald's China continues to promote the three green packaging action plans. On the
premise of ensuring customers' dining experience, they use packaging more responsibly, and
continuously optimize and reduce packaging materials.

Actively reduce the use of packaging materials

In 2015, McDonald's China successively canceled the packaging boxes of Spicy
Chicken Drumstick Burger, Maixiang Fish and Pan-Grilled Chicken Drumstick Burger,
and replaced them with single-layer packaging paper, reducing the amount of paper
used for packaging related products by nearly 80%. For packaging such as French fries
boxes, pie boxes, hamburger wrappers, napkins, and Happy Meal boxes, McDonald's
also optimized the cutting process and size design, reducing the amount of paper
required by about 20%.
reduce plastic
In June 2020, McDonald's China announced that it will further reduce plastic on food
packaging and gradually stop using plastic straws. Starting from June 30, nearly a
thousand restaurants in Beijing, Shanghai, Guangzhou, and Shenzhen will take the lead
in implementing dine-in and take-out services. Consumers can directly drink cold drinks
without solids (such as cola) through a new type of cup lid [1]. Plastic measures will
cover all restaurants in mainland China within 2020. By then, it is expected to reduce
the consumption of plastic by about 400 tons per year.
100% use international forest certification base paper
In 2020, 100% of the paper food packaging used by McDonald's China will be made
from base paper certified by the Forest Stewardship Council (FSC) to support
sustainable forest management.

2.6.1 Burger King

Plant-Based WHOPPER
The Plant-Based WHOPPER® has been designed specifically with flexitarians in mind: meat
lovers who want to reduce their consumption, without having to sacrifice taste and texture. The
Plant-Based WHOPPER®, powered by The Vegetarian Butcher, is now available in more than
325 Burger King® outlets across Beijing, Shanghai, Shenzhen and Hangzhou, with nationwide
roll-out plans from Q2 2021. This has helped the brand further tap into the ongoing global
surge in demand for plant-based foods as people around the world become more
conscious of the impact of animal products on their health and the planet.

2.7. Corporate Social Responsibility activities of the companies

Fair, Care and Pride

Yum China embrace the 'Fair, Care and Pride' principle and are committed to Create a Sustainable
Workplace that Reinforces 'People First': respect and protection for human rights. Yum China strive to
create a workplace and a community that respect and protect human rights. They proactively identify,
prevent and mitigate human rights risks in the Company and throughout the value chain. They also
provide gainful employment opportunities to socially vulnerable and disadvantaged groups including
people with disabilities and migrant worker and take an active role in understanding stakeholders'
concerns and expectations on human rights issues.

Supplier CSR Audit

We practice responsible sourcing and implement the CSR audit program to ensure suppliers are legally
compliant in areas such as child/ minor labor, forced labor, health and safety, discrimination, disciplinary

measures, working hours, wages and benefits, environmental management and security.

Yum China CSR audit framework and evaluation criteria are developed with reference to applicable
national laws and regulations as well as 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.
In 2021, they started to include suppliers' efforts of energy-saving and GHG emissions reduction into CSR
audit.

KFC First Light Fund

For twenty years since its establishment in 2002, the KFC First Light Fund has been providing financial
support for college education to talented students from underprivileged families.

The program created an integrated 'Receive Help – Help Yourself – Help Others' model, providing
scholarships for students, arranging for students to participate in KFC restaurant internships, and public
welfare activities to help students achieve transformation from being assisted to self-help and to helping
others, as well as promoting their independence and personal growth. As of the end of 2021, we had
invested approximately RMB 120 million in the fund and assisted 20,000 college students in 68
universities across 30 cities.

KFC Little Migratory Birds Fund

Targeting left-behind and migrant children, KFC set up the KFC Little Migratory Birds Fund together with
China Children and Teenagers' Fund (CCTF) in 2016. The fund supports a series of reading, sports and
arts activities all over the country to support and promote the physical and mental growth of these
children. To complement the program, KFC also set up 'Mom Restaurants for Little Migratory Birds' to
provide employment opportunities for working parents of left-behind children so that they can work
near their hometown and spend more time with their children. As of the end of 2021, the KFC Little
Migratory Birds Fund had donated over RMB 24 million, benefiting 4 million left-behind and migrant
children.

2.7.2 McDonald’s
In 2018, McDonald's announced the Scale For Good sustainable development vision and action
plan globally, including packaging and recycling, children's nutrition, children's well-being, youth
employment and other fields. In October of the same year, McDonald's China announced the
local "Scale For Good" sustainable development action plan and interpreted it as: " One small
step for us, one giant leap for the world ".

Unlimited Youth

McDonald's China announced the "Unlimited Youth" talent training plan in 2020: from 2020 to 2022, it
will invest more than 100 million yuan, and join hands with more than 100 vocational colleges across the
country to run schools through the "Modern Apprenticeship System" implemented by the Ministry of
Education across the country The model has helped more than 10,000 young people improve their
employability and supported them to embark on the career development path after graduation.

Ronald McDonald House

"Uncle McDonald's Home" was established in the United States in 1974. It is a global public welfare
project that provides a "home away from home" for families of sick children who seek medical treatment
in other places, just a few minutes away from the hospital . Uncle McDonald's House is one of
McDonald's China's core public welfare projects. In 2006, McDonald's China cooperated with the China
Soong Ching Ling Foundation to set up the Special Fund for McDonald's Uncle Home of the China Soong
Ching Ling Foundation,  physical public welfare project, to provide poor families with children who seek
medical treatment in other places. Free shelter and care services. Up to now, Ronald McDonald Houses
have been opened in Changsha, Hunan, Shanghai and Beijing . The three McDonald’s Houses have
served more than 860 families , provided more than 39,000 nights of sound sleep , and saved various
living expenses for the families. The cost exceeded 10 million yuan .

2.7.3

Love Meal Charity Program

“Loving meals” for Angels in white and volunteers who quickly assembled and raced
against time to devote themselves to the frontline battle against the epidemic.

“Love Meal" for "urban beauticians"- sanitation workers who start their work at 4:00
a.m. day after day, and devote themselves to their ordinary posts day after day.
"Lighting Project"

Burger King McLamore Foundation and Burger King China will cooperate with the Lu Xun Cultural
Foundation to carry out counterpart assistance and research areas and deliver cultural content such as
painting, sculpture, music, and dance to local primary and secondary schools to lighten the culture of
children life.