Yum China Holdings (YUMC) Has Made Significant Progress Recently in ESG Disclosure Requirements

Sustainable Growth Advisers (SGA), an investment management company, released its fourth-quarter investor letter for its “Emerging Markets Growth Strategy.” A copy of the letter can be downloaded here. The fourth quarter of 2025 marked strong divergence from the market. Market leadership by AI beneficiaries and revival of cyclical sectors dominated the market, while quality growth strategies faced challenges. In Q4 2025, the portfolio returned 0.8% (Gross) and 0.6% (Net) compared to the MSCI EM Net TR Index return of 4.7% and the MSCI EM Growth Net TR Index return of 3.3%. In 2025, the portfolio delivered strong returns of 23.8% (Gross) and 22.8% (Net) but lagged the 33.6% and 34.3% returns for the indexes, respectively. The portfolio projects 13% revenue growth and 16% earnings growth annually for the next three years. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, SGA Emerging Markets Growth Strategy highlighted stocks like Yum China Holdings, Inc. (NYSE:YUMC). Headquartered in Shanghai, the People's Republic of China, Yum China Holdings, Inc. (NYSE:YUMC) is a fast-food restaurant operator. On February 13, 2026, Yum China Holdings, Inc. (NYSE:YUMC) stock closed at $55.42 per share. One-month return of Yum China Holdings, Inc. (NYSE:YUMC) was 16.55%, and its shares are up 12.73% over the past twelve months. Yum China Holdings, Inc. (NYSE:YUMC)has a market capitalization of $19.578 billion.

SGA Emerging Markets Growth Strategy stated the following regarding Yum China Holdings, Inc. (NYSE:YUMC) in its fourth quarter 2025 investor letter:

 "Yum China Holdings, Inc. (NYSE:YUMC): In November we met with Yum’s ESG team, the company’s Chief Sustainability Officer, and members of the legal department.

We discussed updates on Yum’s ESG disclosure requirements across the globe. Standards are still being established, but Yum is well underway preparing for finalized requirements. The two biggest ESG reporting disclosure initiatives are in the EU (Corporate Sustainability Reporting Directive, or “CSRD”) and California. The reporting requirements are still a work in progress, and Yum is currently conducting high-level work but is waiting for further clarification before diving deeper. The good news is that more and more jurisdictions are moving towards common disclosures, with most broadly consistent with the ISSB (International Sustainability Standards Board).

Regarding biodiversity, we were pleased to hear that Yum is in the midst of a risk assessment of its exposure to ensure it complies with new disclosure requirements in California. The assessment will utilize a Task Force on Climate-related Financial Disclosures framework to look at the company’s exposure based on its restaurants and the network of its suppliers. The company should be able to leverage this work to comply with new reporting requirements under the EU’s CSRD directive once the EU’s framework is finalized. Separately, Yum continues to programmatically engage with its beef, chicken, and dairy suppliers on biodiversity.

We also discussed whether the “MAHA” (Make America Healthy Again) movement might be a threat to Yum restaurant sales despite the company having made significant progress on the elimination of artificial colors and flavors from its menu items. The company recently met with White House staff for what sounded like a productive session. According to Yum, the White House was particularly impressed with the transparency Yum provides on its website regarding nutrition content, ingredient disclosure, etc. Yum is also well positioned versus RFK Jr.’s war on artificial colors and flavors, having removed 95% and 91% of artificial colors and flavors (respectively) from its food in recent years. Stepping back, the company has a reasonably well developed nutrition strategy under which significant progress has been made in areas including calorie, salt, fat, and sugar reduction."

Yum China Holdings, Inc. (NYSE:YUMC)is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 31 hedge fund portfolios held Yum China Holdings, Inc. (NYSE:YUMC) at the end of the third quarter, up from 30 in the previous quarter. While we acknowledge the potential of Yum China Holdings, Inc. (NYSE:YUMC)as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Yum China Holdings, Inc. (NYSE:YUMC) and shared a list of top Chinese companies on US exchanges. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.