YSG Releases its Second ESG Report, Setting a Benchmark for the Industry

GUANGZHOU, China, July 31, 2023 /PRNewswire/ -- Against the backdrop of sustainable development around the globe, excellent ESG (environmental, social and governance) performance is a new measure for the quality and sustainable prospect of an enterprise. In the future, driven by the "dual carbon" strategic goal, ESG indicators will be new focus for domestic consumer goods companies.

Recently, the fast-growing beauty group YSG released its Environmental, Social and Governance Report of 2022 (hereinafter referred to as the ESG Report). This is the second consecutive year for the Company to release the ESG Report, which thoroughly demonstrates the actions and achievements of YSG in practicing the ESG framework in multiple dimensions in the past year.

YSG's good ESG performance has won the recognition of an authoritative third party institute— in December 2022, the world's largest index company, Morgan Stanley Capital International, MSCI, upgraded the rating of YSG to A, which is an internationally recognized leading level. The rating report shows that YSG is an industry leader in the management of packaging materials and wastes, and is committed to reducing the impact of packaging materials through green packaging, lightweight packaging and recycling, etc.

Expanding "Carbon Footprint" Assessment Category, Embarking on Sustainable Path of Beauty Products

Under the guidance of "dual carbon" national strategy, the beauty industry is actively participating in sustainable development and green growth. Domestic beauty enterprises rise to implement the ESG goals. With the long-term vision of "health and beauty explorer in the era of new technology", YSG has been adhering to low-carbon development, and has always been practicing its commitment to environmental friendliness.

Following Perfect Diary's core product "Rouge Intense Velet Slim Lipstick" launched in 2021, YSG has continued to expand the scope of categories covered by carbon footprint verification. The ESG report shows that in 2022, the Company conducted carbon footprint assessment on Perfect Diary's ace products, "Weightless Velvet Lip Stain" and "Translucent Blurring Loose Powder (Anti-dullness Version)". Through this process, YSG can ascertain the carbon emissions of products in the whole life cycle, identify the potential for emission reduction at each stage, and continue to upgrade its products in the future to reduce the impact on the environment.

In addition, YSG also focuses on issues such as suppliers' carbon emissions and energy management in order to realize low-carbon and sustainable development of the entire supply chain. The Company encourages suppliers to take the initiative to meet the challenge of carbon emission reduction and to seize the opportunity to set feasible and challenging carbon emission reduction goals, so as to work together with YSG to continuously reduce the total amount of carbon emissions of the supply chain. By the end of 2022, all seven core suppliers of YSG have implemented carbon emission management.

At the same time, the consumption of packaging materials, possible pollutions and other issues have drawn more concern; plastic reduction, lightweight packaging, recycling has become the direction advocated by the government and expected by consumers. In 2022, Yatsen's brands, including Perfect Diary, Pink Bear, and Little Ondine, adjusted the weight and size of their product cartons, switched from offset-printed cardboard boxes to watermarked ones, and adopted eco-friendly kraft paper materials, reducing paper consumption by 25%;at the same time, plastic films have been removed for all paper boxes, further reducing the use of plastic packaging materials. Galénic's plastic packaging in China is 100% replaced by degradable bio-based paper plastics. EVE LOM's product packaging achieved 100% recyclability (obtaining The Green Dot logo).

Committed to Scientific Research and Innovation, Laying Solid Foundation for Brand R&D

In the past year, the cosmetic industry has been speeding into the era of detailed brand building with quality as the focus, and the attention paid to R&D by domestic beauty brands has risen significantly, as the beauty industry has entered a new stage of competing for "internal strength". According to the ESG report, YSG attaches great importance to product innovation and R&D, and has invested RMB 127 million in R&D in 2022, accounting for 3.4% of its total revenue. The R&D expense ratio continues to rank among the top in the world.

With the support of the Open Lab R&D system, YSG has formed cooperation with many renowned research institutions, universities and colleges and hospitals home and abroad, identifying, studying and transferring for commercial applications worldwide— all for quality beauty products. Multiple types of achievements of technology-supported cosmetics have been made. Perfect Diary cooperated with the Key Laboratory of Molecular Nanostructure and Nanotechnology of Chinese Academy of Sciences and developed the SmartLOCK, which is used in the Translucent Blurring Loose Powder for its high efficiency in keeping look fresh with antioxidant capacity.

What is more noteworthy is that YSG understands that R&D innovation is the way to long-term development of an enterprise, drives category innovation, which in turn brings R&D breakthrough. In 2022 June, YSG R&D Center officially obtained the Laboratory Accreditation Certificate issued by China National Accreditation Service for Conformity Assessment (CNAS), which marks that the Center's product testing capabilities, equipment and devices have reached national approved standards. In November of the same year, the Company established the Sun Yat-sen University-Yatsen Group (YSG) Skin Health Precise Research Joint Laboratory,which has now built two major platforms, namely, the Chinese Skin Aging Research Platform for Chinese and the Bio-Fermentation Research Platform of Sun Yat-sen University.

Shouldering Public Welfare, Setting Benchmark for Sustainable Development

As young listed beauty enterprise, YSG spares no effort on public welfare while promoting its own development, deepening its enterprise and brand value. The Company explores actively the new path of beauty, aiming to discover female beauty, guard natural beauty and pass on the beauty of goodwill. The on-going "Create a beautiful life" and other training programs have witnessed YSG's endeavour in public welfare.

Since the establishment of the Company, YSG has been committed to involving more people to enjoy beauty as part of its corporate social responsibility practice. In 2020, YSG, with the goal of "helping women to discover and create beauty", joined hands with the China Women's Development Foundation to launch "Creating a beautiful life" public welfare training program. A total of RMB 2 million has been invested in the program in three years. As of March 2023, 5 training sessions have been completed, empowering 202 women to start their own business/employment in the field of beauty through the learning of beauty skills, quality enhancement, in-person visits and practice, industry exchanges, and mentor support.

At the same time, the Company is also expanding the depth and breadth of public welfare practices, actively contributing to social welfare such as education and research, child care, rural revitalization, public welfare for the disabled, shouldering a sense of social responsibility and mission, insisting on giving back real benefits to the society, and spreading the beauty of goodwill even farther.

Promoting high-quality development is the core in YSG's transformation process and the fundamental guideline for the Company's ESG practices. Mr. Huang Jinfeng, Founder, Chairman and CEO of YSG, said, "2022 is a year for YSG to deepen its transformation and reform in a comprehensive manner. Good ESG governance is an important driving force to promote the sustainable development of enterprises. In the future, YSG will focus on three aspects of optimization: continue to give full play to the value of ESG to create new momentum for development; continue to improve the green management to create sustainable products; and promote more public welfare programs to give full play to their own strengths and social influence, and actively give back to the society."

On the road of sustainable and high-quality development, YSG will continue to enhance its professional ability, improve itself through reformation, apply new technology and new thinking to the field of beauty, drive product upgrading with innovation, provide high-quality and innovative products to global consumers, and bring new vitality and confidence to the beauty industry.

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SOURCE Yatsen Global