Perfect Diary's Parent Company Releases Its First ESG Report

Yatsen, the parent company of Perfect Diary, practiced the concept of green development and low-carbon operation, issuing the first environmental, social and governance report (ESG Report): The company completed in 2021 the carbon footprint verification of the core product of Perfect Diary, slim lipstick. The carbon footprint of one Perfect Diary slim lipstick is 507g CO2 equivalent. The price of Perfect Diary slim lipstick series ranges from $13.3 to $113.4 on Tmall, a Chinese e-commerce platform.

On May 16, Beijing time (all times in this article are Beijing time), Yatsen e-commerce, the parent company of China's beauty brand Perfect Diary, released its first ESG report, which is also the first ESG report released by China's new beauty consumption industry. The report includes the information and data of Yatsen from January 1 2021 to December 31, 2021 (hereinafter referred to as the "reporting period").

In 2021, Yatsen ushered in its fifth anniversary and its first year as a listed enterprise. Since its establishment in 2016, Yatsen has been committed to fulfilling its commitment to consumers, employees and society, integrating ESG concepts into the company's decision-making, and continuously improving ESG management level in the process of promoting green development and practicing social responsibility.

Founded in 2016, Yatsen owns several famous brands such as Perfect Diary, Little Ondine, Galenic, EVE LOM and so on. In November 2020, Yatsen was officially listed on the New York Stock Exchange(NYSE), becoming the first Chinese cosmetics group to be listed on the US stock market.

Yatsen adheres to product innovation driven by research and development. Its c integration of the world's leading scientific research resources to construct an innovative ecological R&D system - Yatsen Open Lab, which takes Yatsen e-commerce as the leading core and includes the world's top partners such as raw material end, R & D end and production end.

In 2021, the annual R & D investment of Yatsen exceeded $21 million, with a year-on-year increase of 1.2 %, and the R&D expense rate reached 2.43%. The report also revealed that as a fast-growing multi-brand and omni-channel beauty platform, the average age of Yatsen employees is 27, of which 78.6% are female employees.

At present, Yatsen has a research and development center in Guangzhou, China covering an area of 1,896 square meters -- Yatsen Research and Development Center, with cell, physical and chemical, sensory, efficacy, stability, makeup, skin care and other advanced laboratories. In March 2021, Yatsen cooperated with COSMAX CHINA.INC to build a large manufacturing center and R&D base in Guangzhou.

During the reporting period, with the strong support of the Open Lab R&D system, Yatsen has successfully implemented a number of technological innovations and application achievements, such as SmartLock technology jointly developed with the Chinese Academy of Sciences, which can directionally adsorb the excess oil secreted by the skin and achieve oil absorption without makeup absorption.

In 2021, Yatsen had a total of 114 suppliers in terms of access and annual audit, including 141 direct suppliers and 7 core suppliers in China. In addition, Yatsen has carried out 48 annual and flight inspections on cooperative finished product suppliers, and the qualified rate is 100%.

For cooperative suppliers, Yatsen will conduct a regular assessment of suppliers, including price, quality, delivery, cooperation services, etc. For suppliers who continue to be poor, Yatsen will temporarily terminate cooperation and set a rectification period; For suppliers who still fail to pass the assessment after rectification, Yatsen will immediately terminate the cooperation to ensure the supply quality.

With the promotion of China's "Double Carbon" strategic goal, the green transformation of enterprises has become a hot topic in the industry. As the youngest listed beauty company in China, Yatsen strives to practice the concept of green development and low-carbon operation, and continuously reduce carbon emissions through climate change response, product carbon verification, sustainable procurement, sustainable packaging and efficient operation.

In 2021, Yatsen selected the core product of Perfect Diary, Slim Lipstick, as the beginning of product carbon footprint assessment, and invited a third party organization to conduct carbon emission verification while obtaining the product carbon footprint certificate, as the first step to reducing product carbon emissions. According to the certificate, the carbon footprint of a Perfect Diary Slim Lipstick (Colour L02 and L04) is 507g of CO2 equivalent. (Note: Equivalent refers to the amount equivalent to a specific or popular value).

In terms of product packaging, Yatsen and its brands are actively exploring environmental protection packaging materials through measures such as green packaging, lightweight and recycling: 95% of Abby's Choice products adopt FSC certified environmental protection paper; The packaging of Eve LOM products is 100% recycled, and the materials selected for some products can be 100% biodegradable; Galenic products are printed with FSC certified environmental protection paper and green environmental protection soybean ink; Improving the packaging process of Dr.Wu brand, to promote the reduction transformation of packaging, and strengthen the recycling of packaging, and reduce the impact of product packaging on the environment.

Yatsen’s emphasis on green environmental protection is also reflected in the whole production cycle of its products. In February 2022, Yatsen officially became a member of the Roundtable on Sustainable Palm Oil (RSPO), and pledged to prioritize sustainable palm oil procurement in the future to increase the proportion of products using sustainable palm oil, while promoting green procurement to improve the environmental impact of the supply chain.

Notes:

Core suppliers:：The suppliers that account for 70% of the total purchase amount of Yatsen in 2021.