Corporate Governance

In strict accordance with the Company Law of the People's Republic of China, the Securities Exchange Act of the United States and other relevant laws and regulations, VNET consistently improves the modern corporate governance structure, actively creates a positive internal and external governance environment, protects the interests of all shareholders, and promotes the healthy and stable development of the Group. The robust governance structure is comprised of the general meeting of shareholders, the Board of Directors and its subordinate committees, as well as the management. Under the supervision and guidance of these Board committees, the Board of Directors provides consultation and suggestions on the management of various divisions. This involves formulating relevant strategies, supervising their implementation, and monitoring the operational and financial performance of the Group, ensuring soundness of internal control and risk management systems.

We believe that board diversity brings different perspectives for the development of the Group and provides a solid foundation for promoting sustainability. In accordance with committee charters, the Corporate Governance and Nomination Committee evaluates the Board structure every year in terms of independence, expertise, skill and experience of Board members. It is devoted to selecting the most qualified members according to the principle of diversity. The factors to be considered include but are not limited to gender, cultural background and race. This is to ensure the balance between skill, experience and view diversity and improve the board effectiveness. The current directors of the Group are all equipped with professional qualities and strong educational background.

The Group encourages our directors to take up professional training and courses tailored to their needs, as well as providing them with legal and regulatory updates for reference and study. We aim to enhance the board's awareness and performance in the respective areas. We invest in the anti-corruption training for them. All directors of the Group have participated in various forms of anti-corruption training.

ESG Governance

VNET integrates environmental, social and governance (ESG) management philosophy into major decisions of the Group, promotes high-quality development of the Group, and safeguards the interests of investors, customers, employees, communities and other stakeholders. The Group incorporates ESG governance into the corporate governance structure, which consists of all levels of corporate hierarchy including the board, board committees, management, coordinating departments and business departments.

The Group established a comprehensive ESG topic list in accordance with the SHIELD sustainable system, which will be applicable in the medium and long run. The procedure of our material issues assessment is as follows:

Our materiality assessment is as follow:

We enhance the disclosure of material issues in accordance with the results of this assessment on regular basis. In daily operations, we will take on board these results as guidance for our future work. We will consistently optimize our work, as part of the efforts to respond to stakeholders' expectations. This will increase trust and cooperation whilst jointly advancing the sustainable development of the Group and the society.

Risk Prevention and Control

VNET firmly believes that the effective risk management and internal control hold the key to the success of the Group. In accordance with the NASDAQ's Corporate Governance Guidelines and other guidelines, we develop risk management and internal control systems tailored to the characteristics of our business development. We identify and give early warnings to financial and non-financial risks in the operation process, as well as put in place an effective risk prevention and control mechanism. We also clearly define the roles and responsibilities assumed by the Board of Directors, Board of Supervisors, management, internal control teams and external audit agencies in the risk prevention and control system to ensure both soundness and effectiveness.

"Three Lines of Defense" for Risk Management

Based on the COSO Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and in accordance with the Sarbanes-Oxley Act, VNET adopts the three lines of defense model for risk management. The model distinguishes the level and role of different lines of defense involved in risk management and defines the control process for risks of various types. The first line of defense focuses on the prevention and control of business-related risks through regular business processes. The second line of defense manages risk-related tasks and activities from the perspective of functional departments. It guides and oversees the first line of defense to optimize risk management. The third line of defense provides postevent examination and assessment of the operation of the first and second lines of defense by the Internal Control Department. In doing this, we identify problems and arrange for rectifications to ensure the implementation and optimization of risk management policies and responsibilities.

Forward-looking Risk Management

VNET pays particular attention to risks that are highly sensitive to corporate operations, such as the risk of relevant transactions. We are committed to implementing a comprehensive and forward-looking risk management system, and effectively controlling potential risks such as climate change and energy supply risks. We have formulated a series of emergency response guidelines, such as the Response System for Sudden-onset Emergencies, and obtained the disaster recovery information security service qualification certification issued by China Cybersecurity Review Technology and Certification Center, which safeguards the normal business operation of the Group amid potential risks.

Internal Control Audit

We conduct annual test and self-evaluation of the effectiveness in the design and execution of the internal control system. We also invite external auditors annually to assess the effectiveness of the internal control of financial reports and disclose the significant defects identified in the internal control of non-financial reports. The full text of financial and internal control audit reports presented by the auditors are published on our official website for review and supervision by all parties.

Business Ethics

We believe in the importance of upholding business ethics in the fiercely competitive and fast-changing global business environment and pledge to conduct business operations in accordance with the highest ethical standards. We formulated and issued the Code of Business Conduct and Ethical Standards, requiring employees of the Group and third-party agencies to engage in business activities accordingly.

As a corporate member of United Nations Global Compact (UNGC), VNET has always unswervingly protected internationally recognized human rights. We oppose any disregard or violation of human rights, and never tolerate any unlawful discrimination or harassment against race, ethnicity, region, gender, age, nationality or class, etc. We incorporate personal privacy protection, employee rights protection, and supply chain human rights protection into our business activities and proactively promote the implementation of related work. We also respect the right of existence and development for the poor, the disabled and other special groups, and lend support to the development of human rights in disadvantaged and remote areas.


VNET adopts zero-tolerance policies towards corruption. Adhering to the handling principles of education, supervision, punishment, and protection, we establish a complete integrity management system and formulate various policies, such as the Gift Registration System, the Integrity Inspection System, the Integrity Conservation System, the Integrity and Whistleblowing Rewards Program, and the Whistleblowing and Whistleblower Protection Policy. In addition to specifying the anti-corruption system, supervision management, integrity education, whistleblowing, and investigation, we also require all employees and third-party suppliers to sign the Anti-bribery Commitment Letter, and implement an effective whole-process anti-corruption mechanism, so as to ensure the healthy, stable and long-term development of the Group.

Risk Prevention

VNET establishes an anti-corruption risk identification management process, conducts regular bi-annual inspections to identify and urge relevant departments to resolve risks in a timely manner. Based on the risk identification and evaluation system model, we identify potential integrity risks and management loopholes within the Group in the daily work. After confirming the existence of risks, the Integrity Department and the Audit Department will jointly conduct investigations, and carry out quantitative analysis of integrity risks. According to the complaints and feedback from external channels, we also investigate post responsibilities and corruption risks, identify the risks of corruption events and solve them promptly.

Whistleblowing Mechanism

VNET has developed an effective whistleblowing and handling system led by our Integrity Department. Any stakeholder or individual can make a complaint, either using their name or remaining anonymous, by e-mail, phone, or other means. We resolutely fight non-compliant misconducts such as accepting, giving or seeking bribes, and kickbacks. VNET has developed a sound whistleblowing process and whistleblower protection system. We initiate investigations for reports and complaints and set up units to carry out these investigations. The investigation process and results are reported directly to both the management and the Board of Directors.

Whistleblower Protection

The Group protects and respects every whistleblower. We adhere to the "protection of whistleblowers and anonymous investigations" to resolutely safeguard their interests. We also strictly control the access to whistleblowing-related information within the Group. Confidential materials that are involved in the investigations are protected through such means as technical encryption and physical isolation. The whistleblower-related information, such as name, workplace, and contact details, shall not be disclosed under any circumstances unless there is consent from the whistleblower. The Group also welcomes anonymous whistleblowing and makes whistleblowing channels available. The Group deals with the investigators who violate the confidentiality of whistleblowing, fail to perform their duties, retaliate against the whistleblowers, or take hostile measures against other investigators in a serious manner. If the circumstances are serious enough to constitute a crime, they shall be transferred to judicial organs.

Anti-corruption Promotion and Training

VNET highly values the anti-corruption training and focuses on building a corporate culture of transparency and integrity. The Group has publicized articles and warning cases on integrity education to all employees and directors through DingTalk bulletin boards and office posters. We carry out integrity training and educational seminars tailored to those departments and employees with higher corruption risks, and supervise their behaviors in daily management. In addition, VNET joined the Anti-Fraud Alliance in 2019, and participated in online courses and offline training sessions organized by the Alliance on a regular basis to ensure the best practice of business ethics and compliance requirements are met.

Sustainable Supply Chain Management

VNET boasts diverse business partners and values procurement process management. In strict compliance with national laws and applicable industry guidelines, we have developed the Regulations on Procurement Management, the Regulations on Supplier Management, and the Code of Conduct for Procurement Personnel for responsible procurement, which committed to establishing to mutually beneficial cooperation with suppliers for the long term. We identify, prevent, and control potential risks in all aspects of procurement. We assess suppliers in terms of their financial risks, business ethics, EHS management, quality management, and etc. throughout our review process from multiple perspectives. This involves shortlisting, on-site inspection, internal evaluation and test, public announcement of the shortlisting, and selection.

We regularly review existing suppliers to screen out premium candidates based on service awareness, product quality and capability to fulfill obligations. Substandard suppliers are required to conduct rectification and would be eliminated if the rectifications proved to be below our standards.

VNET is committed to building a sustainable supply system, aiming to safeguard procurement needs and ensure obligation fulfillment while actively urging our suppliers to improve sustainability. In each work process of the supplier management, we incorporate considerations on their ESG risks and focus on their performance in environmental protection and low carbon, information security, labor rights and interests, occupational health and safety, as well as honesty and integrity.

· Environmental protection and low carbon: We prefer suppliers with ISO 14001 and sound carbon management

· Information security: We sign the contracts and the Supplier Confidentiality Agreement with suppliers who have confirmed the partnership with us to clarify information security responsibilities and confidentiality obligations

· Labor rights and interests: We strictly prohibit suppliers from employing child labor and forced labor, and actively protect and promote the legitimate rights and interests of employees across the supply chain

· Occupational health and safety: Suppliers are required to comply with applicable safety regulations, establish a sound occupational health protection system, and provide health and safety training to their staff when appropriate

· Honesty and integrity: We conduct anti-corruption training for procurement personnel. We also require all suppliers to sign the Anti-bribery Commitment Letter and synchronize the information of dishonest suppliers to the database of the China Enterprise Anti-Fraud Alliance.

The World’s Most Influential Cyberspace Infrastructure Service Provider