Governance & Management Systems

POLICIES & MANAGEMENT SYSTEMS

CSR POLICY

At Enbridge, we define corporate social responsibility (CSR) as:

• conducting business in a socially responsible and ethical way
• protecting the environment and the health and safety of people
• supporting human rights
• engaging, respecting and supporting the communities and cultures with which we work.

In 2004, Enbridge adopted a corporate CSR policy, which covers business ethics and transparency, EH&S, stakeholder relations, employee relations, human rights and community investment. This policy applies to activities undertaken by, or on behalf of, Enbridge and our controlled subsidiaries anywhere in the world.

CSR MANAGEMENT STRUCTURES

In 2004, as an important first step toward this long-term goal, we set up a CSR Advisory Committee, a cross-disciplinary group that involves senior staff from across our different business units. This 19-person committee provides advice to senior management on CSR policies, strategies, planning and performance. In 2004, this committee met twice.

In 2005, advisory groups were formed from the CSR Committee and other employees to specifically address CSR activities as they relate to Enbridge projects and operations. The Aboriginal Advisory Committee, Climate Change Advisory Committee and the Community Investment Advisory Committee are all sub-committees of the overall CSR Committee. Their activities include advising on project-specific matters, such as creating procurement and contracting policies and programs for pipeline initiatives that traverse First Nations and aboriginal lands.

The sub-committees and CSR Advisory Committee report to Bonnie DuPont, Group Vice President, Corporate Resources. Ms. DuPont is a member of Enbridge's Corporate Leadership Team and is responsible for informing the Board of Directors of Enbridge Inc. about our company's CSR activities. Group Vice Presidents of our core operations are responsible for putting into effect our CSR policy in their business units.

EMPLOYEE AWARENESS

As we broaden our business plans and activities to incorporate CSR, our company is faced with new challenges, including engaging individual employees on CSR issues and activities. Several initiatives were carried out in 2004 to help our employees better understand what CSR means to our business:

• Articles on CSR issues and initiatives were featured in Link, Enbridge's employee newsletter.
• Our Liquids Pipelines business developed a comprehensive environmental training program for operations employees, which covers regulatory requirements, corporate policies and industry best practices. This program was introduced in our Canadian operations, and we plan to expand it to our U.S. operations in the future.
• Our U.S. Natural Gas Business launched an EH&S quarterly report to spread the word to employees on EH&S issues and activities in its operations.
• Our business units celebrated our CSR achievements at the local level. Last year, for example, Enbridge Gas Distribution organized Celebrating Sustainability, a series of events such as "lunch and learn" presentations, safety demonstrations and fitness activities, across its Ontario operations, showcasing Enbridge's commitment to the environment, the community, and worker and public safety.

CONTINUAL IMPROVEMENT OF MANAGEMENT SYSTEMS

Our business units apply management systems specifically adapted to their activities and business needs. These systems are designed to focus our company's EH&S objectives, improve worker safety, reduce adverse impacts on health and the environment, and measure our progress. A goal of these systems is increased consistency of EH&S activities, closely tied to our business and CSR objectives. In 2004, we continued to strengthen these systems:

• Liquids Pipelines incorporated new operations, such as our recently acquired Cushing-to-Chicago Pipeline, into its EH&S management systems.
• Enbridge Gas Distribution established a distribution management system that provides for the safety of the employees and the public and the protection of property and the environment. The system is a customized management system based on the framework adopted by the Corporation to comply with the Sarbanes-Oxley Act and the ISO framework. EH&S and pipeline integrity management are part of this system. During the year, Enbridge Gas Distribution continued to strengthen different elements of the distribution management system. For example, it developed a software-based auditing protocol and questionnaire to assist EH&S staff in carrying out internal compliance reviews of our 42 gate stations. Enbridge Gas Distribution also revised management systems for estimating and tracking greenhouse gas emissions from our gas distribution operations to prepare for Kyoto regulations.
• We continued to strengthen EH&S compliance in our U.S. Natural Gas Business through the use of our Ops Environmental compliance database system, an online set of EH&S tracking and notification tools that help staff in monitoring compliance with federal, state and internal requirements. This system was successfully put into effect in all areas of our U.S. Natural Gas Business, including the North Texas natural gas system acquired a year ago.

REVIEWS AND AUDITS

We understand that, besides our EH&S management systems, it is essential to have mechanisms to continually evaluate the effectiveness of our EH&S programs. Accordingly, we use reviews and audits to assess each business segment's compliance with government regulations and our internal policies and management systems, and to provide guidance for making improvements.

Internal EH&S reviews

We conduct internal EH&S reviews at all facilities we operate. To carry out the review, a team of EH&S professionals inspects the site, conducts interviews and checks documentation. After the review is done, the team provides local management with a formal written review report summarizing the findings. Management then develops an action plan to correct deficiencies. The review team follows up on documented issues to ensure they are fully addressed.

Process safety management (PSM)

Process safety management (PSM) is a formal review process required by U.S. regulations for non-pipeline plant operations to prevent accidental releases of hazardous chemicals and energy. Our U.S. Natural Gas Business has developed a comprehensive PSM program that meets, or exceeds, regulatory requirements. We take a proactive approach to prevent hazardous chemical releases by identifying, evaluating and monitoring systems before an incident or failure occurs. Besides carrying out PSM audits at all applicable gas plants, we conduct similar review processes at other facilities not covered under the regulations, helping to ensure a consistent approach to safety throughout the business.

In 2004, we carried out PSM reviews at nine gas processing plants in Texas and Mississippi.

External audits and inspections

Environmental and safety audits and inspections of our operations are carried out by local and federal regulatory agencies.

In 2004, for example, the National Energy Board (NEB) conducted a pipeline security management assessment in Canada's pipeline systems, including our Liquids Pipelines mainline system. The assessment identified best practices and assessed the need for security regulations for Canada's pipelines. The NEB, in its review of Enbridge's mainline system, noted that our company has incorporated various best practices, including innovative technology and threat condition response levels, into our security management.

State and federal agencies conducted 80 compliance audits in our U.S. Natural Gas Business. No significant issues were identified.

REGULATORY COMPLIANCE

We manage compliance with laws and regulations through system controls and regular reviews and inspections. We consider any regulatory notification or penalty to be important to our CSR performance and continue to work toward our goal of no non-compliance. In the event that our performance falls short of this goal, we carry out rigorous reviews and institute corrective processes.

In 2004, we received 28 regulatory notifications from government agencies for environmental or safety issues.

• Liquids Pipelines received five regulatory notifications. These included a provincial order for non-compliance items identified during an Ontario Ministry of Environment inspection of our Sarnia, Ontario pipeline terminal. The inspection included requirements to obtain provincial certificates of approval for air emissions and wastewater discharges as well as other relatively minor administrative issues. We continue to work with the Ministry to resolve these issues.
• Gas Pipelines received two regulatory notifications. The most significant was a notice of violation for exceeding operating permit levels for carbon monoxide at the Highland, Michigan compressor station on the Vector pipeline. In early 2005 we received a fine of $69,300 US and took corrective action, modifying equipment and operating practices, in consultation with the U.S. Environmental Protection Agency and state regulators.
• Enbridge Gas Distribution received three orders from the Ontario Ministry of Labour at one job site. One of the orders resulted from a failure to erect a fence between the work project and the public way. A second order was received for failure to develop and implement a traffic protection plan for workers, and a third order related to a contravention affecting the safety of workers. To prevent similar events from recurring, Enbridge Gas Distribution field crews are using a newly developed traffic and control protection form, which ensures consistent review of potential project hazards with on-site contractors.
• Our U.S. Natural Gas Business received 18 notices of violation for air permit and pipeline non-compliance issues. The most significant was a $85,000 US fine from the U.S. Department of Transportation, Office of Pipeline Safety, for inadequate cathodic protection in our Kansas pipeline system. We have installed deep well ground beds and made other improvements to strengthen cathodic protection along the pipeline.

On April 24, 2003, seven people died in an explosion and fire on Bloor Street West in Toronto. The incident was a tragedy and Enbridge is deeply saddened by the deaths and injuries that occurred. Enbridge Gas Distribution and two other companies have had charges laid against them related to this incident. This matters remains before the courts.

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