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Topics of Importance Sustainable Supply Chain & Procurement

2015 Performance

KEY FACTS

In 2015, our Supply Chain Management groups managed the acquisition of approximately $10 billion in goods and services from approximately 20,000 suppliers.

Our Major Projects business unit purchased approximately 220,508 tonnes of steel pipe, approximately 96 percent of which was made from recycled steel.

Our combined Liquids Pipelines and Major Projects Supply Chain Management group has a dedicated SCM Sustainability team within it, with a primary function of integrating environmental, social and governance (ESG) considerations and principles into supply chain decision-making.

The contractors that work for MP work more than 75 percent of all the hours worked throughout our company.

Continuously Collaborate with our Suppliers in Support of Safety and Operational Reliability

Contractor Safety Management

Because contractors working for LP/MP work more than 75 percent of all the hours worked throughout the company, contractor safety management is a critical success factor in our overall strategy of safely and reliably constructing, operating and maintaining our pipeline network.

Collaborating to Improve Contractor Safety - To further our goal of having an industry-leading health and safety program, we merged the separate LP and MP Safety departments into one LP/MP Safety Shared Services team in 2014 such that LP/MP representatives could work collaboratively to review and align our safety policy, standards, processes and safe work practices. Their work resulted in two governing documents: the LP/MP Safety Manual, which we implemented in early 2015; and the Occupational Health and Safety Management System (OHSMS). As of January 2015, both LP and MP require that contractors meet consistent safety requirements outlined in these two documents.

Evaluating Contractors - Since 2014, our business segments have been working together to establish alignment, transparency and consistency across the company with regard to how we evaluate contractor safety performance as part of our contractor pre-qualification process.

During Phase 1 of this work, a joint Contractor Safety Committee reviewed each business segment’s subscription to ISNetworld (ISN), a global resource that we use to qualify contractors. The committee also reviewed each business segment’s contractor grading scorecard. As a result of this work, in 2015 we implemented enterprise-wide minimum contractor safety pre-qualification criteria and a grading standard for evaluating contractors using ISN. We expect that this enterprise-wide approach will strengthen our ability to consistently select contractors that pro-actively manage their safety system performance in a way that is consistent with and that supports our Health and Safety Principles.

For 2016, we will develop objectives that will help us continually improve the processes, systems and controls that we use to ensure a safe contractor work environment.

Assessing and Tracking Subcontractor Safety Performance - LP/MP established a joint Contractor Safety Management Network (CSMN) in 2013 to foster innovation and continuous improvement of the processes, systems, and controls that Enbridge uses to keep contractors and the facilities that they work in safe, while helping to build strong contractor safety management competencies.

In 2015, CSMN members turned their attention to improving subcontractor management. They initiated a pilot project involving a subcontractor checklist that they would incorporate into the RFx (Requests for Information, Proposal, Quote and Bid) to better assess the safety performance capabilities of subcontractors working on our projects. In addition, CSMN members have been working with the LP/MP Safety Shared Services team to amend contractor scorecards so they can clearly see how many hours our subcontractors are working. This will allow us to better understand our subcontractors’ safety performance in terms of incident frequency, and it will allow us to better evaluate overall subcontractor performance and be more strategic in how we apply our resources to affect the best possible safety outcome.

Improving Contractor Prequalification – As part of another 2015 project, CSMN members evaluated Enbridge’s current contractor safety prequalification process to identify areas for improvement. Their goal was to achieve a single safety-approved contractors list for Enbridge. The team worked closely with our SCM groups in Canada and the U.S. to ensure that these processes are integrated and that they capture both our SCM and safety management systems.

Focus on Project Management and Strategic Contracting

Supplier Performance Management

On-line Bidding Tool - In 2015, we implemented an on-line eBidding tool to improve the efficiencies of our contracting process. The tool provides multiple benefits, not only to Enbridge, but for our suppliers. In addition to improving efficiency and transparency, its use results in clearer communication with our suppliers, improved security and ease of access, and greater consistency throughout the bidding process.

Follow-up to Supplier Forums– In both 2013 and 2014, LP/MP held one-day, interactive supplier forums with the goal of building and renewing sustainable relationships with our suppliers. The forums provided an opportunity for our suppliers to meet members of our executive and SCM leaders, and for us to hear and address the suppliers’ collective concerns.

In 2015, we focused our efforts on addressing outcomes from our 2013 and 2014 forums. For example, we established several Supplier Relationship Management steering committees at an executive level between Enbridge representatives and our major contractors and suppliers to discuss everything from the health of our relationships, to key performance indicators, to targets and opportunities for improvement.

In 2016, we intend to find ways to engage our suppliers sooner in our efforts to involve local and Aboriginal businesses in our projects. At past forums, suppliers have brought up their desire to be engaged in this area earlier, and we believe that finding ways to do so will benefit all concerned.

Pipeline Construction Safety Roundtable - Over the past three years, Enbridge has been a driving force behind contractor safety performance improvement in the pipeline industry by leading the establishment of the Pipeline Construction Safety Roundtable (PCSR) in Canada and the U.S. Four PCSRs were held during 2015—two in Canada and two in the U.S.

Starting in 2015, the Canadian Energy Pipeline Association (CEPA) accepted the task of hosting the PCSRs in Canada to ensure that all CEPA member companies receive the benefits. The PCSRs are now being organized by the CEPA Foundation, whose members include engineering, design, construction, manufacturing, pipeline maintenance, legal, land and environmental service companies—key suppliers who play a crucial role in our shared goal of zero incidents.

In 2015, the CEPA Foundation held two PCSRs in Calgary, Alberta, with over 40 participating companies, to discuss the development of a common set of standards for personal protective equipment, overhead power-line hit prevention and light-vehicle safety requirements.  The CEPA Foundation also initiated a workshop series to facilitate in-depth discussion, information sharing and collaboration regarding pipeline construction.

Real Estate Construction Safety Manual - In 2015, we rolled out a Real Estate Construction Safety Manual that establishes safety standards and expectations that are specific to real estate construction projects.

Drive Value through a Centralized LP/MP SCM Function

Given the size of the MP SCM group function, in 2015, we merged it with our LP SCM group such that the two groups could gain greater consistencies and efficiencies. As noted earlier in this section, the newly merged LP/MP SCM group now has a dedicated Sustainability team within it to ensure that environmental, social and governance (ESG) considerations and principles are incorporated into decision making.

Help maintain Enbridge’s Social License to Operate by Integrating CSR Considerations into SCM

Responsible Procurement

The most significant purchase we make is steel pipe. In 2015 MP purchased approximately 220,508 tonnes of steel pipe, approximately 96 percent of which was made from recycled steel. In 2015, GD purchased approximately 1,243 tonnes of steel pipe, approximately 63.8 percent of which comprised steel that had recycled content. GD also purchased approximately 926 tonnes of polyethylene pipe, none of which included recycled content.

GD has the largest fleet of natural gas vehicles in Canada, and has converted 648 of its 853 fleet vehicles to run on natural gas. Every RFP it issues to vehicle manufacturers requires the supplier to provide vehicles that are either NGV ready or that have a component for conversion to NGV.

The majority of its vehicles are dual-fuel (they run on natural gas and gasoline). Some are medium-duty trucks, which are normally diesel-fueled, which have also been converted to run only on natural gas. Through this initiative alone, GD has reduced its GHG emissions by more than 400 tonnes of carbon dioxide equivalent per year, compared to levels it would be emitting if it were operating gasoline or diesel-fueled vehicles.

Sustainable Supply Chain Initiative

In 2014—approximately a year before we added a dedicated Sustainability team to the LP/MP SCM group—we took an innovative step to integrate ESG considerations and principles into supply chain decision-making within MP by deploying one of our sustainability professionals to work directly with and support the LP/MP SCM group. As a first step, the sustainability professional worked with the LP/MP SCM group to map out LP/MP's supply and value chains, research SCM best practices as they relate to sustainability, and review internal policies and practices.

In 2015, we then broadened the initiative to include other Enbridge business segments and created the Sustainability team to support Enbridge’s CSR and Aboriginal economic engagement initiatives in Canada and the U.S. We also began developing a new framework to provide suppliers with guidance on our sustainability expectations.

Advancing Sustainable Practices

Enbridge and EVRAZ—the biggest manufacturer of large diameter steel pipe in North America and one of our largest suppliers—are working together to advance sustainable practices.

Through our long-standing partnership, which is based on a shared commitment to pipeline safety and operational reliability, the two companies are jointly addressing product quality, safety and the environment, R&D, and contributions to the community. For example, while collaborating to ensure quality pipe, we have also looked for ways to decrease the environmental impacts associated with producing pipe. One outcome of our collaboration is that EVRAZ pipe contains an estimated 96 percent of recycled steel.

While producing quality pipe remains at the heart of the relationship, the Enbridge-EVRAZ partnership also generates other benefits. Among the other benefits, EVRAZ offers jobs and apprenticeship programs for skilled trades, funds a scholarship program for Aboriginal students and a literacy program for children, and invests in local environmental initiatives, including protection of native grasslands at the Old Man on His Back Prairie and Heritage Conservation Area in southern Saskatchewan.  EVRAZ was also the 2015 presenting sponsor for the Enbridge Ride to Conquer Cancer benefitting the Alberta Cancer Foundation. For more information, please visit EVRAZ and Enbridge: Proud partners in a Saskatchewan success story on enbridge.com.

Providing Aboriginal Training and Employment Opportunities

We strive to create opportunities that are aligned with the aspirations of the Aboriginal or Native American communities affected by our business. These opportunities often come in the form of partnerships and sponsorships of educational and training programs, employment opportunity initiatives, and other capacity-building efforts.

Line 3 Replacement Project – Our $7.5-billion Line 3 Replacement program (L3RP) is the largest project in our history. It involves replacing the majority of the existing Line 3—which is one of our primary Mainline pipelines, and which runs from Hardisty, Alberta, to Superior, Wisconsin—with new pipe.

As part of our commitment to provide training and employment to members of Aboriginal communities in Canada, in November 2015 we launched in Saskatchewan the L3RP Training-to-Employment program, which is designed to connect Aboriginal workers with future employment in the pipeline industry and related sectors. For more information, please see the Aboriginal & Native American Rights & Engagement section of this report. [provide link]

Also in late 2015, we issued a guidance document for contractors working on L3RP. The document outlines contractors’ socio-economic responsibilities on the project and encourages them to maximize participation of Aboriginal peoples in their L3RP work, including through partnerships, joint ventures or other business arrangements with Aboriginal businesses, and through providing training, mentoring and employment opportunities. Going forward, we intend to apply the guidance in this document to all of our LP/MP projects in Canada and the U.S.

Aboriginal Training-to-Employment Program in partnership with Portage College – In 2015, we sponsored a pilot Aboriginal Training-to-Employment program in partnership with Portage College in Alberta. Sixteen community members from six Aboriginal communities successfully completed the program, which will enable them to begin work on an Enbridge growth project or other industry project.

Continue Developing Consistent SCM Policies, Processes and Practices

Enbridge Supplier Sustainability Expectations

We are committed to upholding the highest ethical and legal standards as we conduct our business, and expect all registered suppliers, manufacturers, contractors and subcontractors with whom we conduct business to understand and share our commitment.

To this end, and to ensure that our suppliers are aligned with our commitment to environmental, social and governance (ESG) considerations and principles, in early 2015 we began developing a framework that will guide our suppliers regarding the ethical standards and business conduct we expect of them.

Our new framework addresses environmental stewardship and protection, human health and safety, social and economic development, indigenous engagement, employment practices and business integrity. We expect to implement it in early 2016, and see this as being an important step in our journey to build strong relationships with our suppliers and bolster our sustainability performance.

By introducing the framework and communicating it to our suppliers, we will have the opportunity to influence supplier performance by sending the message that ESG factors are important to us, and that we take them into account when selecting and building our relationship with suppliers. By introducing the framework, we will also have the opportunity to enlist the support of our supply chain partners to address ESG issues and opportunities. And, our introduction of the framework will give our suppliers the opportunity to strengthen their relationship with us while building their own sustainability performance.

Corporate SCM

In 2015, we established an SCM department in our corporate office whose mandate is to manage indirect and Corporate spend, set targets and measure progress, ensure sustainability of value improvements, and improve Enbridge’s brand through effective management of Enbridge’s indirect supply chain. One aspect of the department’s strategy is to increase the maturity of the company’s SCM discipline, which includes ensuring that suppliers of indirect goods and services are fully aligned with Enbridge’s core values and policies.