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Ethical Behavior & Culture of Compliance

One of the core values of Spectra Energy is integrity - ethically and honestly doing what we say we will do - both as individual employees and as a company.

Our leadership devotes significant attention and resources to reinforcing the message that ethical behavior and compliance with all laws, regulations and company policies are keys to our success. We speak of a culture of compliance at Spectra Energy – and, to us, that means far more than just obeying the letter of the law and meeting regulations. It also means ensuring our decisions and behaviors are fully aligned with company policies and expectations, which often exceed external requirements.

Our Code of Business Ethics (COBE) sets the standard for workplace behavior at Spectra Energy. We expect everyone who works on our behalf – including our employees, board of directors and contractors – to adhere to this Code. All employees and contractors are trained in the Code. Our contractors, vendors and suppliers are expected to be familiar with and uphold our values and support effective compliance programs within their own organizations.

We routinely review and update our Code to ensure it incorporates industry best practices. In 2011, we issued a hard copy of the updated Code to every employee and contractor along with a letter from the general counsel and chief ethics and compliance officer emphasizing the importance of compliance for Spectra Energy. The Code also is readily accessible on the company’s intranet and external website. The updated Code provides scenarios and question and answer sections and visually highlights key points to enhance understanding of our ethics expectations.

We are committed to creating an environment where employees feel they can express their concerns without fear of retaliation. Our open-door policy encourages employees to bring any concerns to the attention of their managers or any other senior leader. We also provide an independent, confidential ethics reporting system, EthicsLine, for anonymous questions or reports, accessible by phone toll-free or by internet.

The audit committee of the board of directors is updated by our general counsel on our ethics and compliance performance at each committee meeting and annually engages in a review of our compliance program with the vice president of ethics and compliance. Our vice president of ethics and compliance also maintains open channels of communications on compliance-related matters with our joint ventures.

We conduct an internal assessment of our ethics and compliance program on an annual basis and in, 2010, commissioned an assessment by an independent law firm. Many of our program’s strengths were recognized, with special acknowledgement that it builds on our core value of integrity and provides the foundation for a strong compliance culture. Our common process for compliance across our company was highlighted as good practice as was our proactive approach to keeping our program relevant and effective. In 2011, the Ethics and Compliance team implemented many of the recommendations outlined in the assessment, ensuring compliance is represented at every strategic point of our business and is aligned with our overall strategy.

Our compliance program encompasses a number of key areas – ethics, regulatory compliance, information technology security, environment, health and safety, records management, legal, human resources, and pipeline/operational integrity. We have committees with oversight responsibility for many of these areas, and they meet regularly to assess our performance. The vice president of ethics and compliance is a member of several of these committees and also presides over a compliance roundtable that addresses any remaining compliance areas, ensuring coordination of our company’s ethics and compliance efforts.

To further strengthen our culture of compliance, we developed a simple message of “iComply” to reinforce the robust expectations of our compliance culture. In 2011 we held Compliance Week, in which we conducted comprehensive compliance training, consolidating information and requirements from departments across the company. Senior leaders were highly visible at the trainings, emphasizing our commitment to compliance. The training material was interactive and engaging to help attendees understand the issues, remember the material and appreciate the importance of individual accountability. Over 1,300 employees and contractors attended live training sessions; all remaining employees and contractors completed compliance training online for 100 percent participation.

We encourage the use of our independent and confidential ethics hotline to report suspected unethical and criminal conduct or environmental, health and safety concerns and to ask questions regarding our Code of Business Ethics or other related issues. Seventy- nine ethics related matters and questions were reported to the office of ethics and compliance in 2011, primarily through our independent and confidential hotline – an increase of 25 percent over 2010. We consider that increase in usage to be an indication that our employees are more aware of how we should comply with the Code, and that they have confidence in the confidentiality of the reporting systems. The majority of the reported items were related to employee relations, harassment and accounting and other internal controls. All reports were investigated. Of the 79 reported matters, 35 percent were substantiated as violations of company policy of our Code, resulting in appropriate actions being taken. The remaining 65 percent of the reported matters involved responding to questions or investigating matters for which the reporting individual did not possess enough information to understand that no violation had occurred.

We also use our Employee Safety and Engagement Survey to gauge employees’ opinion of our ethics and compliance performance. In our 2009 survey, 96 percent of respondents confirmed they know how to report unethical behavior. Also, 84 percent of respondents felt they could report instances of dishonest or unethical practices without fear of retaliation. That metric is seven percentage points higher than the industry average comparison group.

We are extremely pleased that we have been named to the Ethisphere Institute's 2012 World’s Most Ethical Companies list for our demonstrated leadership in ethical business practices and commitment to a strong ethics and compliance culture. The Ethisphere Institute is an international organization dedicated to the creation, advancement and sharing of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability. We are one of only four energy companies in the natural gas sector designated with this honor.