ENERG-0351_2021-22_AR_Corporate_Governance_Book_(JUL-5)

ENERG-0351_2021-22_AR_Corporate_Governance_Book_(JUL-5)

2021-22 Statement of Corporate Governance Practices

Statement of Corporate Governance Practices 2021-22

Board of Directors SaskEnergy’s Board of Directors is led by Board Chair, Susan Barber (Q.C., C.Dir.) and Vice Chair, Nola Joorisity (FCPA, FCA, CMA, C.Dir.). Board member biographies can be viewed at https://www.saskenergy.com/about-us/ our-company/board-directors. Executive Committee SaskEnergy has an eight-member Executive Team led by Acting President and CEO, Mark H. J. Guillet (Q.C., CIC.C, ICD.D). Executive biographies can be found at https://www.saskenergy.com/about-us/our-company/ SaskEnergy is a Saskatchewan Crown corporation governed by The SaskEnergy Act (“SaskEnergy” or the “Corporation”). It is a designated subsidiary of Crown Investments Corporation (“CIC”). CIC operates as a holding company for commercial Crown corporations and commercial investments owned by the Government of Saskatchewan. The Government of Saskatchewan owns SaskEnergy (“Owner”). Our Approach to Governance We are committed to high standards of governance that are consistent with regulatory expectations and evolving best practices. We believe that good governance and being clear about our expectations around governance supports ethical conduct, and it allows us to do a better job running our business and complying with the laws and standards that apply to us. executive-leadership. Corporate Profile As a Crown corporation, SaskEnergy is not legally obligated to comply with the Canadian Securities Administrators (CSA) Governance Guidelines as we do not have share capital and we are not a reporting issuer. However, we benchmark against these governance practices, including National Policy 58-201 and National Instrument 58-101, the guidelines of the Chartered Professional Accountants of Canada, and observations of the Office of the Auditor General of Canada, Treasury Board of Canada Secretariat and Conference Board of Canada. We apply those guidelines that are applicable. The practices of SaskEnergy are substantially consistent with these standards as published. Board Composition SaskEnergy’s Board of Directors (the “Board”) is representative of the Saskatchewan community and industry. According to The SaskEnergy Act , the Lieutenant Governor in Council may appoint up to twelve (12) members and designate a Chair and a Vice Chair. Members represent community/stakeholder diversity, and they possess various attributes, including industry

expertise, strategic leadership, entrepreneurial and communication skills, integrity, flexibility, initiative, and sound judgment. Members are appointed to a fixed term by the Lieutenant Governor in Council, who may renew the term. There are currently eleven (11) people appointed to SaskEnergy’s Board of Directors. These same eleven (11) people sit as members on the Boards of Directors for each of SaskEnergy’s four (4) subsidiary companies. Independence Good governance provides that board members should be independent. A Director is independent if they have no direct or indirect material relationship with the company. In this reporting period, none of the Directors have direct material contracts or relationships with the Corporation or have received remuneration from the Corporation except the fees and compensation concerning their role as Directors and Committee members or as Directors of subsidiaries of the Corporation as outlined below. They have not been employees of the Corporation, and the President and CEO does not have a vote on the Board. However, the Board Chair, Ms. Susan Barber, Q.C., is a partner in a law firm that has performed legal services for the Corporation in the 12-month reporting period. Another Board member, Milad Alishahi, is also a partner in a different law firm that has performed legal services for the Corporation in the 12-month reporting period. Each of them is deemed to have a material indirect relationship with the Corporation. CIC addresses this independence issue through a Protocol Regarding Lawyers Serving on Subsidiary Crown corporation Boards of Directors (the “Protocol”). The Protocol adopts the principle that for a Director to be independent, they must be free from a direct or indirect material relationship to the Corporation and not in a position to influence the choice of law firms. Given the smaller local market in Saskatchewan for legal services, while the Protocol restricts Directors from any direct material relationship, it allows a limited indirect relationship subject to parameters set out in the Protocol. These parameters include pre-approval of legal services by a Board Committee, declarations of conflict, no direct benefit to the Director, and restriction of information to that Director. The Environmental, Social and Governance Committee of the Board (“ESG”), which consists of independent non-lawyer Board members, reviews and approves the Corporation’s external legal service providers following the Protocol on an as-required basis and reviews the services these law firms provide.

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Statement of Corporate Governance Practices 2021-22

The Board Chair, Ms. Susan Barber, Q.C., and board member, Milad Alishahi, are lawyers subject to this Protocol. Throughout this disclosure, the asterisk by their names reflect that they are not independent due to the deemed material indirect relationship. All other Directors, including the Vice Chair of the Board, are independent of management. Board Mandate Good governance starts with the Board. The SaskEnergy Board provides stewardship, including direction setting and general oversight of the Corporation’s operations management, and oversees and closely monitors the Corporation’s adherence to The SaskEnergy Act and its Regulations. The Directors serve on committees that specialize in key areas: audit, finance and risk review; environment, social and governance; and, human resources and safety. The Board’s mandate is outlined in the Board’s Terms of Reference, which defines its roles and responsibilities. It sets the strategic direction, ensures the integrity and adequacy of the Corporation’s systems and management practices, recommends the appointment or termination of the President and Chief Executive Officer (“CEO”), and regularly examines the objectives and mandates of its structure. The Board promotes a culture of integrity; oversees the management of the Corporation, strategic plan, and material and corporate risks; evaluates the Corporation’s performance; and monitors financial results. Board Renewal and Appointment Appointment of the Directors is ultimately made by the Government by Order in Council, upon the recommendation of CIC and the Board. Through the ESG, the Board also undertakes an evergreen approach in analyzing the skills and experience necessary for the composite blend and full functioning of the Board and its Committees, and makes nomination recommendations to the Minister of Crown Investments. If required by the Owner or directed by Government, the ESG is charged with leading the process to identify, recruit and recommend qualified candidates for appointment to the Board. The ESG assesses the skills and competencies of the Board and its Committees to support the strategic direction and operational needs of the Corporation. The Board has approved and adopted a Skills Matrix of those skills desired or required of board members. The ESG performs a skills gap analysis intended to assist in achieving a balance of board members' skills through the recruitment/appointment of new members. The ESG may meet with potential candidates to assess the overall fit with the blend of skills and experience of the current Board, time availability, or any potential conflicts that could limit their full participation. The ESG also makes annual

recommendations to the Board regarding the appropriate structure, size and composition of the Board and its Committees and the required qualifications. Position Descriptions Written position descriptions, posted on SaskEnergy’s website, set out the roles and responsibilities of the Chair, Committee Chairs, and individual Directors. The role of the Chair is to provide leadership in Board organization, processes, effectiveness and renewal. The Chair’s role is to balance the roles of the Board and management in the course of the Board discharging its fiduciary and legal responsibilities. The position description for Directors sets out their roles and responsibilities, including legal requirements, accountability, stewardship, knowledge and education, conflicts, confidentiality, and expectations for attendance and review of materials in preparation for meetings. The CEO’s Mandate sets out the principal duties and responsibilities for the CEO. This Mandate forms the basis for the goals and objectives of the CEO, and it is incorporated into the annual performance objectives against which the Human Resources and Safety Committee measures the CEO’s performance. Orientation and Continuing Education The Board has approved and adopted a Board of Directors Training Policy (the “Training Policy”). The Training Policy has a comprehensive orientation curriculum, including specific training sessions to ensure that new and continuing Directors develop a strong understanding of SaskEnergy’s business and current challenges, as well as the roles of the Board and Committees and the individual contributions Directors are expected to make. Board members also participate in continuing education on industry issues, financial reporting, business operations, procedural issues and ethical obligations to enhance their skills and knowledge. This year, Board training occurred in September 2021. At that meeting, the agenda included an in-depth review of financial statements governance and internal controls over financial reporting, the Enterprise Risk Management system and analysis of residual risk tolerances. In addition, the Board members typically interact with management and employees through attending functions such as the employee Service Achievement Awards or through touring corporate offices, facilities sites or business units as part of Board meetings. In view of COVID-19 there were no in-person events or field visits, but some sites were attended by video conference.

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Statement of Corporate Governance Practices 2021-22

CIC also facilitates additional Director training as part of its Subsidiary Crown Directors Training Program. This year, CIC held two (2) Director training sessions: 1) Exploring Environmental, Social and Governance and Diversity, Equity and Inclusion, and 2) Strategy, Strategic Thinking/Planning and the Role of the Board. CIC also hosts meetings periodically throughout the year for the Chair of the Board and the Chairs of each of the Committees to discuss issues with the Chairs from the other Saskatchewan Crown corporations. These meetings serve as forums to look at matters such as best practices and efficiencies, and to receive messaging from the Owner. Board and Director Performance Assessment To ensure adequate Board performance, the ESG conducts annual performance reviews of the Board, the Board Committees, Chairs and individual Directors. It arranges a survey of the Directors to obtain their individual feedback on the effectiveness and contribution of the Board, the Committees, Chairs and individual Directors on a rotational, triennial basis. The ESG may utilize the assistance of an external consultant to conduct the survey task. The ESG conducted an evaluation of all Board Committees and Committee Chairs for the 2021-22 reporting period. Integrity and Ethics SaskEnergy promotes a strong culture of ethical business conduct at all levels of the Corporation. The Board has approved and adopted a written Code of Business Conduct and Ethics (the “Code”) that applies to employees, contractors, officers, and Directors of SaskEnergy. The Code, designed to promote integrity and deter wrongdoing, is based on fairness, honesty, equal treatment and accountability. It provides guidelines on handling information and protecting or using corporate assets, confidentiality, conduct with suppliers and customers, business hosting, international business, conflicts of interest, compliance with laws and policies, and reporting. To further promote public confidence in the integrity of SaskEnergy and its employees, the Board has approved and adopted a Whistleblower Policy, which sets out a formal process for the reporting, investigation and appropriate follow-up for actual or potential complaints of wrongdoing. Compliance with the Code is reinforced through annual mandatory training for all employees, conducted by way of an online tool. In addition, The Public Interest Disclosure Act provides employees with an additional mechanism to disclose wrongdoing, and there is a policy on Reporting of Losses

that requires disclosure of all losses greater than five hundred dollars ($500.00) to the police, the Board, CIC Board and Minister. The Code, Whistleblower and Reporting of Losses policies (the “Ethics Policies”) are posted on the SaskEnergy intranet site for employees. The Code and Whistleblower policies are also posted on SaskEnergy’s website for public access. A process is also posted on the website for the public to contact the Chair of ESG, in confidence, to report a perceived violation of the Code or Whistleblower Policy. The ESG is responsible for monitoring compliance with the Ethics Policies. Management receives and monitors any reports arising under the Code, the Whistleblower Policy, and the Policy for Reporting Losses. There is a protocol outlined for management on how to address complaints under the Ethics Policies. Depending on the issue, management will either report to the ESG immediately, or at least annually for matters relating to the Code, semi-annually for issues relating to the Whistleblower Policy, and quarterly for issues relating to the Reporting of Losses Policy. In addition to the Code, SaskEnergy’s Directors abide by the CIC’s Directors' Code of Conduct. The ESG is the Ethics Advisor for this purpose. The Ethics Advisor administers, monitors and enforces the Directors' Code of Conduct, including reporting annually to the Board concerning compliance. Upon appointment, a Director declares (“Declarations”) to the ESG the number of other Boards on which they sit as Directors and any material interests in any SaskEnergy business and/or any material contract with SaskEnergy or its subsidiaries. This is meant to proactively address each member’s ability to perform their role, and potential conflicts of interest. It is also standard procedure to commence all Board and Committee meetings with an in-camera agenda where Board members are asked to declare any conflicts of interest or changes to outside employment or directorships that may create a potential or perceived conflict of interest. Management reviews the meeting Agenda against the Board member Declarations before each Board and Board Committee meeting, and the material relating to a matter where a conflict has been declared is not distributed to that Director. Likewise, any Director subject to CIC’s Protocol Regarding Lawyers Serving on Subsidiary Crown corporation Boards of Directors, will recuse themselves from consideration of any item creating a potential conflict of interest. During this reporting period, no waivers were granted by the Board to any Director or Officer authorizing non-compliance with the Ethics Policies.

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Statement of Corporate Governance Practices 2021-22

Board Committees The Board delegates some of its oversight responsibilities to Board Committees. The Committee mandates are set out in corresponding Terms of Reference, which are reviewed annually and updated as required. The Terms of Reference for each Committee establish the constitution, operations, and areas of responsibility for which that Committee makes recommendations to the Board. Full details of the Terms of Reference for each Committee are on SaskEnergy’s corporate website at https://www. saskenergy.com/about-us/our-company/board-directors/ board-roles-and-responsibilities. Each Committee has also adopted a work calendar to schedule and fulfill specific tasks and assigned responsibilities. Each Committee has the authority to engage and compensate outside advisors when it deems necessary to assist with its Terms of Reference. The Board Committee structure and composition are listed below. Audit and Finance Committee Chair: Nola Joorisity (FCPA, FCA, CMA, C.Dir.) Members: Susan Barber, Q.C. (C.Dir)*, Grant Greenslade, Tina Svedahl (CPA, CMA, ICD.D) The Audit and Finance Committee oversees SaskEnergy’s financial performance and ensures the adequacy and effectiveness of financial reporting, internal controls, management information systems, risk management, and audit functions. The Committee ensures that the Board receives financial plans and proposals consistent with SaskEnergy’s annual Corporate Plan and public policy objectives. The Committee meets regularly outside the presence of management with the appointed external auditor, the Provincial Auditor, and internal auditors. Except as qualified previously, all Audit and Finance Committee members are independent of management. All Committee members are financially literate, according to CSA Multilateral Instrument 52-110. Their education and experience are in their biographies on the SaskEnergy website: https://www.saskenergy.com/about-us/our- company/board-directors. The Committee had seven (7) meetings this fiscal year, which included review and approvals of financial statements, commodity strategies, payee disclosure report, economic impact on SaskEnergy, Audit Services reports, Audit Services’ Three (3) Year Audit Plan, Business Plan, budget and financial targets, review and updates to Capital Budget and capital spend review, review and approval of significant contracts, risk management activities and monitoring of corporate risks, and mitigation strategies, policies and review of the Enterprise security monitoring. *Non-independent Board Member

Environmental, Social and Governance Committee Chair: Linda Moulin (ICD.D, CLU, CH.F.C., CSC) Members: Curt Chickoski, Doug Shaw The Environmental, Social and Governance Committee (“ESG”) provides strategic leadership on corporate environmental and sustainability initiatives, social issues, Indigenous relations, human rights, community investment, and corporate governance processes and policies. The Corporation considers ESG to include conducting business in a safe, socially responsible, ethical and transparent manner, protecting the environment affected by its activities, listening and responding to community or stakeholder concerns, supporting human rights, and engaging, learning from, respecting and supporting the communities and culture with which SaskEnergy works. The Committee Terms of Reference includes effective oversight to ensure that adequate and effective controls are in place to assess and monitor ESG risk and required disclosures and compliance with regulatory requirements. This Committee has input into the selection criteria for board members and committee chair candidates, and creates profiles of the desired skills, experience and competencies required of the Directors. The Committee monitors compliance with the Corporation’s Code of Business Conduct and Ethics Policy, including waivers of it, the Corporation’s Whistleblower Policy, and the Reporting of Losses Policy. The Committee is charged with planning orientation and education programs to keep Directors informed and current with business, social, environmental and ethical requirements. The Committee had five (5) meetings this fiscal year. Critical work of the Committee included reviewing and updating the CEO’s Mandate, customer satisfaction survey results, evaluation of Board of Directors including committee structures, key ESG policies, complaints under the Corporation’s Whistleblower Policy, business/industry training for Directors, legal services, Indigenous engagement activities, community investment initiatives, corporate branding strategies, the Corporation’s environmental management system compliance, the Corporation’s annual environment initiatives including the Sustainability Report and framework, Corporate Environmental Risk Management Site Assessments and Remediation Program that outlines related Corporate environmental impact and liabilities, including decommissioning liabilities, the Corporation’s emissions management program, and management’s update on corporate system integrity.

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Statement of Corporate Governance Practices 2021-22

Human Resources and Safety Committee Chair: Alice Wong, (ICD.D) Members: Milad Alishahi*, Veronique Loewen, Bradley Sylvester (C.Dir.) The Human Resources and Safety Committee is responsible for and assists the Board in overseeing the employment environment for SaskEnergy, and is responsible for overall human resource, compensation and succession planning strategies and programs. The Committee also has the Mandate to address safety matters or safety risks proactively, and assist the Corporation to ensure safety is a priority and critical focus of the organization. The Committee also sets the CEO’s performance goals and objectives and conducts a semi-annual assessment of the CEO’s performance through the Committee Chair and Board Chair. The Committee reports on the CEO evaluations and then reports to the Board on any recommended changes to the CEO’s compensation. The Committee also makes recommendations to the Board on employee and Executive compensation, including metrics and targets to be utilized. It receives direction on its Terms of Reference (both in and out of scope) through communication with CIC. An ad hoc Board Committee can be created to identify and recommend candidates for the CEO position. At the same time, the Human Resources and Safety Committee oversees that the incumbent fulfills the role set out in the CEO Mandate. The Committee had seven (7) meetings this fiscal year. Important issues included management and Executive compensation plans, succession planning updates, review of health and safety performance indicators, diversity and inclusion updates, annual work plan status updates, review of key policies, and compliance with legislation updates. *Non-independent Board Member Strategic Planning and Reporting One of the Board’s principal duties is to provide leadership in setting the long-range strategic direction and approve SaskEnergy’s Corporate Plan. This comprehensive strategic planning process results in the Board’s review and approval of the Corporate Plan and annual operating and capital budgets. The previous five-year (5) Strategic Plan served the organization through a period of steady growth, including expanding its natural gas system to meet the demand of customers, businesses and industries. SaskEnergy has moved toward a more agile planning process to help achieve its Corporate Vision. The new Corporate Plan always focuses on the ensuing next three (3) years, as a living document. As such, this allows SaskEnergy to adjust the plan as the operating environment evolves quickly.

The Board of Directors, together with Executive management, identify and set long-term goals for SaskEnergy through the corporate planning process. The Corporate Plan involves a three (3) year rolling projection, which is updated annually. The Board oversees this process, provides input, guidance, validation and critical evaluation of the Corporate Plan and its initiatives. The Board provides oversight and support in implementing the Corporate Plan and initiatives and measuring management’s success against it. Each year, the Board and senior management meet jointly to identify strategic risks and review strategies and measurable targets to gauge performance in managing those risks. Public Policy Role SaskEnergy is a statutory Crown corporation governed by The SaskEnergy Act and Regulations. By legislation, CIC is the statutory holding Corporation for all of Saskatchewan’s commercial Crown corporations, and CIC has the authority to establish direction for SaskEnergy related to matters set out in legislation. As a provincial Crown corporation, SaskEnergy serves a public policy role. SaskEnergy delivers natural gas and energy solutions responsibly to Saskatchewan’s residents, businesses, and industries. SaskEnergy and its subsidiaries fulfill this mission by operating systems for natural gas distribution, transmission, storage, line locating and other related activities to promote the conservation and safe use of natural gas while contributing to and promoting the province’s economy. CIC approves SaskEnergy’s Corporate Plan annually and sets any other strategic priorities against which CIC and the Owner will measure the Corporation’s performance. SaskEnergy collaborates with other Saskatchewan Crown corporations to further CIC’s stated priorities of enhancing efficiency gains through joint initiatives, procurements and promoting an open business environment. Risk Identification and Management SaskEnergy has a formal Enterprise Risk Management Policy and process, which is developed by management, and reviewed and approved by the Board of Directors. SaskEnergy’s risk management process is designed to identify potential events that may impact SaskEnergy and manage the risk presented within accepted risk tolerance levels. Senior management holds primary responsibility for identifying inherent risks and designing and implementing mitigation strategies. Each year, the Board and senior management independently follow a process led by Strategic Planning to identify and prioritize significant inherent risks.

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Statement of Corporate Governance Practices 2021-22

The Director prepares a report summarizing the independent risk assessments completed by the Board and management. This report is discussed at a Board meeting where senior management and the Board align on the key corporate risks and the plans to mitigate or manage the residual risks. The Corporation then implements the mitigation strategies through the Corporate Plan. The Board monitors the risk management programs and oversees the implementation of appropriate systems to manage the identified risks either directly or through the Audit and Finance Committee. This year, the sale of a 'non-core' asset to streamline and focus corporate activity has also led to the transfer of some environmental liabilities and risk mitigation. The Audit and Finance Committee regularly reviews the Audit Services reports and discusses significant risk areas with the internal and external auditors. Environment & Sustainability Environmental sustainability is critical in meeting Saskatchewan’s demand for safe and reliable energy. It’s also important to customers and the communities where SaskEnergy operates. The Corporation encourages and promotes environmental responsibility and stewardship through collaboration with stakeholders, including industry and customers, and by supporting community organizations. SaskEnergy assists its customers in reducing their impacts to the environment and meeting their environmental goals. For more than 20 years, SaskEnergy has offered energy efficiency programs to help its residential and commercial customers install more efficient natural gas appliances. SaskEnergy is committed to protecting the environment as it delivers safe and reliable energy to its customers. From project planning and design through to construction, operation and reclamation, SaskEnergy strives to reduce its impact on all aspects of the environment. This includes plant life, wildlife, wetlands, native prairie, and species at risk. As an energy company, SaskEnergy recognizes its role – and the role of its industry – in reducing greenhouse gas emissions. The Corporation does its part to manage its GHG emissions and contribute to a lower-carbon energy future by meeting and exceeding regulatory requirements. Through collaboration within its industry and with its network of local contractors, SaskEnergy creates innovative solutions to help reduce the environmental impact of natural gas. These solutions assist customers in achieving energy efficiency goals, lowering emissions and reducing costs.

In December of 2021, the Board approved and adopted a Sustainability Report prepared by management. Sustainability for SaskEnergy means providing safe, reliable and affordable energy to its customers today and for years to come. At the same time, SaskEnergy also acknowledges the desire for a cleaner energy future. Sustainability is also about strengthening relationships with customers, communities and Indigenous groups while providing an inclusive, safe working environment for employees. The 2020-21 Sustainability Report provides an overview of SaskEnergy’s continued progress on ESG principles such as stewardship, community collaboration and socially conscious business practices. It also provides an outlook on the Corporation's long-term goals and objectives. SaskEnergy’s 2020-21 Sustainability Report can be found at: https://www.saskenergy.com/about-us/ commitment-sustainability. In addition, at the time of this report, the CSA is developing new guidance on Climate Related disclosures in proposed “National Instrument 51-107 Disclosure of Climate Related Matters” and the Board, where applicable, will adopt the recommended disclosures when National Instrument 51-107 comes into force. It is anticipated that it will come into force by the end of 2022 and companies will have a year to transition. Cyber Security Risk SaskEnergy relies on its information and operations technology systems to operate corporate assets and protect corporate >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14

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