Hydro One Ltd

Policy: We regularly monitor climate change policy developments and assess their potential impact on our business. While we are not a large emitter of GHG, we do seek to minimize our GHG emissions as part of our strategy to limit our environmental impact. We have developed internal programs to monitor and mitigate, to the extent reasonable, the impacts of GHG emissions. In addition, we engage in proactive policy development to support greater electrification in Ontario. Policy and legal-related risks and opportunities are managed by our leadership level Strategic Policy Committee and our Regulatory and Policy teams. [...] Regulatory: Our efforts to build a grid for the future and enhance the resilience of the Ontario grid exist within a regulated context. We continually assess, and advocate, where appropriate, changes to the regulatory environment that may impact our ability to implement our strategy, and we seek to identify regulatory barriers and/or changes needed to enhance the grid's resilience. We regularly review and support development standards, including our specifications, to account for changes in national standards to ensure we are hardening our infrastructure to withstand climate-related hazards.

Hydro One's approach to public policy is aligned with our corporate strategy and focuses on advocating for our customers and all Ontarians. We are proud of the role we play in enabling economic growth through investments, supporting local jobs, and helping rapidly growing domestic industries. [...] Hydro One is actively advocating and informing policy/regulatory reform to enable proactive electricity system investments to support the energy transition and economic development in a sustainable manner. In 2022, our engagements included the following: [• Electrification and Energy Transition Panel:](https://www.ontario.ca/page/electrification-and-energy-transition-panel) The Province of Ontario established this panel to provide advice on preparing the Ontario economy for electrification and strengthen the long-term energy planning process. The Hydro One leadership team met with the panel and provided input, while highlighting our role as an enabler of the energy transition. **• OEB Regulatory Framework Workshops: Hydro One provided** feedback on how the OEB could enable energy transition-related investments while protecting customer interests and delivering on the government's vision.

Hydro One's Board, through its four standing committees – the Audit Committee, Indigenous Peoples, Safety & Operations (IPSO) Committee, Governance and Regulatory Committee (GRC), and Human Resources Committee (HRC) – oversees sustainability. The Board reviews and approves the Company's sustainability priorities, its program and its annual sustainability report, and receives regular updates on sustainability-related topics. Updates included presentations and education sessions on supply chain risks, sustainability reporting readiness, and DEI. [...] Hydro One's approach to public policy is aligned with our corporate strategy and focuses on advocating for our customers and all Ontarians. We are proud of the role we play in enabling economic growth through investments, supporting local jobs, and helping rapidly growing domestic industries. [...] Hydro One is actively advocating and informing policy/regulatory reform to enable proactive electricity system investments to support the energy transition and economic development in a sustainable manner. In 2022, our engagements included the following: Electrification and Energy Transition Panel: The Province of Ontario established this panel to provide advice on preparing the Ontario economy for electrification and strengthen the long-term energy planning process. The Hydro One leadership team met with the panel and provided input, while highlighting our role as an enabler of the energy transition. OEB Regulatory Framework Workshops: Hydro One provided feedback on how the OEB could enable energy transition-related investments while protecting customer interests and delivering on the government's vision.

Hydro One's Sustainable Finance Working Group is responsible for the evaluation and selection of projects in line with eligibility criteria under the Framework. The Company has adopted internal environmental and social risk policies and guidelines which are applicable to all eligible projects under the Framework. Sustainalytics considers the project selection process and the application of environmental and social risk management policies to be in line with market practice. [...] Hydro One's Treasury department will be responsible for tracking and management of proceeds through the Company's Sustainable Financing Register. Hydro One intends to reach full allocation within 24 months of issuance and with 24 months of lookback period for its refinancing activities. Pending allocation, proceeds will be temporarily held in cash equivalents, used to repay debt or invested in bank deposits. Sustainalytics considers this to be in line with market practice. [...] Hydro One intends to report on allocation of proceeds on its website on an annual basis until full allocation. Allocation reporting will include details such as allocation per eligible category, the share of unallocated proceeds, the share of financing vs. refinancing and description of projects financed by the proceeds. In addition, Hydro One is committed to reporting on relevant impact metrics. Sustainalytics views Hydro One's allocation and impact reporting as aligned with market practice.

The Governance & Regulatory Committee oversees Hydro One's regulatory, customer and public policy matters. [...] Furthermore, the Board retains accountability for the oversight of the ESG risks within the Corporate Risk profile; delegating components of this risk to the various committees based on their respective mandates. [...] Climate change is overseen by our Chief Safety Officer (CSO) who manages our climate change mitigation and adaptation program. Our CSO works closely with other executives such as our Chief Operating Officer (COO) who manages our climate change adaptation program. [...] Due to the cross-functional nature of ESG, it is managed by various management committees. The Chief Corporate Affairs and Customer Care Officer chairs Hydro One's leadership-level sustainability committee, which provides strategic advice and perspectives on current, emerging, and key sustainability issues, including climate change. [...] Hydro One also has leadership-level committees on environment and on climate change, led by the CSO, that meet quarterly and focus on the implementation of our climate change program.

In 2020, the Board revamped the structure and mandates of its committees to support Hydro One's new corporate strategy and further embed our vision across the organization. [...] Finally, we recognized the importance of regulatory and public policy matters within the electricity sector by expanding our Governance & Regulatory Committee.

• The Board of Directors is responsible for oversight of the principal risks of the business, which includes ESG. The Board ensures that management has an effective risk management framework, programs, and risk mitigation strategies in place, with a view to achieving an appropriate balance between the risks incurred as well as the potential returns and the long-term sustainability of the company. • The Board oversees and assesses the adequacy and effectiveness of programs and processes for identifying, assessing, and managing or mitigating the company's principal risks and ensuring that primary oversight responsibility for each of the key risks identified in the ERM framework is assigned to the Board or one of its committees. • The ERM team provides an annual corporate risk profile report and quarterly updates on the company's risk profile to the Board of Directors and its committees, consistent with the risk management oversight accountabilities of their mandates and as allocated by the Board. These reports chronicle the most "critical" risks to the achievement of the corporate strategy, including new and emerging risks, and are a key mechanism to integrating climate and other sustainability-related risks into Hydro One's overall risk management process. • The identification, assessment and management of climate-related risks are integrated within management's risk accountabilities and Hydro One's ERM process. The ERM process enables Hydro One to proactively consider the critical and emerging enterprise risks essential to the achievement of our strategic objectives in an integrated, systematic and transparent manner. Climate-related risks and opportunities are monitored regularly by management and our ERM team. • Climate-related risks and opportunities are identified and assessed through multiple channels within the ERM process as well as through internal audit. This includes project risk assessments, enterprise-wide climate-related scenario planning assessments, and executive leadership team risk workshops conducted by Hydro One's ERM team.

In 2020, the Board revamped the structure and mandates of its committees to support Hydro One's new corporate strategy and further embed our vision across the organization. We established the Indigenous Peoples, Safety & Operations Committee[1] in order to elevate the importance of improving our safety culture and strengthening our partnerships with First Nations. We also elevated the review of Hydro One's annual sustainability report to the full Board, underscoring the improved transparency and accountability of our environmental, social and governance (ESG) disclosures. Finally, we recognized the importance of regulatory and public policy matters within the electricity sector by expanding our Governance & Regulatory Committee.[2 ] [...] In 2020, the Board revised the structure and mandates of its committees to support Hydro One's new corporate strategy. The Board established the Indigenous Peoples, Safety & Operations Committee[4] (IPSO) in order to elevate the importance of an improved safety culture and strong First Nations partnerships. The IPSO Committee also oversees the company's sustainability and climate change strategies and major capital projects. The Board also recognized the importance of regulatory and public policy matters within the electricity sector by establishing the Governance & Regulatory committee[5].

Board oversight • Hydro One's Board of Directors oversees the company's approach to environmental, social and governance matters relating to the long-term health and sustainability of the company. This includes overseeing, reviewing and, where applicable, approving the company's strategies and approach relating to sustainability matters and approving the annual sustainability report. • The Board's Indigenous Peoples, Safety & Operations Committee (the "IPSO Committee") oversees environmental strategies, policies and programs, including climate change. • The IPSO Committee is mandated to review material climate and environment events or developments and our progress regarding our sustainability objectives including climate change and other environmental issues. The Committee is expected to assess the company's programs and approaches, including the standards against which the company reports in the areas of climate change. • The Enterprise Risk Management (ERM) function delivers quarterly updates to the Board and its committees for the risks relevant to their respective mandates, including ESG and climate-related risks. Management oversight • Climate change is overseen by our Chief Safety Officer (CSO) who manages our climate change mitigation and adaptation program. Our CSO works closely with other executives such as our Chief Operating Officer (COO) who manages our climate change adaptation program. • Due to the cross-functional nature of ESG, it is managed by various management committees. The Chief Corporate Affairs and Customer Care Officer chairs Hydro One's leadership-level sustainability committee, which provides strategic advice and perspectives on current, emerging, and key sustainability issues, including climate change. • Hydro One also has leadership-level committees on environment and on climate change, led by the CSO, that meet quarterly and focus on the implementation of our climate change program. • The climate change committee is also supported by working groups on sulfur hexafluoride (SF) use and management; and climate change management in fleet and facility operations. These groups meet regularly to focus on strategies and approaches to mitigate climate change impacts associated with the use of fossil fuels and SF within the context of continually providing safe, cost effective and efficient electricity supply to Hydro One's customers and the people of Ontario. • A key metric of our corporate scorecard for all of our management team is reliability, which is impacted by climate-related events.

The Governance Agreement specifically addresses the following governance matters: [...] The governance principles provide that: [...] With respect to its ownership interest in Hydro One Limited, the Province will engage in the business and affairs of Hydro One Limited as an investor and not a manager, and the Province intends to achieve its policy objectives through legislation and regulation, as it would with respect to any other utility operating in Ontario. [...] The Governance Agreement establishes qualification standards for director nominees, provides for the number of directors that may be nominated and establishes a process for confirming nominees. [...] Under the Governance Agreement, the Province and the Governance & Regulatory Committee (formerly the Nominating, Corporate Governance, Public Policy & Regulatory Committee and then Governance Committee) have agreed to nominate as directors qualified individuals of high quality and integrity who have the experience, expertise and leadership appropriate to manage a business of the complexity, size and scale of the business of Hydro One Limited, on a basis consistent with the highest standards for directors of Canada's leading public companies. [...] The Governance Agreement provides that certain actions require approval by a resolution of the Board passed by at least two-thirds of the votes cast at a meeting of the directors, or consented to in writing by all of the directors (a "Special Board Resolution"). Matters requiring approval by a Special Board Resolution include: [...] changes to certain specified governance standards specified in the Governance Agreement to be "Hydro One's governance standards". The governance standards subject to this special approval requirement include the Board's skills matrix, the Ombudsman's Mandate, the Diversity Policy and the Majority Voting Policy, the Corporate Governance Guidelines, the mandates of the Board and its committees, position descriptions for the CEO, the Chair, the directors and committee chairs, and the Stakeholder Engagement Policy.

At the Board level, we now have greater oversight of ESG matters through the review and approval of the company's sustainability priorities and goals. We are pleased that this year, the company committed to achieve net-zero greenhouse gas (GHG) emissions by 2050 with a target of a 30% GHG reduction by 2030. [...] We also enhanced the Board's governance structure to recognize the importance of regulatory and public policy matters within the electricity sector. [...] Leadership starts with the Board and we will continue to enhance the rigour and oversight of our governance practices. [...] Strong governance strengthens our practices and performance, and upholds our values and standards in an ethically responsible manner. We have adopted a sustainability oversight and management structure to ensure accountability at all levels of the company. [...] The Governance & Regulatory Committee oversees Hydro One's regulatory, customer and public policy matters. [...] Due to its cross-functional nature, ESG is managed by various leadership level committees within the company. [...] Strategic policy committee: The Chief Regulatory Officer and Vice President Stakeholder Relations co-chair the leadership level strategic policy committee, which is responsible for developing the company's strategic regulatory and policy positions and initiatives.

Hydro One's Board of Directors, through its committees including the Indigenous Peoples, Safety & Operations Committee (the IPSO Committee), has oversight of sustainability at Hydro One, reviewing and approving the company's sustainability priorities, its program, and its annual sustainability report. [...] The IPSO Committee reviews Hydro One's approach to issues related to sustainability including environment, grid reliability, efficiency, and flexibility. [...] The IPSO Committee reviews material climate and environment events or developments and our progress against our goals related to climate change and other environmental issues. [...] The IPSO Committee also assesses the company's programs and approaches related to sustainability objectives, including the standards against which the company reports in areas such as climate change.

Hydro One's approach to public policy is aligned with our corporate strategy and focuses on delivering value for our customers and people across Ontario. We are proud of the role we play in enabling economic growth through investments, supporting local employment and supporting rapidly growing domestic industries. In 2023, our leadership team met with the Electrification and Energy Transition Panel. This panel, established in 2022 by the Government of Ontario, was formed to provide advice on preparing the Ontario economy for electrification. Our team provided feedback on how to best strengthen the long-term energy planning process and highlighted our role as an enabler of the energy transition. This panel released its report in 2023 and made recommendations that were supportive of the modernization of the distribution grid and encouraged an initiative-taking approach in the path forward for greater electrification. We also engaged with the OEB on processes to encourage EV adoption. We provided recommendations on standardizing non-residential EV charging connection processes and supporting the efficient integration of EVs in Ontario. Our engagement with the OEB has resulted in a simplified and customer-centric DER connection process that has facilitated DER adoption and utilization of the distribution system.

At the Board level, we now have greater oversight of ESG matters through the review and approval of the company's sustainability priorities and goals. We are pleased that this year, the company committed to achieve net-zero greenhouse gas (GHG) emissions by 2050 with a target of a 30% GHG reduction by 2030. [...] We also enhanced the Board's governance structure to recognize the importance of regulatory and public policy matters within the electricity sector. [...] Leadership starts with the Board and we will continue to enhance the rigour and oversight of our governance practices. [...] Strong governance strengthens our practices and performance, and upholds our values and standards in an ethically responsible manner. We have adopted a sustainability oversight and management structure to ensure accountability at all levels of the company. [...] The Governance & Regulatory Committee oversees Hydro One's regulatory, customer and public policy matters. [...] The Chief Regulatory Officer and Vice President Stakeholder Relations co-chair the leadership level strategic policy committee, which is responsible for developing the company's strategic regulatory and policy positions and initiatives.