From the CSIRO to Fortescue: Dr Larry Marshall FAICD

As the former CEO of the CSIRO, Dr Larry Marshall FAICD was instrumental in turning around the fortunes of the 102-year old organisation and helping to deliver its first profitable years, plus increasing the funding base by $400 million a year. He also helped to transition the scientific agency to 80 per cent of its target to reach net zero. Now as a board member at Fortescue, he is using his scientific climate insights to work towards a similar goal – except this time the aim is to get to “real zero”. Marshall is this week’s guest on Season 2 of the AICD podcast series Boardroom Conversations. Listen to the podcast here.

Climate change is a major issue for boards and Dr Larry Marshall has no illusions about how hard the journey is for organisations to reduce emissions and to set achievable targets in this area.

“We've seen a lot of grand claims being made. In the last two or three years,  people promising to get to net zero by 2025 and so on. I think as the years have gone on, people have begun to realise how hard that is to do.”

Marshall, who sits now on the boards of mining giant Fortescue and medical technology company Nanosonics and is a member of the Australian National University (ANU) Governing Council, was one of the founding members of the Australian arm of the Climate Leaders Coalition.

“When you look at the list, there are some great achievements in terms of emissions reduction, but no-one has made a significant reduction in the five years …with CSIRO being the exception, perhaps. So, I think we're learning that it's a lot harder to do.”

For example, the ANU had set out making “grand claims”, which were later revised after leadership changed and the new vice chancellor Genevieve Bell AO took up her position.

“Genevieve did a great thing of looking at it honestly and coming back to the market and saying: ‘You know what? We're not going to be able to do this. So, we're going to rethink.’ I think we should see more CEOs doing that….

“What we've seen up until now has been CEOs trying to outbid each other, trying to out commit each other.” Very few companies had progressed beyond signing power purchase agreements because they have office buildings, and they buy electricity in a city, according to Marshall.

At Fortescue, the aim is to reach net zero, but there are challenges. The mining giant is building its own grid, massive wind and solar farms, because there are no power purchase agreements in the Pilbara. “But at the same time, two-thirds of its emissions come from bulk carriers that burn diesel fuel and remote diesel generators that are far away from any grid. The industrial process of turning iron ore into steel uses massive amounts of coal. That's not a solved problem yet, and electrification isn't really the solution.”

Marshall says industrial processes need to be reinvented to work on solutions that don’t emit carbon. “That hasn't really been done yet. And I think most CEOs are learning that, working that out now.”

Fortescue is on an “extraordinary journey” and has managed to preserve the hunger of a start-up, even though it’s a company worth many tens of billions of dollars in value.

“It's trying to become an energy company and solve that same problem that we solved at CSIRO. How do you grow profit and get to - not just net zero in Fortescue's case, we set an even bigger ambition. We want to get to real zero.”

Companies need to treat climate reporting as rigorously as financial reporting, he adds. “The government will require that in the next couple of years anyway. But you should do that as a matter of principle, because if you don't, you'll lose trust from your customers.”