FRANKFURT ― A top European Central Bank official stunned employees by saying people who don’t buy into the institution’s green objectives aren’t welcome to work there.
Frank Elderson, one of six members of the ECB’s executive board, told an internal meeting: “I don’t want these people anymore.”
His comments, verified by POLITICO, have sparked outrage among ECB staff, who described them as “authoritarian” and said they showed a free and open discussion about climate change ― and the role the bank should play in tackling it ― was no longer possible at the Frankfurt-based organization.
At the meeting earlier this month, Elderson asked employees ― some in person, some online ― “Why would we want to hire people who we have to reprogram? Because they came from the best universities, but they still don’t know how to spell the word ‘climate.’”
Anyone already working at the ECB should be retrained, Elderson added. He insisted he was “not threatening anyone,” and did not expand on what he meant by being able to “spell” climate.
The Dutchman’s remarks have broader significance because the ECB is embroiled in a debate ― internally and among Europe’s politicians ― over how much its policies should steer toward making the economy “greener,” or whether it should just stick to its main goal of keeping eurozone prices stable.
Diversity and inclusion
The comments drew an angry reaction from employees who took to a private chatroom for bank staff. Their responses were also seen by POLITICO.
Elderson, who is the bank’s climate czar and vice-chair of its supervisory arm, “killed the ideal of diversity and inclusion in one sentence,” said one member of staff. “I thought these underpinned the culture of this institution.” They described the Dutchman’s comments as “authoritarian.”
Others warned his comments risked fostering “groupthink,” which would impair the ECB’s decision-making.
‘I stand by Frank’
Christine Lagarde, the ECB president, was asked about the issue at the European Parliament on Thursday morning after this article was originally published on POLITICO Pro on Wednesday evening.
“I stand by my colleague, Frank, but equally, and probably more importantly, I and others value diversity in the institution that I lead,” she said.
“Across the board, all the usual definitions of what diversity means, but also diversity of thinking, diversity of background, and I think that we will l improve our work as a result of that.”
Anti-climate
Many have argued that “diversity” hasn’t always extended to differences of opinion on central banking’s green agenda.
“The discussion about greening central banking has become so polarized that a critical debate has become difficult,” said Daniel Gros, director at the Institute for European Policymaking at Bocconi University in Milan. “If you voice criticism, you are quickly accused of being anti-climate. I have personally had that experience more than once.”
Gros sees this problem as especially pronounced in the central bank world, where top officials generally avoid outright conflict.
When contacted by POLITICO about the implications of Elderson’s remarks for hiring and training strategies, the ECB said: “Climate and nature risks affect our monetary policy and banking supervision mandates, and all colleagues should understand what it means for their work.”
Cultural purge
A recent survey showed that most ECB staff support the central bank’s increased efforts to fight global warming. Discussion among staff following Elderson’s remarks show some are wary of turning the bank’s green revolution into a cultural one, with staff who don’t support the battle being purged.
The ECB has argued it is legally obliged to contribute to battling climate change, citing a formal secondary task requiring that it support the EU’s broader economic policies as long as they don’t conflict with keeping prices steady.
One former ECB policymaker, granted anonymity to speak freely, expressed concern over the ECB’s recent focus on tackling climate change, especially in light of its failure to keep inflation in check.
“The ECB has a primary objective of price stability and then supports the economic policies of the EU,” he said. “These include climate but also other objectives like employment and growth, which entail tradeoffs. Talking only about climate at the expense of all others increasingly creates a problem for the ECB’s legitimacy.”
‘We should be more candid’
As if to illustrate the conflict, ECB Governing Council member Pierre Wunsch, the head of Belgium’s central bank, last year had an experience similar to that mentioned by Gros. After he expressed reservations about adjusting certain ECB operations to take the climate into account, 20 environmental groups wrote to Belgian King Philippe late last year, urging him to block a second term for Wunsch.
Undeterred, Wunsch, who has never questioned the reality of climate change, spelled out some trade-offs associated with the green transition at the European Parliament only this week.
“This transition is not going to make us collectively richer,” he said. “We should be more candid and [not] lure people into thinking that greening carries positive opportunities that could augment GDP and create millions of well-paid jobs.”
It is not for unelected central bankers to choose the winners and losers in the process ― that’s the role of elected governments, say those wanting to limit the role of central banks in the green battle. Both Federal Reserve Chair Jerome Powell and Swiss National Bank President Thomas Jordan, for example, have vowed to limit the role of their banks to protect their independence.
Gros cautioned that the failure to have a constructive, open debate on fighting climate change and the role central banks can play could return to haunt the ECB.
“Some policymakers have a very ideological stance, and they are not doing the institution a favor,” he said. “This is not tenable in the long run.”
This article was updated to include comments from Lagarde.
