The European Central Bank (ECB) is refusing to back down in a row with staff over perceived “disrespect” by top management toward staff.

Earlier this week, the bank's staff committee wrote to President Christine Lagarde to protest at comments at an internal event last month, where board member Frank Elderson — who oversees the bank's policy on climate change — had lamented about the need to “reprogram” staff “who can't even spell ‘climate’.”

“We would encourage the executive board to reflect on their leadership style and to acknowledge that people in democratic societies shall not be ‘reprogrammed’ but convinced by reasoning and facts and leading by example,” the letter said.

However, in an internal memo to staff from the ECB's new chief operating officer, Myriam Moufakkir, seen by POLITICO, gave little sense that Elderson had said or done anything wrong.

Elderson's message “that climate science should be considered in the ECB's work is a direct result of the ECB strategy,” Moufakkir wrote. “It also reflects his view, supported by all colleagues on the Executive Board, that all factors affecting the ECB's mandated tasks should be properly understood.”

In a similar vein, a statement by Elderson himself on the bank's intranet posted on Wednesday glossed over any potential offense given.

“To deliver on our mandate we must be fact- and science-based,” Elderson wrote. “This means ensuring that the knowledge and skillset of all of us develop in lockstep with scientific progress, including the findings of climate science, which are highly relevant for our price stability, financial stability and banking supervision mandates. In this context, I used the word ‘reprogram’ where I meant — should have used — ‘train’. "

He added that “I remain and always have been a staunch supporter of diversity of thought, and indeed all forms of diversity” — something also echoed by Moufakkir's reassurance that: “Diversity and inclusion are deeply embedded in the ECB's culture and embraced actively by the Executive Board.”

By contrast, the staff letter had complained of “having one-sided views unilaterally imposed from the top to the bottom.”

The letter had also referenced “other public statements made by executive board members which were perceived as disrespectful towards the ECB’s staff.” Although it didn't refer explicitly to the incident, staff were reportedly upset two months ago by President Christine Lagarde's criticism of the economist profession as a ‘tribal clique’, overly dependent on theoretical models.

Parliamentary warning

Elderson's original comments, which POLITICO first reported in February, had prompted the EU Parliament to warn the central bank about “the importance of pluralism for the institutional culture of the ECB” and urge it to “swiftly address any suspicions of ideological bias.”

Putting climate change at the heart of the ECB's mission was a milestone decision taken by Lagarde when she took over from Mario Draghi as President in 2019.

The bank, which enjoys near-complete independence in how it formulates and implements policy, has greatly expanded its research into the economic effects of climate change since then. However, in terms of policymaking, its most concrete initiatives have been largely in the area of banking supervision, where it is conducting a multiyear exercise to force banks to recognize and account for the climate-related risks on their balance sheets.

Last year, Elderson warned some 20 banks they would face daily fines if they failed to report back as directed.

Concern that the bank may be over-reaching in its efforts to implement Lagarde's vision are not limited to the ECB's staff. Governing Council member and Austrian National Bank Governor Robert Holzmann told POLITICO last month that he was “skeptical of the ECB including green considerations in its monetary operations and supervisory function.”

“My sense is that this requires too much information, which we don't have,” he argued. “I believe information is better guided by the markets than by bureaucracy.” 

An ECB spokesperson declined to comment.

Additional reporting by Johanna Treeck.