Campaigning against BlackRock, almost all the information you need
I had never thought of going against BlackRock, even remotely. Not that it wasn’t tempting, but the largest asset manager on the planet is so ridiculously big and powerful that it’s hard to find an angle to seize and grasp, a section of its business against which one could possibly muster collective action to confront the giant. Yet, many groups have tried it.
For instance, when the European Commission hired BlackRock in March 2020 to advise on how to make the banking sector more sustainable, the conflict of interest was clear for all stakeholders. It was unbearable to have the largest investor of all decide which investment is green or socially responsible. A coalition of civil society organizations was quickly formed under the moniker Change Finance, with the project of canceling the contract between BlackRock and the Commission. Organizations within Change Finance come from all around Europe, with diverse missions. They have in common to be concerned with the effects of the European financial policy on society and the environment. I somehow managed to join the Change Finance coalition, although my contribution to their work was rather modest, if not practically null.
However, thanks to the benefit of joining a big network of activists, I gained access to financial data I could only dream of. Data that I spent the last two years analyzing, a pleasant pastime of which I’m happy to present the results today, right here. It’s a report about how BlackRock is financing the deforestation of the primary forest through tax havens. I will come back to this research, but for now let’s talk more about BlackRock and why it matters to do so.
It is indeed difficult to remain indifferent to BlackRock once you learned what it is. The term polarizing comes to mind, but it doesn’t quite cover the range of psychological reactions provoked by the exposure to the nature of its business. In the leftwing circles where I usually dwell, the first reaction would be anger. After all, the basic promise of BlackRock, its fiduciary duty, is to help their customers to increase their personal wealth. Based on this premise alone, BlackRock could be pictured as the natural adversary of any form of collectivism, or the archetype of the capitalist investor, aimed at maximizing shareholder value. In other words, making money and nothing else. But this is not the whole picture, by far. The same company is also one of the world’s top advisors for public authorities in times of financial crisis. Particularly in the USA, its home, but also in Europe.
As such, BlackRock could be described as the warden of the world’s finance. The ultimate gatekeeper preserving the stability of the markets. At this point of the explanation, the average leftist is usually boiling. The fact that BlackRock can combine the role of managing nearly everyone’s investments and advise public authorities on how to deal with financial crises is enough to sicken anyone with the thinnest fiber of socialism in their worldview. In fact, I haven’t met anyone who could justify this double role with a straight face. But I probably haven’t met the right people. Story of my life. Even the libertarians I spoke to could only softly lament the conflict of interest and the unfair advantage that BlackRock has made for itself against its competitors: private banks and financiers who don’t enjoy the same inside view on financial regulation.
The main reason behind both BlackRock’s ascension to the top of the financial skyscraper and its strategic position in the ears of financial regulators is plain and simple. BlackRock has the best tools. BlackRock’s access to financial information is unrivaled, so far. Aladdin, BlackRock’s own software, is the largest financial risk calculator on the planet. It provides risk assessment to most big banks, to rival asset managers like State Street and Vanguard, but also to international institutions and tech giants like Apple and Alphabet (Google). The Financial Times estimated in 2020 that Aladdin manages at least $20 trillion, but the real number was probably higher. The financial journal also noted that such a concentration of proprietary tech caused a serious problem of conflict of interest and vulnerability to systemic risks like climate change and cyber attacks. Combined with a ruthless approach to political lobbying, the strategy of focusing on technology and proprietary software has made BlackRock a unique supplier of information on the markets, better informed than any public body.
In the process of understanding this situation, my initial state of mind as a left-wing finger-pointer was pessimistic. To target the systemic problems caused by BlackRock is to put oneself at the lighter end of an immense power differential. However, after an initial stage of stupor in front of the size and complexity of their financial lattice, I found myself filled with a sense of serenity. It is rare to find such a good prize. Few institutions have more power and less accountability. I can’t think of any other financier who has done a better job at riding the crisis cycle to launch themselves into orbit. BlackRock is right now a centerpiece of the global financial industry, vital to investors and unavoidable to regulators. For anyone willing to address the main issues of capitalism and finance, for instance sustainability and inequality, considering the influence of BlackRock is at least useful, if not absolutely necessary.
I will try to maintain some regularity in this blog. Next week I’ll tell you what happened between Show Me Finance and Change Finance, and what’s the difference between using open and proprietary data when you are working with a group of volunteers.
This article is the first in a series.
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