From open data to proprietary data, how to prevent people from investigating BlackRock
At the beginning of 2020, I was writing the first articles of Show Me Finance, a blog dedicated to uncovering financial flows in Europe using open data. With the help of Open Knowledge Belgium, a few people were somehow convinced to contribute to the project, a fact which continues to amaze me to this day. It goes without saying that if it wasn’t for Open Knowledge, these contributors wouldn’t have done the work and the research that they have, and I wouldn’t be able to write what I’m writing.
We tapped into some unused sources of open financial data and tried to produce some useful analysis out of it. Open Knowledge gave us a slot at their annual conference. A serious business meeting, but we weren’t speaking at the corporate event for big data professionals, just at the “off”, the little gathering for nerdy volunteering projects. It was March 2020, masks were only starting to grow on faces. I drank all the coffee I could find and gave a talk to less than ten people who may or may not remember anything. But they were all technically minded and absorbed most of the chewy stuff. For my effort I got a promotional mug from an obscure database provider, which was given to my mum as a trophy. Show Me Finance was also scheduled to talk at Economia, in Eindhoven, a strange event joining art and backyard experimentation to explore new ideas in economy. Then Covid hit, and everything was canceled. Public talks and our bi-weekly meetings disappeared as the world went into lockdown.
What strikes me now, about Open Knowledge and the people with whom I was lucky enough to work with on Show Me Finance, is how little they were inclined to support what I would call leftwing priorities in economics, such as the redistribution of wealth or the collectivisation of resources. They were convinced that transparency and access to information was beneficial to society as a whole, and that was enough for them to contribute to an experiment in citizen analysis of financial data. Most of them were more inclined to classical liberalism, libertarianism, or some blend of anarcho-capitalism. I’m probably missing some nuances, but the point is that most of the technical, practical help I got during the creation of Show Me Finance didn’t come from the economic left. Even if my own family, my years of activism and most of my friends were on the edge of marxism. According to my calculations, roughly 74% of my exes were leftwing when we dated (I don’t know what happened afterwards).
I didn’t exactly betray my friends to realize the project of Show Me Finance, but it came quite close. I hope they don’t feel that way. There must be some explanation to this. Left-wing activists are mostly concerned with the social or environmental effects of the economy, downstream of the supply chain, while liberal activists work from the inside of capitalism, in the guts of the machine. On the left they tend to the damage done by the system, on the right they try to make the system work. In between, the knowledge gap is immense. Lefties don’t really know how markets function in practice, liberals don’t really know what poverty means in practice, to picture it grossly.
Nevertheless, through the patronage of Open Knowledge, Show Me Finance was able to attract the interest of professionals with direct experience in financial data. Without their help, the project wouldn’t have existed. A crucial point which convinced them to contribute was the use of open data, accessible to anyone with the technical skills, as opposed to proprietary data, protected by intellectual property rights. Even so, most of the contributors worked anonymously, by fear of losing their jobs or their customers, but it was rarely stated clearly. It wasn’t enough that the data was “open”, if the project was to investigate financial flows and seek to uncover systemic issues like income inequality, sustainability or tax avoidance, it was too risky for them to announce themselves. When I would ask any of them for an interview for the blog, they declined and preferred to write some code anonymously.
Later on, when I got involved with Change Finance’s campaign against BlackRock, it became even harder to get the contributors of Show Me Finance on board, particularly because the data we were supposed to use wasn’t “open”. Instead, it came with a blurry proprietary status. The data set on BlackRock was handed to me with the instruction to only share it with members of the Change Finance coalition. But I wasn’t a member in any official capacity, so while my own legal integrity in publishing the data was uncertain (it still is), there was no way I could offer guarantees to the contributors of Show Me Finance. The data in question concerned BlackRock’s investments in forest-risk groups. It showed all the money managed by BlackRock on behalf of their customers in groups that cause danger to the primary forest. The most ancient forested areas, the ones that have never been cut down before, in South America, Africa and South-East Asia.
The plan was simple in theory. Finding which companies in BlackRock’s investments were based in tax havens, and demonstrate that BlackRock was funding deforestation through tax avoiding companies. Convincing Show Me Finance contributors of the interest of this goal wasn’t difficult. The point was to show that BlackRock was in a conflict of interest when it signed a contract with the European Commission to shape the regulation of sustainable finance, where it was supposed to address the financing of deforestation, as well as tax avoidance. Spoiler alert, BlackRock did neither of those things.
But the proprietary status of the data on BlackRock was repulsive to the finance professionals, no matter how much they were willing to help. A legal action from BlackRock would have terminal consequences on their careers, or simply getting their names out in a story criticizing BlackRock could bar them from finding a job in the finance industry. That’s how much fear this company can instigate in people on the inside.
BlackRock doesn’t only manage investments on the account of others, it also controls financial information. Its empire is built on intellectual property. It collects data from global markets, processes it with its own proprietary software (Aladdin) and sells it back in the form of structured investment products. To the outsiders, it’s a black box that produces money. To the insiders, the women and men who work for the financial industry, it’s the most powerful company in the game, way ahead of everyone else. Their image is that of stability, efficiency and flawlessness. Few even think about criticizing their methods because most professionals are tied to the asset manager in some way. They either own BlackRock financial products, sell them to their customers, or find their own financing through BlackRock products. This quasi-monopoly on the industry is publicly announced as beneficial. What is good for BlackRock is good for everyone else, and vice-versa. “Everyone else” in the finance industry is what is intended, but still relatively few people know this name on the outside. On the inside, it appears that criticizing BlackRock is equivalent to criticizing the industry itself. Inconceivable in a period of economic growth, before and after each cyclical crisis. Inconceivable and unnecessary, since Larry Fink, BlackRock’s boss himself, is lecturing on sustainability and long term profitability in his annual letter to CEO’s. Privately, however, the opinions of insiders are much more contrasted and really depend on each personal perspective on the financial sector.
Eventually, I joined the Change Finance campaign and stopped organizing the meetings of Show Me Finance, because I couldn’t keep up with both at the same time. I dropped the open data project of Show Me Finance to work on the not-so-open-at-all data on BlackRock that I obtained through Change Finance. The contributors of Show Me Finance didn’t join Change Finance, mostly because the data on BlackRock was too risky to play with.
A crucial difference between the new BlackRock data and the open data we used with Show Me Finance is that each financial product was connected to the asset manager, in this case BlackRock. The Show Me Finance data was raw and incomplete, it needed work to be augmented by various sources if we wanted to produce usable information. The data on BlackRock came in a perfectly clean spreadsheet, ready for analysis. The reason, naturally, is that someone had already done the job of collecting the relevant information on forest-risk companies inside the investments managed by BlackRock.
Such hard work rarely comes for free, and beyond the issue of retribution for the research, there was the delicate matter of allowing anonymous actors access to research data, which could potentially have an impact on the business of many companies, including BlackRock, but also a number of groups with various degrees of implication in deforestation and tax avoidance. In the end, I wasn’t able to share the data on BlackRock with other volunteers, and the analysis was produced by me alone over a bit more than a year (read the report here). I will get to the specifics in other articles, the point I wanted to make now was about access to knowledge and proprietary data.
Next week, I will let go of the hard facts and try to imagine a wonderful world where financial data related to sustainability is fully accessible to everyone.
This article is the second in a series.
