Does the forest grow in tax havens ?
A few emails later, I was sitting in my kitchen waiting for the call with Jasper. I believe it was the kitchen, this is where I usually worked on my laptop, while my ex was upstairs doing the same thing. I think at this stage of the lockdown, we were not speaking anymore. Later I would sleep on the sofa and work at her desk, in the living room, as she made the upper floor her private space.
In the background, Jasper’s (pseudonym) office room was minimalistic and spacious. His laptop was sitting in the middle of the desk, allowing me to see his upper body and hand gestures. I was answering his questions from inside a transparent box in front of him, between thrill and cold sweat.
Jasper started with a few technical inquiries. I was happy to oblige, rejoicing at the opportunity to talk about financial identification codes without putting my interlocutor to sleep. Once he was more or less reassured that I wasn’t going to mess up his work, Jasper moved on to the touchy subject. Spoiler alert, I did mess up his work later on, but we’ll get to that.
— So, he said, your project is to search forest-risk groups inside BlackRock’s assets under management, to see if these groups are domiciled in tax havens. Is that correct ?
— That is correct.
— But how is that supposed to help the Change Finance campaign ?
I made the point of tax avoidance being included among issues covered by environmental, social and governmental principles (ESG), although it is often overshadowed by climate change and carbon emissions. I claimed the support of the Change Finance coalition. Demonstrating that BlackRock helps financing deforestation through tax avoidance would kill two birds with one stone.
Jasper continued with the same composure.
— In my opinion, there is no evidence that tax haven financing accentuates deforestation. I don’t see any correlation between them.
What a bummer, I almost said. Instead I paused and tried to match his cool.
— If that’s the case, I said, then it will show in the numbers, right ?
— Possibly.
At this stage I only had a vague idea of what I was going to find in the investments managed by BlackRock. Similarly, I hadn’t seen any academic proof of the correlation between tax haven financing and deforestation. But I found it later, and Jasper didn’t dispute it when he read my report, one year and three months after this first and only meeting.
— Look, he said, I think many people have a negative outlook on tax havens, mainly because of the offshore leaks. But these “leaks” didn’t reveal anything illegal.
— True, I said, walking on thin ice. There are some political implications to this question, I replied, and we may not share the same perspective on tax havens. But I strongly believe that the numbers should have the final word.
— I agree.
He held his chin, tapping his fingers onto his cheek.
— But I don’t think you will find anything. Many companies finance themselves via tax havens. Most of them have legitimate business reasons to do so. Deforestation and tax avoidance are two separate matters. I don’t see why they could be connected.
I didn’t argue. Most importantly, I needed him to agree to send me the data set. Which he did. But under the condition that I share it only with members of the Change Finance coalition. This condition excluded the anonymous members of my own little group, Show Me Finance, which just happened to be made up of professionals with the right skills to use the data. Only one member of Change Finance had the appropriate experience with financial data (much better than mine) and she already had plenty of work.
In any case, I was looking for a way to bury myself in data with some kind of grand purpose, so I did exactly that. I got to work and produced a very short version of the report I’ve been talking about. This first version contained only graphs with summary descriptions. It was botched in three months and sent for review to Change Finance in the middle of the Christmas holiday. To the immense satisfaction, no doubt, of the members of Change Finance, who had nothing better to do with their vacation time. The coalition approved it, but I needed Jasper to approve it too, because he was the one who provided the data in the first place. He had done the hardest work of collecting all the relevant information on forest-risk groups, with the help of Annemieke’s research team. I didn’t want to release the report behind his back.
But Jasper didn’t endorse the botched report. The issue that he pointed out was central. According to his comments, if it wasn’t proven that tax haven financing and deforestation are causally linked, it was inadmissible to accuse BlackRock of accentuating deforestation by investing in forest-risk companies domiciled in tax havens. A sensible criticism, but it meant that “my” report would never be ready before the publication of the report on sustainable finance that BlackRock was preparing for the European Commission.
I went back to work and searched the academic literature, ripping most of the articles and books, to write a new version. I sent the new report for review exactly one year later, on Christmas 2021. By then BlackRock had already published his report, and Change Finance was on the brink of dissolution. The group I was taking part in was inactive, because its sole purpose had been to try to cancel the contract between BlackRock and the Commission. The contract hadn’t been canceled, and there wasn’t anyone in Change Finance to read my report, but Jasper read it anyway.
He read half of the laborious prose between 7am and 8am, during breakfast, but I bet he already had breakfast by this time. I could follow his comments on the shared document. The first half of the report is dedicated to summarizing the academic literature that establishes a correlation between tax havens and deforestation. He didn’t slow in this part, only noting minor mistakes and lexical imprecisions. He went on to read the analytical part. No major issue. Then he arrived at the section where I criticize his own work (page 21, section 3.5).
Since my point was to explain why corporate laws in tax havens shield forest-risk groups from investigation in their activities, I had to consider my own sources. Which means I had to criticize Jasper’s work, and by extension the work of Annemieke’s team, by pointing out that the available data on groups domiciled in tax havens is probably not reliable. Another reason to keep both of them anonymous, I’m not trying to ruin their professional reputation. Whatever the reason might be, Jasper didn’t read any further in the report and I haven’t heard of him since. I hope the next time we talk, it won’t be about a lawsuit, but from my understanding I can publish the report itself as long as I don’t publish the research data, the actual tables that he produced.
One of the reasons why I was hoping for some validation from Jasper (besides my own father issues), is that I needed someone to double check the numbers and endorse the analysis. But no one is going to do that, so I’m releasing the report as it is.
I tried my best to follow Jasper’s corrections, except the last remarks he made about the reliability of his own data related to companies domiciled in tax havens. These remarks didn’t convince me. I will not publish or share Jasper’s tables privately, but I hope someone will verify my results. The fastest way to do so is to use the Refinitiv database with the Eikon tool, which is the private data vendor used by Jasper. The cost of subscription to Refinitiv is not public, but estimates range between $3600 and $27000 per year (before inflation, I suspect). If you don’t have that sort of cash on hand, you could try your local university or business school, maybe they will have access to Refinitiv, and maybe they will let you have a look.
In the next series of blog entries, I will try my best to rewrite my report in a more accessible way. Without the jargon, the technical details and with more explanations. I will also try to make it more fun to read, if that’s possible with a topic like the influence of tax havens on deforestation inside BlackRock’s assets.
This article is the sixth in a series.
Previous article: The end of the campaign against BlackRock, and how somebody gave me some data
Start from the beginning: Campaigning against BlackRock, almost all the information you need
