New criticism of BlackRock’s influence in Europe

Alexia Barakou

Unsurprisingly, throughout the past months, there has been a strong lobbying effort against the EU’s decision to award the contract to BlackRock. O’Reilly quickly received three complaints, including two from 80 members of the European parliament. 92 civil society organizations ­from Attac to Friends of the Earth also signed an open-letter to European Commission President Ursula Von der Leyen, ­calling on her to cancel the contract. The Brussels-based research and campaign group, Corporate Europe Observatory ­ which defines its job as exposing and challenging the privileged access and influence enjoyed by corporations and their lobby groups in EU policy making” ­ stressed that BlackRock was a major shareholder in big European banks and was constantly fighting for “soft regulation on climate change”.

Along with dozens of other big financial institutions, it has fought key elements of the EU’s agenda on sustainable finance,” said CEO. „Still, it is allowed to do consultancy work that will lay the ground for the EU institutions’ green banking regulations.

The Ombudsman pointed to another example in her inquiry: following a tender that attracted nine candidates, BlackRock made a financial offer of just over half of the initial estimated maximum value of the contract. Today, O’Reilly suggests that the Commission “provide clearer guidelines on possible conflicts of interest to assist its staff dealing with public procurement procedures for policy-related service contracts” and “reflect on whether a specific update to the Financial Regulation is needed, to strengthen the provisions on possible conflicts of interest”.
 Despite the lack of sanctions, the Ombudsman’s position is already a serious drawback for BlackRock, whose strategy of infiltration within public decision-making bodies is now visible to all. In that regard, any upcoming decision from the European Commission regarding banking may be shadowed with suspicion, at a time where billions of euros will be poured in to support European economies‘ recovery from the ongoing coronavirus crisis, and to accelerate their shift towards sustainable industries.

 Back in 2018, Investigate Europe decided to launch an investigation into the largest asset management company in the world, BlackRock. Our team of journalists spent months digging into BlackRock’s tools, activities, top nominations and lobbying efforts with European governments and financial institutions across the European Union. At the time, BlackRock was still very much flying under the radar of public scrutiny. Our research resulted in multiple stories which came out in 17 publications across Europe, almost simultaneously. Here is one of them, which was originally published on the French news website, Mediapart, then translated into English. From that period onwards, we carefully monitored how the issue of BlackRock’s influence was being tackled. .
At the time of our investigation, as Le Monde pointed out at the day of O Reillys announcement, we already stressed that BlackRock, while lobbying for private retirement programs in France, had been awarded a contract with the European Commission. We wrote in our reporting, “on the European front, BlackRock can already count on the zeal of Valdis Dombrovskis. This Latvian is the European Commissioner for Financial Stability, but is also one of the Commission’s vice-presidents. He is behind the pan-European Individual Retirement Savings Product (PEPP), a new type of retirement savings product scheduled to be launched next year within the EU, currently undergoing testing by private and public-sector researchers. The voluntary contribution programme is called Resaver, and it’s Black Rock that Valdis Dombrovskis has entrusted with the task of managing participants’ savings”.

Our investigation also aimed to reveal the extent of BlackRock investments in Europe’s largest companies. Our point remains valid today, as such ownership has only risen. For example, in June 2020, BlackRock and its rival Vanguard combined had over 15% of the 30 largest companies listed in the Frankfurt Stock Exchange (DAX30).

Finally, Aladdin platform —­ an AI-powered device that plays a central role in big firms’ investment strategies by looking after their portfolios and measuring risks around-the-clock — is now being criticised by a think tank which is advising incoming US president Joe Biden. This popular BlackRock tool, used by more than 900 companies across 65 countries and, should be split from its owner “to curb the growing influence of the world’s biggest asset manager”, according to this report. “Separating Aladdin from Blackrock would address the risks of conflict of interest,” said M. Steel, senior fellow at the think tank and former legal counsel to the US Senate Banking Committee. It can’t be overestimated how central Aladdin has been for the success of Blackrock in the recent years: It is so successful that the company no longer reveals how many clients are using the platform to back their investment decisions. “One former employee says the figure is no longer disclosed because of the negative attention the enormous sums attracted,” writes the FT.