The grandiose entrance hall of BlackRock’s Paris office in the historic Centorial building is often used for fashion shows and high-end cocktail parties.
But earlier this month the dome-topped room was host to chaotic scenes when leftwing activists stormed the building brandishing flares and chanting slogans attacking the New York-based group.
The protests were in response to France’s sweeping pension reforms, which have sparked unrest and strike action across the country. Waving trade union flags, the demonstrators directed their anger at BlackRock, which has become a scapegoat following claims it played a role shaping the reforms.
Shortly afterwards, Olivier Besancenot, a far-left candidate for the 2007 French presidency, tweeted a video with the caption: “Surprise visit to BlackRock’s office today to denounce the insidious capitalisation [pension system] hidden behind the proposed law!”
The controversy swirling around BlackRock highlights the growing reputational challenge for the world’s largest asset manager. BlackRock’s size, status as a shareholder in most of the world’s listed companies and influence in the corridors of power are fast turning it into a prime target for anti-establishment anger.
It is also an ominous sign of how vulnerable asset managers are in general to populist, anti-capitalist rage as the sector continues on its growth march and takes on roles left vacant by banks.
As their public profile grows, asset managers are making a concerted effort to position themselves as responsible investors and showcase the role they play holding companies to account, partially in a bid to appeal to a wider pool of investors.
Yet the French protests — along with demonstrations by Extinction Rebellion activists outside BlackRock’s London office last year — suggest that fund groups have some way to go to improve their image.
The demonstrations at BlackRock’s Paris office were the culmination of a testing time for the company in France, where it has been the subject of hundreds of thousands of negative tweets — mostly from the far-left campaigners — and dozens of press articles questioning its influence over the French government and the country’s corporate sector.
The situation was further inflamed this month when the chairman of BlackRock France, Jean-François Cirelli, who previously worked as an adviser to former French president Jacques Chirac, was named an officer of the Legion of Honour, the French order of merit.
BlackRock has been defended by the likes of French finance minister Bruno Le Maire, who has sought to dispel misinformation surrounding the company’s role. BlackRock declined to comment for this article but has repeatedly denied that it lobbied for the pension changes. A senior executive at BlackRock, who asked to remain anonymous, said that the company was caught in the middle of a domestic furore, adding that its role was “a red herring”.
Jean-Louis Laurens, former international ambassador for the French asset management association, says the recent backlash highlights a lack of understanding among the public about what BlackRock does. “It underlines the need for fund managers to make themselves better known and draw attention to their role as long-term shareholders,” he says.
The rapid global expansion of passive investing has made some observers nervous about the clout of the so-called big three — BlackRock, Vanguard and State Street — and given rise to misconceptions about the asset management industry.
This scepticism found fertile ground in France, where there has long been a conflation between asset managers, pension funds and “speculators” such as private equity funds, says Mr Laurens, who describes the backlash as “a bit of a setback” for France as it seeks position itself as Europe’s top investment management hub post-Brexit.
“The confusion about what asset managers do explains why a small number of people have used BlackRock’s name to express their anxiety about the [pension] reforms,” says Arnaud de Bresson, chief executive of Paris Europlace, the lobby group responsible for promoting Paris as a financial centre.
Although Paris Europlace believes the impact of the BlackRock controversy has been “limited”, Mr de Bresson says that the organisation recognises the need to “explain how [asset managers] serve the needs of the people and the wider economy”.
BlackRock is a relatively small player in France, managing €27.4bn of assets, a fraction of its $7.4tn global asset pool and significantly less than the level of assets controlled by France’s largest asset manager, Amundi. Yet its clout as a shareholder has led some to exaggerate its role in shaping policy in France.
The circumstances of BlackRock’s creation of its French investment business added fuel to this misconception. The company picked Paris as the location for its European alternative investment hub in 2018, following a concerted charm offensive by the French establishment, including a meeting between Mr Macron and Larry Fink at the Elysée Palace.
Critics of BlackRock recently circulated a photo of Mr Fink sitting alongside the French president at a green finance summit in Paris last year to illustrate the US group’s perceived proximity to the government.
Although the claims about BlackRock’s influence over the French pension reforms are unfounded, its ties with politicians and its powerful lobbying capability are undeniable. The group counts several former politicians among its ranks: the chairman of its supervisory board in Germany previously served as deputy parliamentary leader of Angela Merkel’s CDU between 2002 and 2004, while it also employs former UK chancellor George Osborne as an adviser.
The criticisms illustrate an emerging dilemma for asset managers as they seek to cultivate links with key policymakers at a time of rapid growth for the industry: amid rising populist discontent, they risk being labelled as elitist if they are seen as too close to political decision makers.
Amin Rajan, chief executive of Create-Research, says it is not yet clear whether the uproar against BlackRock in France is an isolated case or “the start of a disturbing trend” of negative sentiment towards asset managers. “If it’s the latter, it may impair asset managers’ ability to attract new money and new clients,” he says.
Public scrutiny of BlackRock is only set to increase as it becomes more of a household name, gets closer to government and increasingly sets the agenda for the corporate world through Mr Fink’s annual letter to chief executives. This opens up the company to criticisms or protests from political activists or disgruntled groups in society.
Other asset managers appear to be shielded from such anger, but Mr Rajan says they can keep it at bay by steering clear of government policies that inflame public anger and striving to shed their “fat cat” label by ensuring that their rewards are based on merit.
“Asset management is entirely based on trust, [which has] been eroding since the 2008 crisis,” he says. “Many managers have worked hard to restore it [but] it takes a long time.”