The Oatly Chronicles Part 2: What’s The Housing Crisis Got To Do With It?
Swedish oat milk company Oatly says it's on a mission to defeat the almighty dairy industry and save the planet. To do that, it claims it needs to grow into a massive corporate success — and it’s willing to take on controversial investments to get there.
In episode two of ‘The Oatly Chronicles’, we investigate what makes those investors so controversial. It takes us on a journey from green capitalism being battled out in the coffee shops of Malmö; to enormous housing protests in a post-financial crisis Spain; to… China?
This series is funded by Journalismfund Europe and the Allianz Foundation
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Credits
Credits: This episode was produced by Katz Laszlo, and reported by Katz Laszlo and Katy Lee. Editing came from Katy Lee, as well as Justine Paradis, visiting from NPR’s excellent podcast, Outside/In. Editorial support came from Margot Gibbs, Dominic Kraemer and Wojciech Oleksiak, and mastering, scoring and sound design also came from Wojciech.
Artwork came from favourite illustrator RTiiiKA.
Thank for talking to us: Fredrik Gertten, Lucía Gonzalez Martín, Laura Young, George Monbiot, Max Carbonell, Ben Axler, Brett Christophers, and Gregor Sebastian.
Special thanks to lovely neighbours Joris Klingen and Thomas van Dijk, for letting us use their very nice studio. You can find their music under Bovenburen.
Interesting links:
‘Change Isn’t Easy’ - Oatly’s statement on the Blackstone investment (August 2022 update) https://community.oatly.com/conversations/news-and-views/change-isnt-easy/62f2f4c91b4bf47dd15fb249
‘Private Equity Propels the Climate Crisis’ - a report by the Private Equity Stakeholder Project, 2021 https://pestakeholder.org/wp-content/uploads/2021/10/PESP_SpecialReport_ClimateCrisis_Oct2021_Final.pdf
‘These Photos Show the Reality of Spain's Housing Crisis’ - Time, August 2015 https://time.com/4007349/spain-evictions-housing-crisis/
‘#RavalVsBlackstone. The right to the city versus the finance-real estate-tourism complex’ - European Network of Corporate Observatories, June 2020
‘Activists sour on Oatly vegan milk after stake sold to Trump-linked Blackstone’ - The Guardian, September 2020
https://www.theguardian.com/food/2020/sep/01/oatly-vegan-milk-sale-blackstone
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EPISODE TRANSCRIPT
Dominic: Hi Katy, Hi Katz!
Katz: Hello!
Katy: Hi!
Dominic: We are back with the Oatly Chronicles! This week, we are back, with part 2 of The Oatly Chronicles, a mini-series exploring green capitalism through oat milk.
D: How’s it going Katy? Have you cut down on your Gruyère intake since last week’s gloomy dairy episode?
Katy: I actually haven’t had any cheese! Which is more by chance than having listened to last week’s podcast. But, you know, small victories…
Dominic: So you’re saying you have no principles, but accidentally…
Katy: Accidentally was a good person yes. But, well Katz is our resident flegan - flexible vegan.
Dominic: Yeah I’m wondering if that’s becoming a thing, I should check out the hashtags.
Dominic: So Katz, last week, you had an existential crisis in the middle of the supermarket aisle. Good summary?
Katz: Pretty much. Last week, we investigated whether Oatly's claims that we urgently need to replace dairy with plant based milk - if those are legit. And essentially we learned that yes, dairy is very destructive, and oat milk is drastically more sustainable. But the next step, is that Oatly argue that to defeat the almighty dairy industry, they need to become a massive capitalist success. And, they are willing to take some pretty controversial investments to get there. So that is what we’re looking at this week: those controversial investments.
Dominic: And Katy, I understand you’re joining Detective Katz Laszlo in doing some of the sleuthing for this episode, is that right?
Katy: Yeah, I actually got quite bored over the summer while I was waiting for this baby to come out, so I thought I’d pass the time helping Katz out and ringing some of the people that you’re about to hear from.
Dominic: Great! Well it looks like I can sit back and relax then.
Katy: Yes, gather round children, it’s story time. And our story starts in the Swedish city where Oatly has its headquarters, Malmo.
Fredrik: My lovely hometown is an old industrial city, big shipyard, a huge textile industry.
Katy: That is Fredrik Gertten, he’s a filmmaker from Malmo.
Fredrik: And then in the 90s most of the industries went down, the shipyard went down. So the city was like, in many ways, in a deep identity crisis. They had to reinvent themselves as a city.
Katy: Malmo became a kind of progressive startup city, and one of those start-ups was Oatly. Remember, Oatly’s been around since 1994, initially marketing itself as a lactose free alternative to cow milk.
Fredrik: I've known them since they were really small. My daughter was allergic to milk, so we bought Oatly 20 years ago or something.
Katy: Some of Fredrik’s friends went to work for Oatly. And that was something he, and his friends, were really proud of.
Fredrik: And remember at this time, Oatly were at all the cool coffee shops, in London, in Amsterdam, in Sweden. They really want to make an alliance with cool conscient people, people who wanted to do something better.
Katy: So did you get a sense that like, the working culture was genuinely that it was a place where people were serious about trying to make the world a better place?
Fredrik: Absolutely. They recruited that kind of people, who came from the environmental movements, you know, so it was really, really, really cool.
Katz: Fast-forward to summer 2020. It is one year before Oatly’s infamous superbowl ad - but it’s already started anti-dairy campaigns all around Europe and it’s taking off. It’s become a favourite for millions of people who are trying to switch out dairy for plant milks, and people who just like the taste of it.
Dominic: Actually me included, I think that’s when I occasionally started buying Oatly.
Katy: And at that point, Oatly announces some pretty huge news.
[NEWS CLIP] Oatly, the plant based and vegan milk brand, says its raised $200 million –
Katy: worth about 10% of the company. And this news is extra exciting because the new investors include several seriously big-hitting US celebrities.
NEWSCLIP: Oprah Winfrey, Natalie Portman and Jay-Z’s entertainment company.
Dominic: But Beyonce didn’t wanna get involved
Katy: Apparently not
Dominic: I remember hearing about this! It must have been really weird for this like niche little Swedish company to suddenly be the thing that all these big American celebrities wanted to invest in. Are we going to get them on the show?
Katy: Sadly not, they aren’t that relevant to the story… Because it’s not like Oprah and Natalie Portman took out their chequebooks and sent cash directly to Oatly.
NEWS CLIP: The new investors which also include former Starbucks CEO Howard Schultz were led by the multinational Blackstone Group.
Katz: Yes – Blackstone, a major protagonist in our story today. So, Fredrik saw these big splashy headlines about a bunch of celebrities investing in Oatly. And he was like Blackstone! That is the story! Not Oprah!
F: I happened to know because I had access to research.
Katy: Because, funnily enough a year before Oatly announced the Blackstone investment, Fredrik had released an entire, award-winning documentary about Blackstone.
Fredrik: When you checked it out and said, ‘Okay, but Oprah bought into a fund created by Blackstone. And who is Blackstone?
Katz: In this episode we are gonna answer that very question: Who is Blackstone? Because Blackstone play a crucial role in Oatly’s massive expansion, but they are hugely controversial for a couple different reasons. Reasons that have to do with the global housing crisis, with climate change… and with Donald Trump. Now, Blackstone's investment in Oatly gives us a really interesting case study, for what we might call "green capitalism."
Dominic: Yeah, “green capitalism” - is there such a thing? I don’t know… But I guess Oatly are making the case that in order to get big enough to replace Big Dairy -- that's gonna take quite a lot of money.
Katy: And, does it matter where that money comes from?
Brett: What's interesting about Blackstone is that Blackstone has become kind of a lightning rod for criticism of the asset management industry.
Katy: This is Brett Christophers. Brett is an economics professor, also in Sweden, and he has written a whole book about how asset management companies like Blackstone affect our day-to-day lives. All these companies, they take other people’s money and invest it to try to make more money. And just to be clear, Brett doesn’t think Blackstone behaves particularly differently than other asset managers. But they are a very big player in this industry.
Brett: Blackstone's long-time leader, Stephen Schwarzman – I don't think he is anymore, but he was a long-time supporter, and campaign contributor for Donald Trump.
Trump: I don’t believe the impact is nearly what some say and other scientists that dispute those findings very strongly…
Katz: And Trump was still president when Blackstone invested in Oatly
Dominic: There’s quite some cognitive dissonance here - I mean, Blackstone investing in Oatly, this sustainable oat milk company, at the same time as its CEO supporting Trump, who scrapped the Paris accord!
Katz: Very dissonant!
Katy: Now these days, Blackstone says it’s trying to decarbonize, but it still holds investments in various oil and gas companies in the US. It also previously invested in a company involved in exporting Brazilian soy. That company was actually investigated by journalists at The Intercept — and linked to deforestation in the Amazon. Blackstone, by the way, flatly denied any connection to deforestation.
Katz: So we’ve got Oatly, a company on a mission to fight climate change…
Katy: And they have taken an enormous investment from a company that activists accuse of pouring money into some of the worst climate offenders in the world.
Dominic: I think this is what people describe as “strange bedfellows”.
Katz: I’ve always thought that was a weird expression.
Dominic: And honestly I can see why people worried about the climate wouldn’t love this connection between Oatly and Blackstone.
Katy: Yeah, and Blackstone is also controversial for a whole other, completely separate reason. And it’s a big reason. And it has to do with gentrification, and the housing crisis.
Dominic: Oh, how jolly! Climate change, and the housing crisis!
Katz: Yup! The core question “can green capitalism save the planet?” didn’t really lead us to the jolliest podcast, no…
Katy: To understand this housing crisis link properly, we need to go back to Blackstone’s beginnings.
Brett: So Blackstone was created in the mid-1980s by a couple of ex-bankers who left Lehman brothers. Within a couple of years, Blackstone was a fully fledged asset management company.
Katy: Back then, asset management companies like Blackstone invested money in ways that were much more abstract. What clever people like Brett call ‘financial assets’.
Brett: when they invested that money that was given to them by their clients, they bought financial assets – bonds and shares, essentially. But from the 1980s, they began to also invest in what in the industry is referred to as real assets. Real assets are things that have physical substance.
Katy: Real assets.
Dominic: Real assets? Sounds kind of funny!
Katy: Wait Dominic, you’re suggesting it sounds kind of sexy?
Dominic: Yeah, cos people talk about your assets! Was that not the direction I was meant to go in?
Katz: I didn’t see that coming at all.
Katy: Show off your real assets!
Dominic: “Real assets are things that have physical substance”. I still don’t understand what that means.
Katy: Well, Blackstone and other investment companies – they start investing in the infrastructure of our daily lives.
Brett: Commercial real estate. Shopping centres, office blocks, hotel chains. And they began to put a lot more money into what we can think of as essential forms of infrastructure. Energy, transportation, water and wastewater services. And they began to also invest in residential property. So, housing, in its various forms.
Katy: So, it’s a massive shift: these big companies would have been trading stocks and bonds, right? And now, the roof over your head has become something that can be traded many times a minute, on a computer screen. It’s a phenomenon that housing experts call financialisation.
Frederik: Fi Nan Cia Li Sation - I couldn’t even pronounce it.
Katz: Yes. And then comes the global financial crisis. People were losing their homes, and these homes were getting bought up — by none other than asset management companies like Blackstone.
Brett: They made huge amounts of money out of that. And that was very, very controversial, because essentially, they were making money out of housing that had basically become available cheaply because individual families had been bankrupted and foreclosed upon.
Katy: This happened everywhere, but some parts of Europe felt it way more than others. Including a place which you, Katz, are very familiar with.
Katz: Yeah, it was really surreal actually to be reporting on this as an adult - because one of the worst hit neighbourhoods is actually where I grew up, in the centre of Barcelona. I actually had to interview people on the streets about gentrification for a school project way back in like… 2008.
Dominic: Sweet.
Katz: Shout out to Mr Geary - ahead of his time! But now, for this podcast, I went back as a grown-up journalist to learn more about how Blackstone influenced what happened there.
See, in a lot of places, Blackstone is kind of invisible, even though they’ve had a huge impact on people’s lives.
Dominic: I think in most of Europe, most people have never heard of them.
Katz: Yeah I think so too. But in Barcelona…
Katz ¿Blackstone es un nombre que la gente conoce en Barcelona?
Lucia: Sí.
Katz: This is Lucia Gonzales Martin, and she was until recently the housing councillor of the Barcelona Municipality. And I asked her, do people know the name Blackstone here?
Lucia: Yo quiero pensar que sí. Dios mío. Cerberus quizá no, pero Black Stone, si siii.
Katz: And her reaction was, like Yeah. God I hope so…maybe not every single investment fund…but Blackstone, people know about. These at the centre of Barcelone - Barrio Gotico, El Raval - are some of the most gentrified neighbourhoods in the world.
Lucia: ¿Por qué no os llamáis Fondo Buitre? Fondo Buitre, digo, a ver, pues no sé, ¿qué sois?
Katz: People call companies like Blackstone ‘vulture funds’, and the reason people have a name for them, is because they’ve had a huge impact on people’s lives here. Rents have gone up massively, and investor owned flats – a lot of them are just rented out temporarily to tourists. Lots of people have been priced out, and feel replaced by tourists coming in and enjoying a Barcelona that they themselves can no longer afford.
Katz: In July 2019, people snapped when it came to Blackstone. Blackstone had bought this beautiful old building, and tried to evict the seven working class families living there. And people had just had enough. The local housing union organised this huge protest, it was 15 days long, in the middle of the city, and it was called Raval Vs. Blackstone, Raval like the neighbourhood. All of these famous catalan musicians came and rapped about the housing crisis from the balconies.
Dom: Oh wow.
Katz: And it got a ton of media attention. As Brett says, it starts with the financial crisis.
Brett: Spain endured a much more significant crisis in the housing sector than many other European countries, and companies like Blackstone definitely exploited that opportunity.
Lucia: en el año que más desahucios hubo, más de 70 000 desahucios al año. Era una locura. En todo el Estado. Eran unas cifras…
Katz: Lucia tells me that at the peak, there were more than 70,000 evictions a year, in all of Spain that is - absolutely crazy numbers.
Lucia: locas, locas, loquísimas. Yo creo que ha habido más de 750 000 ejecuciones hipotecarias desde el 2009 en España. Son cifras locas
Katz: Estimates say more than 1.7 million people have been evicted since 2008.
Katy: Wow.
Katz: Yeah, and this time is just burned into my brain. ‘La Crisis’, ‘the crisis’, is actually the first big political thing that I remember - it started when I was 15. And when I walked into Lucia’s office, she said, ‘Hey, so you lived here in the neighbourhood?. And I said ‘Yeah yeah, until 2011, and she said:
Lucia: Hostia, el 2011, justo con el 15M.
KAtz: Eso.
Lucia: Jolin
Katz: ‘Oh! So you were here for all this?! We got goosebumps talking about it.
[Way back machine]
Katz: Right, so it’s 2008. Tons of people are losing their jobs. Variable mortgages were skyrocketing. It was huge. The front pages of the major newspapers were illustrations of mortgage contracts like nooses around people’s necks.
Katy: Wow.
Katz: And actually I remember my mum repeating this mantra at the time - 2000€ a month, 2000€ a month. And that was her mortgage. And I mean we were definitely not in the worst position, we weren’t evicted, but the older I get the more I understand how much that number means. She was a teacher in Spain, living alone with her daughter, and that was just one of her costs. It was everywhere. And Lucia was actually getting her PHD in chemical engineering, and this crisis was unfolding around her, you know she was talking about it at lunch with her colleagues at lunch, and she decided: this housing crisis needs my attention – alongside former mayor Ada Colau. Lucia and Ada were some of the first people seriously organising in a time where there were just so many evictions every single day. And it was emotional – initially people privately felt like it was their fault, like they hadn’t managed their money well. And then, as these movements started growing, it became clear that it was a structural problem. People started turning to governments, who remember - were bailing out the banks with taxpayers’ money – and the governments just kind of shrugged, and said, we’re not going to do anything about this.
It was really brutal, and people were absolutely furious. And on people’s eviction days, activists like Ada and Lucia, they would join hands, and form these human chains around people's houses to stop people getting kicked out.
Dominic: What a powerful thing to do.
Katz: Yeah, it really is an unforgettable image. And this movement, it grew and grew and grew into the Indignados movement, which later inspired Occupy Wall Street.
Katz: So Lucia said to me, you know, what happens to all of these flats? Because the government was bailing out the banks, who were, you know, getting all these homes from people defaulting their mortgages. And the government could have said, ‘Ok, but in return for this bailout we are gonna keep those defaulted homes and we’re gonna turn them into social housing. Because there are hundreds, thousands of people who have just been evicted. We are going to need them.
Lucia: Pero claro ¿eso no se hizo, no?
Katz: But clearly, that’s not what happened.
Katz: Lucia told me that instead, the banks - to clean up their balances - they started looking for investors. And who came? The companies Lucia calls vulture funds - investment funds, like Blackstone. And Blackstone had an enormous capacity to buy, and it bought cheap. They weren’t the only ones, but they were important, and one of the first.
Here’s economist Brett Christophers again.
Brett: Governments facilitated and lubricated and actually even subsidised the large-scale acquisition of large amounts of distressed housing. And I think that's a real stain on governments’ record in those periods.
Katz: So, over these years, Blackstone become owners of just an enormous quantity of property.
Katz: Now it’s hard to get specific numbers, but it’s really widely reported that they’re actually the biggest landlord in Spain, still now.
Dominic: Oh! Wow. But actually - is it necessarily a bad thing, living in a house or an apartment owned by a company like Blackstone? Like isn’t a landlord just a landlord, right? What makes them any different?
Brett: All the evidence I've seen suggests that outcomes for tenants are worse in housing owned by asset managers than in housing owned by other types of other types of private landlords. They're structurally incentivized to apply kind of sticking plaster, Band-Aid solutions that entail minimum costs. You certainly don't want to spend too much money on fixing leaks and repairing holes in the plaster, getting rid of rodent infestations or whatever else it might be.
Katy: The thing is, Blackstone isn’t the kind of landlord that might buy a single flat as an investment, and keep it rented out for years to the same family. They are not in it for the rental income.
Katz: Right, they bought this house to trade - their core business isn’t renting, their core business is trading assets and maximising profits for their investors.
Katy: Exactly, and they’re often under pressure to sell flats on just a few years later and hand over the profits to the people whose money they’ve been managing.
Blackstone declined to send someone to be interviewed for this podcast, but they deny that they’ve done anything wrong when it comes to housing. They gave us a statement saying they were incredibly proud of their investments in the rental market and that they bring, quote, ‘world class operating standards to the rental experience’.
Katz: The other thing that makes Blackstone different is that they own far more housing than a traditional landlord. Now Blackstone flat out denies it has this kind of power, but Lucia says that because they own thousands of flats, just in Barcelona alone, they can fix the prices. They can raise the price of say, a two-bedroom flat all over the city and the country even.
And she says that’s especially dangerous when we are talking about investors who are looking for maximum profit.
Katy: And speaking of profits, Blackstone have made a ton of money out of housing.
Brett: Say over the last decade or so, at least the half and as much as three quarters of Blackstone's profit in any year comes from its real estate business. So real estate is kind of like the goose that laid the golden egg for Blackstone these days. It doesn't provide numbers anymore for this, so you have to kind of extrapolate, but something I think like around $60 billion would be the value of its housing portfolio.
Dominic: $60 billion dollars!!
Katy: Yeah, it’s difficult to comprehend just how much housing Blackstone owns around the world - and how much money it controls in general! As of this year, it’s the first private equity company to manage a trillion dollars of assets.
Dominic: Fucking hell. That’s like a countries worth of assets!
Katy: It’s actually, I looked it up, and it’s about the same as the GDP of the Netherlands.
Dominic: Oh.
Katz: This is extra wild to me, because most of us have never even heard of them! This anger about unaffordable housing though - that is something brewing all over the world.
Frederik: When they entered into the most poorest homes in Sweden, they left with billions, you know? And that money, it’s now put into Oatly, or whatever, you know?
Fredrik: There are no such things that, ‘the rich are just rich and stupid and have their funny lives on their yachts’. Their investments affects our lives.
Katy: This is Fredrik again, the filmmaker from Malmo.
Fredrik: When the rich want to grow their money, you can feel it when you can't stay in your flat in Amsterdam, because they're pushing up the rent. But you can also feel it when your cup of coffee suddenly gets very expensive, because the coffee shop owner has to pay a big part of his pay to the landlord. It affects us everywhere.
Katz: Back to Malmo, Sweden, 2020. Oatly has just announced its new investors — Oprah! Jay Z! Blackstone! But, for people who knew about Blackstone in this housing crisis context, that was what was on their minds – not Oprah.
Dominic: I wonder if this was a deliberate tactic to like get these splashy names so that people would forget about the housing crisis and be like ‘oooh, celebrities’.
Katy: Oprah! Distract with Oprah!
Katz: Now as we heard up top, one person that knows a lot about Blackstone, is Fredrik.
Katz: It's kind of a mad coincidence that like you, a documentary filmmaker, live in Malmo, made this film about Blackstone, therefore a disproportionately large quantity of people in Malmo have probably seen Push, including people who've worked at Oatly. And I'm wondering how they then responded to this meeting where they say, at their workplace, you know, ‘Hello, we're getting an investment from Blackstone’, like?
Frederik: [laughs] What I heard from that meeting that people were totally confused. And, of course, the company's internal sell was that, ‘Now we managed to turn big capital green,’ you know? ‘Hey, we are on the winning side. Now, the big money's coming on our side.’
Katz: When we asked Oatly about their version of how this meeting went, they just said that their staff have diverse views on what they do in the company, and they wouldn’t have it any other way. But I’m just imagining like, the core questions of green capitalism being battled out, in the Malmo coffee shops - can big companies save us from climate change? Is an investor as controversial as Blackstone really worth it?
Dominic: Yeah, and, are we being tricked as consumers into buying a product that will make us feel like we’re doing good for the climate - where actually we are just helping this huge corporation grow even bigger?
Katy: I think that’s called greenwashing.
Dominic: Oh yeah? That thing!
Katy: Slowly but surely, Blackstone’s investment in Oatly started turning into a big old internet hoohah. And, one of the people who helped this investment go viral was someone named Laura Young. She’s a Scottish climate activist, and she runs an Instagram account, documenting her attempts to live more sustainably.
Laura: …called it Less Waste Laura, coz that’s what I was trying to do - create less waste.
Katy: Back in 2020, Laura was an Oatly customer, but she didn’t know much about Blackstone -- she’d just vaguely heard that they were kind of controversial.
Laura: ...some kind of controversy around some of the investments they had and that. But I didn't really know much about them, because they’d never come into my space, because they’d never to my knowledge invested in any sort of companies that I was interested in.
Katy: So, when she heard the news about their investment in Oatly, she got curious. But then, the more she found out about Blackstone, the angrier she got that Oatly was taking their money.
Laura: I mean, to me, it just felt opposite to what they had been doing up until that point… You go through all the different feelings, because you think, ‘Well hold on a minute, there must be, there must be some explanation for this’, you know? Oatly seem like a really decent company that are trying to, you know, encourage more people to take up plant milks, which is more sustainable. They seem to be quite friendly, almost felt like a person. So I thought there must be a really good explanation for this.
Katy: So, naturally, she posted about what she’d found out about Blackstone. And the post got something like 17,000 likes.
Laura: I think at first, the response online was from people who loved Oatly – love Oatly – just saying, ‘Hold on a minute, is this true?’ And then it was people going ‘Well, hold on Oatly, can you talk about this?’ And the way that they do their marketing online and their social media is this sort of friendly voice that you can have a conversation with. So people were kind of tagging them and saying, ‘What's happening, what's going on?’
Dominic: And did Oatly respond?
Katy: They did. Especially because, as the weeks went on, mainstream media started writing about it. Customers, including some of those cool independent coffee shops, talked about boycotting Oatly, looking for another brand. So Oatly was under a lot of pressure to respond to this growing wave of anger. And they did. They put out this really interesting, quite long statement headlined, ‘Change Isn’t Easy’. I’m not gonna read the whole thing out – you’ll find the link in the show notes. But basically, it argued that Oatly needs to grow to save the planet. Here’s part of their statement:
Oatly: ‘It’s about our current need for funding, specifically 400 million US dollars, in order to continue to grow as sustainably as possible as the demand for our products continues to skyrocket…’
Katy: The other interesting thing here is that Oatly wasn’t shy about the fact that it deliberately sought out financing from Blackstone. They could’ve gone for a, like, green financing option – and in fact they did take a $200 million green deal loan at the same time. But they also specifically wanted money from Blackstone.
Dominic: Bold.
Katy: Here’s another part of their statement:
Oatly: ‘We thought that if we could convince them that it’s as profitable (and in the long-term even more profitable) to invest in a sustainability company like Oatly, then all the other private equity firms of the world would look, listen and start to steer their collective worth of 4 trillion US dollars into green investments. If we ever want to have a chance of reaching the global climate goals of cutting greenhouse gas emissions by 50% before 2030 and reach net-zero emissions by 2050, we need to speak a language that the capital markets can understand.’
Laura: That’s when people started to kinda turn from confusion and a little bit disappointed - to kinda angry. That a brand that was such a favourite and, you know, one of the wee guys – had kind of gone after this investment, and their reasoning for it just didn't sit well with people. Oatly, when they started speaking about this, it almost sounded like they were trying to change the investment world. And you think: it doesn't really work that way. It works the other way, they've got the kind of influence over you as a funder.
Katy: Especially when you think about how *small* Blackstone’s investment was in Oatly, compared to the insane scale of the assets it manages. Like, 200 million dollars for them – it’s nothing. It’s literally 0.0002% of all the money they have invested.
Dominic: One thing I’ve been wondering. Are Blackstone making any money on this?
Katy: They own a bunch of the shares in Oatly, and in theory, if you own shares, you might get paid a dividend every year, so like a little fraction of the companies profits. In Oatly’s case, they haven’t actually paid any of these dividends since Oatly went public and became a publicly traded company - so for now: no, Blackstone isn’t making any money per se out of its investment in Oatly. It’s holding onto its shares in Oatly and I guess at some point hoping to sell them at a profit.
Dominic: It makes me wonder: was it worth it for Blackstone, making this Oatly investment? I mean, all they seem to have gotten out of it is a bunch of bad publicity, and podcasters talking about their influence on the housing crisis.
Katy: I mean remember, Blackstone are trying to decarbonise, so being able to say ‘and we’re invested in the very nice sustainable oat milk company’ is maybe kinda handy?
Dominic: Yeah and who knows, maybe someone in Blackstone really believes that Oatly is important for the planet?
Katz: And maybe Oatly isn’t changing finance from the inside, but maybe this podcast will?
[Laughter]
Katy: When we asked Fredrik what he thought about Oatly’s argument, that they were changing private equity from within, he said:
Fredrik: It’s silly. It's silly. Because, you know, Blackstone, BlackRock, these other big hedge funds – they are in the boards of thousands of companies where they can have an impact on decisions to go more responsible, to go green. Have you seen that? I mean, if Blackstone had human rights in their body, and were promoting human rights and the planet, in every decision, we would have felt it.
Katy: When Blackstone invested that $200 million in Oatly, that bought them about 10% of the company. And with that came a bunch of influence – not least picking one of the 13 people who sit on Oatly’s board of directors. And those people – they get to do things like choose the CEO, choose the company’s strategic priorities. They really do have a significant input on Oatly’s operations and future.
Katz: While we were looking into the board, we actually found out that there is another group, with a way higher stake.
Katy: And it’s a very bland-sounding company called China Resources Verlinvest Health Investment Limited.
Dominic: What a name!
Katy: Rolls off the tongue, doesn’t it?
Dominic: It’s just like a string of words.
Katy: Yeah so, half of the company is made up of a Belgian firm set up by the families behind some of the world's biggest beer brands, like Corona and Budweiser. And the other half is a company called China Resources, and it is owned by the Chinese State.
Dominic: Oh!
Katy: Yeah, and together these Belgian and Chinese companies own nearly half of Oatly! So that means that nearly a quarter of this friendly Swedish oat milk brand is owned by the Chinese state. And I think a lot of people probably don’t realise that.
Dominic: What am I meant to make of that?
Katy: I mean, for me the Chinese state is just as controversial an investor as Blackstone. But this investment was back in 2016, and I guess at the time it kind of went more under the radar because Oatly wasn’t nearly as big as a brand back then.
Katz: I actually got a lot of questions about this while I was reporting - no one I spoke to knew anything about it but a lot of them were curious. They asked me, you know, how worried should we be about that?
Katy: Yeah, I actually rang up an expert on this who said: it isn’t necessarily anything sinister. Chinese state-owned enterprises aren’t necessarily, a mouthpiece for the state. But honestly, for me, as someone who isn’t a fan of the Chinese government and its human rights record, it makes me really quite uneasy. And, it’s interesting because what we’re looking at here is another investor in Oatly that is really not a household name, but is mindbogglingly huge and powerful. Last year China Resources had revenues of 119 billion dollars! That is seventeen times bigger than Blackstone.
Katz: Whaaaat
Dominic: Woah. Hang on, I thought Blackstone was the biggest?
Katy: Yeah, Blackstone is the biggest asset management company it controls a huge amount of assets around the world, but China Resources is an actual company that makes things.
Dominic: Where does all that money come from?
Katy: A bunch of different places. So they own supermarkets, some beer brands, real estate…
Dominic: And apparently a quarter of a Swedish oat milk company.
Katy: Apparently so. But the point is: this was the investment, years earlier than Blackstone, that really kicked Oatly off on this journey to becoming a much bigger company. This is when they started expanding their factories, entering new markets. And for people like Laura and Fredrik, it was the Blackstone investment was this turning point where Oatly sold out as a brand. But they’ve actually been influenced by big outside shareholders much longer than that.
Katz: So, Oatly’s joined more than one strange bedfellow - and it’s connected with companies far bigger than itself. Which brings me back to the start. To have enough influence to challenge ‘big dairy’ Oatly has argued that it has to take this kind of investment. But in exchange, these big companies now have influence over Oatly - and this is just one example, this pattern is seen all over our food system. As climate journalist George Monbiot put it in episode 1:
George: We start from a position where almost the entire food chain is in the hands of big business. Extremely exploitative and concentrates wealth to a very great extent indeed. And of course, their economic power translates into political power and you know, it’s a very, very dangerous situation for democracy, as well as for everything else.
Katz: Can these massive companies, whose fundamental imperative is to make a profit, really be aligned with the urgent needs of saving our planet? Just like Blackstone is not in the business of being landlords — they’re also not in the business of replacing dairy. And they’ve invested in Oatly, in the hope of making profit. In this case, arguably, Blackstone’s profits might align with this vision of sustainability now. But even if profit and sustainability overlap for Blackstone and Oatly sometimes - what happens when they don’t?
Katz: Next week on the show: How sustainable we investigate, how sustainable is Oatly, now that it's grown so much with all this investment? And is it still focused on taking down big dairy, or have priorities for profit overtaken? And also…. what on eart should we be buying?!
Dominic: The answers to those questions -- next week. Tune in for the third and final instalment of the Oatly chronicles.
Katz: This episode was produced by me, Katz Laszlo, and reported by both me and Katy Lee. Editing came from Katy Lee, as well as the wonderful Justine Paradis, visiting from NPR’s excellent podcast, Outside/In. Editorial support came from Margot Gibbs, Dominic Kraemer and Wojciech Oleksiak, and mixing, scoring and sound design also came from the amazing Wojciech.
Special thank you to my lovely neighbours Joris Klingen and Thomas van Dijk, for letting me use their very nice studio. You can find their music under Bovenburen, there’ll be a link in the show notes. And of course, thank you to Fredrik Gertten, Lucia Gonzales Martin, Brett Christophers, Laura Young, Ashley Allen, Ben Axler and Gregor Sebastian for talking to us for this episode.
The song you’re hearing is by Barcelona band ADALA, singing about the residents that make the neighbourhoods what they are, taking back the city.
Finally, none of this would have been possible without the generous funding of Journalismfund Europe, Allianz Foundation, and our lovely Patreon supporters - thank you for helping keep one of the only independent podcasts about Europe going! See you next week!
