BlackRock Plans Global Layoffs Amid ESG Controversy and Spot Bitcoin ETF Approval: Report

BlackRock is reportedly expected to make a significant announcement regarding a substantial downsizing of its workforce.

The impending layoffs, which account for about 3% of its global workforce, will result in approximately 600 employees leaving the company.

BlackRock to Implement Routine Layoffs

The layoffs are being internally described as routine, aligning with BlackRock’s previous practices. In 2023, the company underwent a similar trimming of its workforce based on employee performance metrics.

This decision comes after a period of substantial market recovery for BlackRock. The firm’s shares saw a notable increase of 6% in 2023, a significant rebound following a 21% decline in 2022.

BlackRock is also scheduled to announce its fourth-quarter earnings on Friday, with analysts projecting a 2.46% decline in earnings per share year-over-year.

The firm ended the third quarter of 2023 with $9 trillion in assets under management (AUM), a decrease from its peak of over $10 trillion in 2022.

BlackRock is set to receive approval from the Securities and Exchange Commission (SEC) for its new spot Bitcoin ETF.

This approval, expected on Wednesday, marks a notable venture into the crypto space, allowing investors to track the daily price of Bitcoin on public stock markets.

This move positions BlackRock at the forefront of digital asset investment alongside other asset managers awaiting similar ETF approvals.

BlackRock Realigns Strategy Amid ESG Controversies

Analysts speculate that these layoffs may be part of BlackRock’s transition into a more mature phase of its business.

The company’s decrease in AUM aligns with broader market instabilities and its embroiled status in political debates over its Environmental Social Governance (ESG) investing strategies.

Due to the controversy surrounding its ESG approach in the U.S., BlackRock has been scaling back its emphasis on such business stateside. U.S. portfolio managers no longer consider ESG metrics in non-ESG funds.

This shift comes as many green investment funds struggle with declining assets and underperformance, particularly in sustainable energy investments.

Larry Fink, the founder and CEO of BlackRock, expressed to Fox Business his decision to refrain from using the term “E-S-G” due to the political controversies it has sparked.

Despite the scaled-back focus in the U.S., ESG remains a significant aspect of BlackRock’s international business.

Mark Wiedman, head of BlackRock’s client business, highlighted the sustained demand for ESG investments from foreign clients, including large sovereign wealth funds in Europe and the Middle East.

Meanwhile, BlackRock plans to reallocate resources saved from the job cuts towards expanding in growth sectors like technology investing and alternative products beyond traditional stocks and bonds.

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