BlackRock, the global investment management corporation, is poised to announce significant layoffs, reportedly affecting approximately 3% of its global workforce. This translates to around 600 employees being let go, a move that is being internally characterized as routine and consistent with the company’s past practices. For context, BlackRock executed similar workforce reductions in 2023, based on performance evaluations.

This news emerges in the wake of a recovery period for BlackRock, which saw its shares rise by 6% in 2023, rebounding from a 21% drop in the previous year. The company is also preparing to release its fourth-quarter earnings report, with expectations of a slight decrease in earnings per share compared to the previous year.

As of the end of the third quarter of 2023, BlackRock managed assets totaling $9 trillion, a decrease from its peak of over $10 trillion in 2022. Amidst these developments, BlackRock is awaiting approval from the U.S. Securities and Exchange Commission (SEC) for its new spot Bitcoin ETF, a significant move into the burgeoning cryptocurrency market.

Analysts believe that these layoffs are part of BlackRock’s broader strategy to transition into a more mature phase of business. This approach aligns with the current market instabilities and the company’s involvement in political debates surrounding its Environmental Social Governance (ESG) investing strategies. In the U.S., BlackRock has dialed back its emphasis on ESG metrics in non-ESG funds, amidst controversies and underperformance in sustainable energy investments.

Despite reducing its focus on ESG in the U.S., BlackRock continues to prioritize ESG investing internationally, responding to sustained demand from clients, including large sovereign wealth funds in Europe and the Middle East.

Larry Fink, BlackRock’s CEO, has expressed his preference to avoid using the term “E-S-G” due to its politicization. Meanwhile, the company plans to reallocate resources saved from the job cuts to areas of growth such as technology investing and alternative products, diversifying beyond traditional stocks and bonds.

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