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World’s Largest Money Manager Faces Workforce Adjustments, Shares Surge, and ESG Controversies
- BlackRock, the global financial giant, announces a 3% global workforce reduction in routine layoffs.
- Financially resilient, BlackRock’s shares rebound by 6% in 2023 after a 21% dip in 2022, driven by substantial new customer investments in its ETF business.
- Amid controversies, BlackRock strategically de-emphasizes its ESG business in the U.S., prompting global shifts in investment strategies and posing questions about the future of money management.
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Start TradingBlackRock, the world’s largest money management firm, is set to make a significant announcement in the coming days. With a global workforce of unprecedented scale, BlackRock is planning to implement layoffs affecting approximately 3% of its employees. According to an internal source, these workforce reductions are being characterized as routine, drawing parallels with a similar measure taken last year based on employee performance metrics.
In 2023, BlackRock witnessed a noteworthy recovery in its financial standing. After a challenging 2022 marked by a 21% fall in shares, the company experienced a resilient rebound, with shares increasing by 6%. Notably, this turnaround was accompanied by substantial inflows of new customer money into BlackRock’s Exchange Traded Fund (ETF) business, totaling $187 billion.
This impending announcement echoes a trend observed in the previous year, where BlackRock executed a comparable round of layoffs based on performance metrics. Simultaneously, BlackRock anticipates a pivotal development in its operations – the expected approval from the Securities and Exchange Commission (SEC) for its new Bitcoin “spot” ETF, marking a historic milestone in the crypto investment landscape.
Also Read: BlackRock Officially Submits Form S-1 With SEC for Ethereum ETF
BlackRock’s Position in ESG and U.S. De-emphasis
BlackRock’s foray into Environmental Social Governance (ESG) has not been without controversy. The company’s commitment to ESG practices, aimed at directing investment into sustainable energy and promoting corporate governance measures, has attracted political scrutiny and resulted in declining assets.
In response to the controversies and changing dynamics, BlackRock has strategically chosen to de-emphasize its ESG business in the United States. Notably, U.S. portfolio managers are no longer obligated to consider ESG metrics when not utilizing ESG funds, indicating a shift in the company’s strategic priorities.
The repercussions of BlackRock’s ESG stance are evident as pension funds in politically aligned red states have withdrawn approximately $6 billion from BlackRock funds in protest. Interestingly, despite criticism from some quarters, former President Donald Trump has remained silent, potentially influenced by BlackRock’s past management of his substantial wealth. The savings generated from the announced layoffs are slated to be redirected toward expanding into growth sectors, including technology and alternative products.
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Start TradingGlobal Significance of ESG and Conclusion
While ESG may be facing challenges in the U.S., its significance remains robust on a global scale. BlackRock’s foreign customers, including large sovereign wealth funds in Europe and the Middle East, continue to view ESG as a vital component of their investment strategies. Mark Wiedman, head of BlackRock’s client business, highlights that ESG represents a significant demand from clients, with BlackRock managing around $1 trillion in pure sustainable assets.
BlackRock’s strategic maneuvers, from workforce adjustments to changes in its approach to ESG, paint a dynamic picture of the company adapting to evolving market conditions. The interplay between layoffs, financial performance, and shifting priorities underscores the challenges and opportunities faced by this industry giant. As BlackRock looks ahead, the question remains: How will these strategic shifts shape the future landscape of money management and investment practices?
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The post Blackrock Lays Off 3% of Workforce Ahead of Expected ETF Approval appeared first on Bitcoinsensus.
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