BlackRock plans layoffs amid ESG pullback and spot ETF approval 

BlackRock, the world’s largest money management firm, is reportedly planning to announce layoffs of about 3% of its global workforce, totaling around 600 employees.

This decision comes as BlackRock anticipates approval from the U.S. Securities and Exchange Commission (SEC) for its spot Bitcoin exchange-traded fund (ETF).

While the layoffs are described internally as routine, they come after a period of rapid growth in assets under management (AUM). The layoffs are expected to be announced in the coming days.

BlackRock streamlines

The impending reduction of approximately 600 positions mirrors BlackRock’s approach last year, where layoffs were aligned with employee performance metrics.

Despite a 21% decline in 2022, BlackRock’s shares rebounded in 2023, rising by 6%. 

According to a Fox Business report, a spokesperson for BlackRock declined to provide comments regarding the layoffs. The company is set to reveal its fourth-quarter (Q4) earnings on Friday.

One potential reason behind the layoffs is that BlackRock, following years of robust growth in Assets Under Management (AUM), is transitioning into a more mature phase in its business. Analyst consensus for the Q4 anticipates a 2.46% year-over-year decline in earnings to $8.71 per share.

As of the end of Q3 in 2023, BlackRock’s AUM stood at $9 trillion — less than its peak of over $10 trillion in 2022.

The decrease in assets also coincided with BlackRock becoming a focal point of political scrutiny due to its adoption of Environmental Social Governance (ESG) investing. 

This strategy involves directing investment funds into public companies in the sustainable energy sector or those actively working to reduce their carbon footprint, along with promoting corporate governance measures such as boardroom diversity.

Still, there was a substantial influx of $187 billion into BlackRock’s robust Exchange Traded Fund (ETF) business, featuring products tracking a basket of securities and traded on major exchanges.

BlackRock’s Bitcoin ETF approval

If the SEC approves the firm’s spot Bitcoin ETF application, it would place BlackRock among the top asset managers to offer a crypto investment product.

BlackRock is anticipating approval on Jan. 10, coinciding with the SEC’s deadline to approve or reject the ARK 21 Shares spot Bitcoin ETF.

Contrastingly, the SEC’s deadline for BlackRock’s Bitcoin ETF application is set for Jan. 15. This follows a series of amendment forms filed by spot Bitcoin ETF applicants in recent days.

On Jan. 5, BlackRock submitted a 19b-4 amendment for its spot BTC ETF application, aligning with other asset managers such as Valkyrie, Grayscale, Bitwise, Hashdex, ARK 21Shares, Invesco Galaxy, Fidelity, Franklin Templeton, VanEck, and WisdomTree on the same day.

While these filings represent crucial steps in the SEC approval process, the completion of S-1 documents is essential for U.S. exchanges to list shares of investment securities directly exposed to cryptocurrencies.