A GAIN of over $1 trillion in windfall profits was made by 722 of rhe world’s biggest corporations each year for the past two years, amid soaring prices and interest rates
Analysis by Oxfam and ActionAid of Forbes’ Global 2000 ranking shows companies made $1.08 trillion in windfall profits in 2021 and $1.09 trillion in 2022. This led to an 89 per cent jump in total profits compared to the previous four-year average (2017-2020).
Forty five energy corporations made on average $237 billion a year in windfall profits in 2021 and 2022. Windfall profits are defined as those exceeding average profits in the previous four years by more than ten per cent.
There are now 96 energy billionaires with a combined wealth of nearly $432 billion – $50 billion more than in April last year.
Food and beverage corporations, banks, Big Pharma and major retailers also cashed in on the cost-of-living crisis that has seen more than a quarter of a billion people in 58 countries hit by acute food insecurity in 2022.
Katy Chakrabortty, Oxfam Head of Advocacy said: “These eye-watering excess profits are not only immoral, we are also seeing increasing evidence that a corporate bonanza is supercharging inflation, leaving millions of people in the UK and around the world struggling to pay their bills and feed their families.
“When the windfall profits of 18 food and beverage corporations are more than twice the amount needed to cover the shortfall in life-saving assistance to tens of millions of people facing hunger in East Africa, it is clear governments need to act. We need to see windfall taxes introduced across the board and an end to this racket, where rich shareholders are rewarded at the expense of everyone else.”
The analysis found:
- 18 food and beverage corporations made on average about $14 billion a year in windfall profits in 2021 and 2022. Global food prices rose more than 14 per cent in 2022.
- 28 pharmaceutical corporations made on average $47 billion a year in windfall profits, and 42 major retailers and supermarkets made on average $28 billion a year in windfall profits.
- Nine aerospace and defence corporations raked in on average $8 billion a year in windfall profits
The IMF last week published a study showing that corporate profits account for nearly half the increase in Europe’s inflation over the past two years. Christine Lagarde, the President of the European Central Bank, suggested in May that corporations are engaging in “greedflation” – where corporations exploit the cost-of-living crisis to boost profit margins.
Huge corporate profits have coincided with the degradation of pay and conditions for workers. Oxfam estimates that top-paid CEOs across four countries enjoyed a real-term nine per cent pay rise in 2022, while workers’ wages fell by three per cent. One billion workers in 50 countries took an average pay cut of $685 in 2022, a collective loss of $746 billion in real wages when compared to what woukd have been the case if wages had kept up with inflation.
Oxfam and ActionAid are calling on governments to claw back gains driven by profiteering. While the UK introduced two small windfall taxes on energy companies last year, the charities say these are nowhere near enough and barely scratch the surface.
A tax of 50 to 90 per cent on the windfall profits of 722 mega-corporations could generate between $523 billion and $941 billion both for 2021 and 2022. This is money that could be used to help people struggling with hunger, rising energy bills and poverty in rich countries, and to provide hundreds of billions of dollars to support countries in the Global South. For example:
- An injection of $400 billion into the fund for loss and damage agreed to at COP27 last year. Loss and damage finance needs are urgent, with estimates saying that low- and middle-income countries could face costs of up to $580 billion annually by 2030. The UN Secretary-General, António Guterres, has called on rich countries to impose windfall taxes on fossil fuel companies and redirect the money to vulnerable countries suffering worsening losses from the climate crisis.
- Cover the financing gap ($440 billion) to provide universal social protection coverage and healthcare to more than 3.5 billion people living in low- and lower- middle-income countries, and the financing gap ($148 billion) to provide universal access to pre-primary, primary and secondary education in these same countries. This would support the hiring of millions of new teachers, nurses and healthcare workers across the Global South.
Arthur Larok, ActionAid Secretary-General, said “Enough is enough. Government policy should not allow mega-corporations and billionaires to profiteer from people’s pain. Governments must tax windfall profits of corporations across all sectors – and invest that money back in helping people and deterring future profiteering. They must put the interests of their great majorities ahead of the greed of a privileged few.
“Taxing windfall profits is smart economic policy, it’s a very clear and direct source of money for development and tackling climate change. Piling more loans onto poorer countries is what makes absolutely no sense when debt is accelerating the climate crisis.”
* Source: Oxfam GB