Thirty-six top companies in the fossil fuel industry and their funders made over $420 billion in ‘surplus’ profit in the 24 months leading to July 2023, a new ActionAid report has shown.
Launched at the World Economic Forum (WEF) in Davos, Switzerland, the document noted that a 90 per cent tax on the windfall could generate as much as $382 billion in revenue.
It added that taxing these extraordinary profits could fetch funds to boost public spending in key areas such as education and climate action.
Windfall profits are often attributed to external context changes and considered a ‘surplus’ above the regular profits.
The research, which analysed profits of top 14 fossil fuel companies and 22 big financial corporations by value on the stock market, showed that during the period under review, the firms made $1,218 billion in profit. The total windfall profits eventually amounted to $425 billion.
It gathered that fossil fuel company profits in the period were up by an astonishing 278 per cent, compared to the average in the period between 2017/8 and 2020/1.
The report observed that both the fossil fuel and financial industries have been making extraordinary profits in recent years due to the impact of Russia’s invasion of Ukraine, and high interest rates adopted by several countries in response to growing inflation.
The amount is almost 20 times more than the $21 billion provided by donors for climate adaptation in 2021.
ActionAid Secretary-General, Arthur Larok, stated that the scale of profits that fossil fuel companies and their bankers are making in the wake of global crises “is truly astounding, especially when compared to the hardships that these crises have brought upon regular people around the world.”
He maintained that windfall profits’ taxes make sense, as it could bring in significant revenue for climate action and social services, while taxing only the extraordinary corporate profits.
ActionAid’s research in 2023 had found that banks alone have invested over $3.2 trillion into fossil fuels in the Global South since the Paris Agreement was adopted in 2015, making them complicit in climate damage.
They also recalled that at COP27, United Nations Secretary-General Antonio Guterres asked governments to tax the windfall profits of fossil fuel companies and redirect the money to those impacted by climate change.
However, one year later, only some European Union (EU) member-states like the United Kingdom and a few Latin American nations have introduced some forms of temporary and often limited windfall taxes on fossil fuel companies.
