In a striking revelation, a recent report by ActionAid has unveiled that 14 leading fossil fuel companies reaped enormous profits totaling $346.713 billion within a span of 24 months. The report sheds light on the period from June 2021 to June 2023, during which these companies witnessed significant financial gains.
According to the report, the fossil fuel firms amassed $232 billion in net profits within the specified timeframe, with $155.039 billion classified as profit windfalls. Notably, windfall profits are characterized by exceeding the average profits from the preceding four years by over 20 percent.
Furthermore, the report underscores that in the 12 months leading up to July 2023, the top 14 fossil fuel companies, based on market capitalization, collectively reported net profits of $278 billion. This staggering figure represents a remarkable 278 percent increase compared to the average profits recorded in the reference years from mid-2017 to mid-2021. Out of these net profits, $192 billion is identified as windfall profits.
The data also reveals that during the same period, from June 2021 to June 2023, the top 22 financial corporations jointly generated $78 billion as profit windfalls.
The report draws attention to a call made by the Secretary-General of the United Nations, Antonio Guterres, on the first day of COP27 in 2022. Guterres urged governments to impose taxes on the windfall profits of fossil fuel companies and redirect the generated revenue to address the needs of affected communities and countries grappling with climate change impacts.
However, the report points out that a year later, only certain European Union Member States, the United Kingdom, and a few Latin American countries have introduced limited and temporary windfall taxes on fossil fuel companies. This has resulted in significant undertaxed profits and insufficient funding for climate action.
A separate study conducted in July 2023 by Oxfam and ActionAid disclosed that 722 mega-corporations raked in $1 trillion a year in windfall profits during 2021 and 2022. The research proposed that a windfall tax of 90 percent on these profits could generate $941 billion, potentially boosting global investment in clean energy by one-third.
The report emphasizes the natural contribution of energy companies, especially fossil fuel giants, toward such a tax, aligning with the Polluter Pays Principle. Additionally, it notes the indirect profits gained by major financial institutions from fossil fuel extraction and use, emphasizing their complicity in climate damage. Banks alone have reportedly invested over $3.2 trillion in fossil fuels in the Global South since the adoption of the Paris Agreement in 2015.
