14 Fossil Fuel Firms Rake in $346bn Profit
14 fossil fuel companies made profit windfalls of $346.713bn in 24 months, a report by ActionAid has said.
The report showed that the fossil fuel firms, between June 2021 and June 2022, made $232bn in net profits, $155.039bn of which was considered profit windfalls.
Similarly, the ActionAid report stated that “in the 12 months to July 2023, the top 14 fossil fuel companies by market capitalisation, collectively made $278bn in net profits, an increase of an astounding 278 percent compared to the average of the reference years (mid-2017 to mid-2021).
“Of these $278bn net profits, $192bn can be considered windfall profits – profits that exceed the average from the preceding four years by over 20 per cent.”
In the same period under review – June 2021 to June 2023 – the top 22 financial corporations collectively made $78bn as profit windfalls.
According to the document, on the first day of COP27 in 2022, Secretary-General of the United Nations, Antonio Guterres, had “asked governments to tax the windfall profits of fossil fuel companies and redirect that money to those in need and countries suffering loss and damage due to climate change impacts.”
Low Implementation
However, one year on, it was reported that only some European Union Member States, the United Kingdom, and a few Latin American countries, have introduced some forms of temporary and often limited windfall taxes on fossil fuel companies, leaving colossal profits undertaxed – and climate action underfunded.
In July 2023, research by Oxfam and ActionAid revealed that 722 mega-corporations raked in $1tn a year in windfall profits in 2021 and 2022.
The research calculated that a windfall tax of 90 percent on these windfall profits could generate $941bn; “money that could increase global investment in clean energy by a third.”
Energy companies dominated by fossil fuel giants, the report said, are a natural contributor to such a tax, in line with the Polluter Pays Principle.
“While financial companies do not drill for oil and gas themselves, many of the largest ones have been big financiers of fossil fuels extraction and use, gaining indirect profits from these activities.
“As ActionAid research has found, banks alone poured over $3.2tn into fossil fuels in the Global South since the Paris Agreement was adopted in 2015, making them complicit in climate damage,” it was stated.
Profit windfall is a term used in business to describe a sudden, unexpected increase in profits. The term usually implies that the increase in profit was not due to any specific actions by the company, but rather to external factors like a booming economy or a rise in consumer demand.
Punch/Adukwu William
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