- 36 top companies in the fossil fuels and financial sector, often funding fossil fuel use, made over US$420 billion in windfall profits in the 24 months preceding July 2023.
- A tax of 90% on these windfall profits could generate as much as US$382 billion in revenue, an amount that could be spent on public services such as education or climate action.
- ActionAid calls for the urgent introduction of windfall profits taxes.
Thirty-six top companies in the fossil fuel industry and their funders made over US$420 billion in ‘surplus’ profits in the 24 months before July 2023, according to a new ActionAid report.
The report shows that taxing these extraordinary profits, referred to as windfall profits, could generate funds to boost public spending, especially for key areas such as education and climate action. Windfall profits are often attributed to external context changes and are considered a ‘surplus’ above the regular and expected profits.
A tax of 90% on the windfall profits of these 36 firms could generate as much as US$382 billion in revenue, shows the report launched as world leaders meet at Davos for the World Economic Forum. This amount is almost 20 times more than the US$21 billion provided by donors for climate adaptation in 2021.
ActionAid Secretary-General, Arthur Larok, said:
“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.
Windfall profits taxes make sense. They can bring in significant revenue for climate action and social services while taxing only the extraordinary corporate profits.”
ActionAid’s research is an analysis of the profits of the top 14 fossil fuel companies and the top 22 financial corporations by value on the stock market. In the 24 months to July 2023, these firms made US$1,218 billion in profits. Windfall profits from this amount come to US$425 billion. Fossil fuel company profits in the 12 months before July 2023 were up by an astounding 278% compared to the average in the period between 2017/2018 and 2020/2021.
Both the fossil fuel and the financial industries have been making extraordinary profits in recent years, widely attributed to the impact of Russia’s full-scale invasion of Ukraine, and high interest rates adopted by many countries in response to growing inflation.
ActionAid’s research in 2023 found that banks alone have poured over US$3.2 trillion into fossil fuels in the Global South since the Paris Agreement was adopted in 2015, making them complicit in climate damage.
At COP27, United Nations Secretary-General Antonio Guterres asked governments to tax the windfall profits of fossil fuel companies and redirect that money to those impacted by climate change. Over one year later, only some EU Member States, the UK, and a few Latin American countries, have introduced some forms of temporary and often limited windfall taxes on fossil fuel companies.
ENDS
For media requests, please email Jenna.Farineau@actionaid.org or call 2027319593.
Spokespeople:
- Anders Dahlbeck, Climate Justice Programme Manager, ActionAid Denmark
- David Archer, Head of Programmes and Influencing, ActionAid International
Notes to editors
ActionAid’s research covers the 200 largest companies by market capitalisation, and only the companies within that group that operate within the fossil fuels and financial sectors.
About ActionAid
ActionAid is a global federation working with more than 41 million people living in more than 72 of the world’s poorest countries. We want to see a just, fair, and sustainable world in which everybody enjoys the right to a life of dignity and freedom from poverty and oppression. We work to achieve social justice and gender equality and to eradicate poverty.