722 of the world’s biggest corporations together raked in over $1 trillion in windfall profits each year for the past two years amid soaring prices and interest rates, while billions of people are having to cut back or go hungry.
Analysis by Oxfam and ActionAid of Forbes’ “Global 2000” ranking shows they made $1.09 trillion in windfall profits in 2021 and $1.1 trillion in 2022, with an 89 percent jump in total profits compared to average total profits in 2017-2020. For this analysis, windfall profits are defined as those exceeding average profits in 2017-2020 by more than ten percent.
45 energy corporations made on average $237 billion a year in windfall profits in 2021 and 2022. Governments could have increased global investments in renewable energy by 31 percent had they taxed at 90 percent the massive windfall profits that oil and gas producers funneled to their rich shareholders last year. 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.
Extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years.
- 18 food and beverage corporations made on average about $14 billion a year in windfall profits in 2021 and 2022, enough to cover the $6.4 billion funding gap needed to deliver life-saving food assistance in East Africa more than twice over. Oxfam estimates that one person is likely to die of hunger every 28 seconds across Ethiopia, Kenya, Somalia and South Sudan. Global food prices rose more than 14 percent in 2022.
- 28 drug 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 defense corporations raked in on average $8 billion a year in windfall profits even as 9,000 people die every day from hunger, much of that driven by conflict and war.
“People are sick and tired of corporate greed. It’s obscene that corporations have raked in billions of dollars in extraordinary windfall profits while people everywhere are struggling to afford enough food or basics like medicine and heating,” said Oxfam International interim Executive Director Amitabh Behar.
“Big business is gaslighting us all —they’re hiking prices to make monster profits, plundering people under the cover of a polycrisis.”
“A few increasingly dominant corporations are monopolizing markets and setting prices sky-high to line the pockets of their rich shareholders. Big Pharma, energy giants and big supermarket chains shamelessly fattened their profit margins throughout both the pandemic and cost-of-living crisis. Most worryingly —in the absence of regulation, including progressive taxation— governments have invited this,” Behar said.
There is a growing body of evidence that corporate profiteering is playing a significant role in supercharging inflation, echoing fears that corporations are exploiting the cost-of-living crisis to boost profits margins —a trend dubbed “greedflation” and “excuseflation”. Christine Lagarde, the President of the European Central Bank, suggested in May that corporations are engaging in “greedflation”, while 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.
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 9 percent pay hike in 2022, while workers’ wages fell by 3 percent. One billion workers in 50 countries took an average pay cut of $685 in 2022, a collective loss of $746 billion in real wages compared to if wages had kept up with inflation.
Oxfam and ActionAid are calling on governments to claw back gains driven by profiteering. A tax of 50 to 90 percent 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. 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.
“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,” said ActionAid Secretary-General Arthur Larok.
“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”.
Notes to editors
Oxfam and ActionAid’s analysis is based on data from Forbes’ “Global 2000” ranking.
According to the IEA, governments worldwide have earmarked $710 billion for “long-term clean energy and sustainable recovery measures”. Taxing the windfall profits of 45 energy corporations ($237 billion in 2022) at 90 percent would generate $219 billion in revenue. Added to the existing $710 billion in investments, this represents a 30.9 percent increase.
According to the World Food Program’s Global Report on Food Crisis (GRFC), 258 million people in 58 countries and territories faced acute food insecurity at crisis or worse levels (IPC/CH Phase 3-5) in 2022, up from 193 million people in 53 countries and territories in 2021.
Data for the East Africa funding gap was extracted from OCHA Financial Tracking Service (FTS) on 12 June 2023.
In East Africa alone, drought and conflict have left a record 36 million people facing extreme hunger, nearly equivalent to the population of Canada.
Death figure calculations are based on IPC reports on acute food insecurity, using the crude death rates associated with IPC Phase 3 in the IPC Technical Manual Version 3.1. We subtract 0.22 deaths per 10,000-affected population per day to account for the “normal death rate,” based on World Bank data.
In 2022, global food prices were on average 14.3 percent higher than the previous year.
Oxfam calculated daily deaths attributable to IPC 3 level hunger driven by conflict using the IPC Technical Manual Version 3.1. Because figures are not disaggregated into IPC 3, 4 and 5, the estimate is conservative. For IPC 3, crude daily death rates are 0.5-0.99 per 10,000, and we subtract 0.22 from each end of the range to account for “normal deaths” based on World Bank data. As such, the daily deaths attributable to IPC 3 acute food insecurity for the 117 million affected people in 19 countries where conflict is the main driver of hunger (according to the GRFC 2023) would be 3,276-9,009.
In the US, the UK and Australia, studies have found that 54 percent, 59 percent and 60 percent of inflation, respectively, was driven by increased corporate profits.
An article published by European Central Bank economists Oscar Arce, Elke Hahn and Gerrit Koester (2023) shows that larger corporate profit margins are contributing to domestic price pressures much more than wages.
The President of the European Central Bank, Christine Lagarde, suggested last May that corporations were engaging in “greedflation”.
According to the IMF, rising corporate profits account for almost half the increase in Europe’s inflation over the past two years as corporations increased prices by more than spiking costs of imported energy.
A. Glover, J. Mustre-del-Río and A. von Ende-Becker, economists at the Federal Reserve Bank of Kansas City, found that “markup growth” likely contributed more than 50 percent to inflation in the US in 2021.
The EU has implemented a windfall tax, but only on energy corporations.
According to Anil Markandya and Mikel González-Eguino (2018), the costs of loss and damage in low- and middle-income countries could reach between $290 billion to $580 billion a year by 2030.
UN Secretary-General António Guterres has called for windfall taxes on fossil fuel corporations.
In 2020, the financing gap for achieving universal social protection coverage and healthcare in low- and lower- middle-income countries was $440.8 billion.
The financing gap to provide universal access to pre-primary, primary and secondary education in low and lower-middle income countries was estimated in 2019 at $148 billion a year between 2020 and 2030.