The world’s 722 largest companies are generating over $1 trillion per year (£780 billion) in windfall profits due to surging energy prices and increasing interest rates. Magazine data by Oxfam and ActionAid shows that these companies earned $1.08 trillion in 2021 and $1.09 trillion the previous year. These collective profits are 89% higher than the average profits from 2017 to 2020.
Windfall profits are defined as profits that exceed the average earnings of the previous four years by more than 10%.
According to the research, energy companies have recorded the highest windfall profits. Out of the 45 energy firms, they averaged $237 billion in windfall profits per year in both 2021 and 2022.
The significant surge in energy profits has resulted in the emergence of 96 energy billionaires, collectively amassing a fortune of nearly $432 billion. This figure surpasses the wealth accumulated in April of the previous year by approximately $50 billion.
Furthermore, numerous food and beverage corporations, banks, pharmaceutical companies, and retailers have also witnessed a notable increase in profits amidst a cost-of-living crisis. This crisis has affected more than a quarter of a billion people across 58 countries, resulting in acute food insecurity in 2022.
The substantial profits reported by these companies have sparked allegations of “greedflation.” This term refers to the accusation that companies are excessively raising prices, thereby contributing to the escalation of inflation.
Windfall Profits Impact on Food, Pharmaceuticals, Retail, Aerospace & Defense Industries
The analysis revealed the following findings:
In 2021 and 2022, 18 food and beverage companies generated an average of approximately $14 billion per year in windfall profits. This period coincided with a global food price increase of over 14% in 2022.
Over the same timeframe, 28 pharmaceutical companies made an average of $47 billion annually in windfall profits, while 42 major retailers and supermarkets accumulated an average of $28 billion.
Nine aerospace and defense corporations amassed an average of $8 billion in windfall profits.
Katy Chakrabortty, Oxfam’s head of advocacy, expressed concern, stating, “These staggering excess profits are not only ethically questionable. We are also witnessing growing evidence that this corporate windfall is exacerbating inflation, leaving millions of individuals in the UK and worldwide struggling to meet their financial obligations and provide for their families.”
“When the windfall profits of 18 food and beverage corporations surpass twice the required amount to address the shortfall in life-saving aid for tens of millions of individuals grappling with hunger in East Africa, it becomes evident that governments must take action.
Introducing windfall taxes universally and putting an end to this system that favors wealthy shareholders at the expense of others is imperative.”
Conclusion
Research reveals that the world’s largest companies generate over $1 trillion annually in windfall profits, driven by energy prices and interest rates. Allegations of “greedflation” arise as food, pharmaceutical, retail, and aerospace industries reap substantial profits, exacerbating inflation and impacting vulnerable populations. Government action and windfall taxes are crucial.
