Unsustainable corporate profits

Excessive company profits

Nature

According to Global Witness, ‘excess profits’ are sudden and significant increases in a company’s financial returns that are due not to their own actions but to external events. The EU says profits count as ‘excess’ when they are more than 20% above the average return of the previous four years.

Background

The issue of unsustainable corporate profits gained prominence in the late 20th century as analysts observed that short-term profit maximization often led to environmental degradation, social inequality, and economic instability. High-profile corporate scandals and financial crises, such as the 2008 global recession, intensified scrutiny of profit-driven business models. Increasingly, international organizations and academic studies have highlighted the systemic risks posed by unsustainable profit practices, prompting calls for more responsible and long-term oriented corporate governance.

Incidence

The 2022 annual profits of the five largest integrated private sector oil and gas companies – Chevron, ExxonMobil, Shell, BP and TotalEnergies – were $195 billion; up by almost 120% on 2021 and the highest level in the industry’s history. This means that these companies made $134 billion in excess profits.

Centrica, the company that owns British Gas, reports record profits for 2022. Operating profits of £3.3bn were recorded, up from £948m in 2021. This surpassed its previous highest ever yearly profit of £2.7bn in 2012.

In 1996, the thirty U.S. corporations whose stock prices comprise the basis of the Dow Jones Industrial Average averaged total returns to their shareholders of 28.2 percent for the year, a substantial increase from the five year average of 18.3 percent. Each such increase in annual returns to shareholders further lifts the floor under investor expectations and increases the pressure on top managers to maintain such returns in the future – by any means.

Claim

Unsustainable corporate profits are a critical threat to our society and planet. When companies prioritize short-term gains over ethical practices, they exploit workers, devastate the environment, and widen inequality. This reckless pursuit of profit undermines long-term economic stability and social well-being. If we ignore this problem, we risk irreversible damage to our communities and ecosystems. Urgent action is needed to hold corporations accountable and demand responsible, sustainable business practices.

Counter-claim

Concerns about "unsustainable corporate profits" are vastly overblown. Profits drive innovation, create jobs, and fuel economic growth. Companies naturally adapt to changing markets—if profits dip, they adjust. The market self-corrects without government interference. Obsessing over profit sustainability distracts from real issues like education or healthcare. Let businesses thrive; their profits ultimately benefit everyone through investment, employment, and improved products. This so-called problem is simply not worth our worry.