Fossil capital in the Caribbean
Fossil capital in the Caribbean
by Jose Atiles and David Whyte
Offshore jurisdictions—commonly known as tax havens or offshore financial centers— play a central role in sustaining the fossil fuel industry through legal, financial, and regulatory frameworks. Over 68% of fossil fuel financing by the world’s 60 largest banks flows through secrecy jurisdictions. These jurisdictions, including flag-of-convenience states and special economic zones, serve as critical nodes in the global economy, shielding corporations from accountability. This opacity provides a veil of sovereignty for fossil fuel profits and hinders corporate accountability for environmental harms
It is bitterly ironic that the Caribbean– the place where the key fossil fuel offshore jurisdictions facilitate the extraction of carbon profits – is the region that is most exposed to the devastation wreaked by climate change manifesting as hurricanes, rising sea levels, and wholesale destruction of communities.
Fossil fuel corporations employ intricate networks of shell companies and subsidiaries within secrecy jurisdictions to obscure ownership and evade scrutiny. The Cayman Islands hosts over 100,000 registered companies despite a population of just 65,000, illustrating its role as a secrecy jurisdiction. The British Virgin Islands (BVI) and Bermuda similarly house thousands of corporate entities used for profit shifting and liability avoidance.
The role of secrecy jurisdictions is not restricted to taxation and financial secrecy; they also enable the beneficiaries of the fossil fuel industry to mask all of their regulatory liabilities. This is why we name those jurisdictions ‘regulatory havens.’
Regulatory havens enable fossil fuel corporations to exploit weak transparency laws to obscure ownership structures and financial flows, making it difficult to trace capital movements or enforce regulatory oversight. Corporations channel resources into exploration, extraction, and production through internal capital markets and flag-of-convenience registries.
Asset managers, including Vanguard, Fidelity, and State Street, are among the largest financiers of the fossil fuel industry, holding significant shares in major oil companies. The Bahamas and Offshore Leaks investigations revealed that these firms maintain holding companies and subsidiaries in the Bahamas, BVI, Bermuda, and Nevis. Captive insurance further insulates fossil fuel firms from liability. By establishing subsidiaries in regulatory havens, companies like BP and ExxonMobil create internal insurance mechanisms to reduce exposure to environmental risks while maintaining financial secrecy. The Cayman Islands, a global leader in captive insurance, managed over $74.9 billion in assets as of 2021, allowing corporations to externalize environmental costs onto affected communities.
In addition to providing direct financial advantages, regulatory havens enable fossil fuel corporations to evade environmental regulations, circumvent sanctions, and insulate their operations from social and political conflicts. This vast offshore capital flow deepens global inequality and obstructs efforts to track fossil fuel revenues, further undermining national regulatory frameworks. This opacity is not incidental but a deliberate legal and political strategy employed by major players in the global oil market. For example, Ghost ships operating under flags of convenience frequently disable their automatic identification systems to avoid detection, heightening the risk of environmental disasters. Panama, the Bahamas, the Marshall Islands, and Nevis register a significant share of the world’s oil tankers and drilling rigs, shielding companies from accountability for spills and pollution.
Some of history’s largest oil tanker spills have involved vessels registered in flag states. The secrecy afforded by regulatory havens obscures liability, shifting the costs of environmental disasters onto affected communities and ecosystems.
Regulatory havens shield fossil fuel corporations from climate activism, litigation, and accountability by structuring ownership and financing through secrecy. Caribbean jurisdictions, in particular, play a critical role in protecting controversial assets, including those acquired through extralegal means. As climate change accelerates and environmental movements grow, fossil fuel reserves and infrastructure have become politically toxic and increasingly contested. The veil of sovereignty offered by Caribbean regulatory havens is now essential to the survival of fossil capital, echoing colonial-era strategies used to insulate extractive assets from scrutiny. Ironically, the very Caribbean populations most impacted by climate change are among the most vocal critics of fossil capitalism, yet they are structurally excluded from challenging the legal frameworks that protect it. These regulatory regimes function in insulated political spaces, ultimately controlled by global superpowers that retain sovereignty over the region’s legal and financial systems.
The Caribbean’s role as a hub for secrecy jurisdictions underscores the deep entanglement between colonial legacies, financial capitalism, and environmental degradation. These jurisdictions have been placed in a detrimental position where their economic development is subordinated to the fossil fuel industry and the secrecy needs of Global North countries. In this way, regulatory havens end up carrying the political blame and the environmental consequences of the fossil fuel industry’s efforts to disrupt climate action by externalizing environmental and social costs, perpetuating global income asymmetries, and maintaining economic and political dominance.
Understanding how fossil fuel corporations exploit regulatory havens is critical for advancing climate accountability and dismantling the legal structures that sustain environmental harm. Limiting financial secrecy, enforcing accountability, and addressing environmental and economic injustices require international regulatory action. Without taking drastic measures, the consequences will be drastic, since the global transition from fossil fuels.