How stocks judge COPs: market impacts of climate conferences
Markets lift ESG-rated stocks during climate COPs, but leave renewables and fossil fuels largely unmoved
International efforts to combat climate change almost inevitably entail relative earnings reductions for fossil fuel companies and gains for renewable companies, yet whether financial markets price that expectation during the negotiations themselves is an open question. We construct portfolios of the 32 largest publicly listed companies in each of three categories, fossil fuel producers, renewable energy companies, and companies rated 'green' by Sustainalytics, meaning a lower environmental risk score, and compare each Conference of the Parties window against the same window shifted forwards or backwards by between three and twenty-four weeks, which we term pseudo-COPs. Two approaches are applied: a whole-of-period comparison that ranks the actual COP among its pseudo-COPs, and a daily linear regression with company-year fixed effects.
Both methods find distinct increases in the values of stocks with high green ratings, with the daily model returning a COP effect of 0.0013 ± 0.0004 in daily fractional price change for the top twenty green-rated companies. We find no change in the stocks of renewable companies, and weaker, more statistically inconsistent decreases in the values of fossil fuel companies at −0.0005 ± 0.0002, a result that is absent from the whole-period comparison and does not survive a change in the fitting algorithm. No consistent results emerge for variability, other than a general increase in market variability during COPs.
To establish that predictable, scheduled events can move prices at all, we apply the same daily model to Organization of the Petroleum Exporting Countries meetings, which produce increases in fossil fuel company valuation of 0.0025 ± 0.0004, around double the effect seen for green-rated companies during COPs, alongside decreases for renewables. That contrast carries the argument, since it shows the muted COP signal is a property of the negotiations rather than a limitation of the method. We conclude that market behaviour so far appears to favour companies with lower environmental impact during COPs but does not convincingly shift company price formation in line with the necessary green transition, which suggests that COP news reaches the market channelled through the prism of ESG metrics rather than an actual need to move away from fossil fuels.
@article{lamboll_how_2025,
title = {How stocks judge {COPs}: market impacts of climate conferences},
volume = {20},
copyright = {All rights reserved},
url = {https://doi.org/10.1088/1748-9326/ae15a6},
doi = {10.1088/1748-9326/ae15a6},
number = {11},
journal = {Environmental Research Letters},
author = {Lamboll, Robin and Al Khourdajie, Alaa and Pelz, Setu},
year = {2025},
pages = {114082},
}