How stocks judge COPs: market impacts of climate conferences
Markets lift 'green'-rated stocks during climate COPs, but leave renewable and fossil fuel stocks largely unchanged
Read the published paper ↗doi.org/10.1088/1748-9326/ae15a6
We find that stocks with high 'green' ratings rise in value during the UN climate conferences (COPs), while renewable energy stocks do not change and fossil fuel stocks show only weak, inconsistent declines. International climate action almost inevitably implies relative earnings losses for fossil fuel companies and gains for renewable companies. We ask whether financial markets price that expectation during the negotiations themselves.
We construct portfolios of the 32 largest publicly listed companies in three categories: fossil fuel producers, renewable energy companies, and companies rated 'green' by Sustainalytics (a low ESG risk score). We compare each COP window against the same window shifted forwards or backwards by 3–24 weeks, which we term 'pseudo-COPs'. We apply two approaches. The first compares whole periods, ranking the actual COP among its pseudo-COPs. The second is a daily linear regression with company-year fixed effects, which control for each company's characteristics within a given year.
Both methods find distinct increases in the values of stocks with high green ratings. For the top twenty green-rated companies, the daily model returns a COP effect of 0.0013 ± 0.0004 in daily fractional price change. We find no change in the stocks of renewable companies. Decreases for fossil fuel companies are weaker and statistically inconsistent (−0.0005 ± 0.0002 for the top twenty). They are absent from the whole-period comparison and do not survive a change in the fitting algorithm. No consistent results emerge for variability, other than a general increase in market variability during COPs.
As a check that scheduled events can move prices at all, we apply the daily model to meetings of the Organization of the Petroleum Exporting Countries (OPEC). These raise fossil fuel company valuations by 0.0025 in daily fractional price change, around double the effect for green-rated companies during COPs, and lower renewable valuations. Detectable changes during predictable events are therefore plausible. We conclude that market behaviour so far appears to favour companies with lower environmental impact during COPs, but does not convincingly shift price formation in line with the necessary green transition. This suggests that COP news reaches the market mainly through the prism of ESG metrics, rather than through 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},
}