Informed trading and the fossil fuel industry's influence over UN climate meetings

This study develops a novel methodology to estimate the probability of informed trading around United Nations COP climate meetings. Analyzing options market data from 87 U.S.-listed fossil fuel firms between 2006 and 2023, we find that informed trading rises significantly during the [−9, 9] window. This activity generated abnormal returns of 17.565 %, or up to $25.064 billion in profit for informed traders over the relevant period. Our analysis shows that compared to fossil fuel stocks, the change in the probability of informed trading in industrials, healthcare, finance and utilities was relatively flat during COP meetings and the accumulated profit obtained by informed traders in these markets was at most $8.719 billion. Following Adler et al. (2025) who classify COP meetings by positive and negative climate policy shocks, we find that the change in the probability of informed trading around meetings with positive signals is 70.237 %, while it is 62.721 % for meetings with negative signals. We also find that the change in the probability of informed trading around COP21 (at which the Paris Agreement was adopted) was 3.544 times higher than the average across all other COP meetings, while the associated CAR was 2.118 times higher. Given the fossil fuel industry's substantial presence at COP meetings, our findings suggest that these events offer not only policy signals but also informational advantages to select market participants. • This study develops a novel methodology to estimate the probability of informed trading in fossil fuel stocks listed in the U.S. around United Nations COP climate meetings. • We show that the probability of informed trading increased significantly during the nine days preceding and the ten days spanning COP meetings (days [−9, 9]). • The maximum estimated profit earned by informed traders across COP meetings reached $32.985 billion. • We find that the highest gain in the profit of informed traders is observed around COP20 ($18.081 billion) and the lowest around COP18 ($916.94 million). • Our findings suggest that COP meetings repeatedly create opportunities for informed trading.