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A new report -- funded by the Independent Petroleum Association of America -- argues that colleges that sell holdings in fossil fuel companies are likely to pay a financial price for doing so. The report is by Daniel Fischel, a consultant who is emeritus professor at the University of Chicago Law School. He analyzed the performance of two hypothetical portfolios over a 50-year period, including energy-related stocks in only one of the portfolios. The portfolio without energy stocks had average annual returns of 0.7 percentage points less than the one with the energy stocks. Fischel released his findings in an op-ed in The Wall Street Journal called "The Feel-Good Folly of Fossil-Fuel Divestment."
The findings are sure to be challenged. Many proponents of divestment, for example, do not deny that energy stocks have done well historically, but suggest that changes in society, energy policy and the environment will make many energy companies less profitable in the years ahead. Others note that various divestment movements have always been opposed as financially questionable, and that colleges that have divested have not reported financial harm.
