Fossil fuel divestment is one of the major subjects of student activists today. Back in December energy advocate Bill McKibben argued that colleges should cease investing in oil companies: “fossil fuel industry [is] an enemy that must be defeated,” since the industry uses “money and political influence to block climate action in Washington.”

Students at many colleges have taken up the cause, known as “Fossil Free.” There are fossil fuel divestment movements at more than 200 colleges, including Stanford, Harvard, Swarthmore Yale, Cornell, Ohio State and the University of Colorado.

Some smaller colleges, like Unity College in Maine and Hampshire College in Massachusetts, have already agreed to sell their fossil fuels stocks.

But critics argue that such an investment strategy could hurt endowments. American oil companies are profitable, after all, and perhaps avoiding such investments could damage schools.

Gil Kemp, a member of the Swarthmore Board of Managers, said that fossil fuel divestment was too risky because it would cost the endowment “$11 million to $14 million a year.”

But that’s probably wrong, or at least somewhat shortsighted. According to a recent Associated Press article:

The research firm S&P Capital IQ found that by one measure, endowments would have been better off had they divested 10 years ago.

The firm calculated the total returns of the broad U.S. market as tracked by the S&P 500 index, with and without the companies singled out by Fossil Free. An endowment of $1 billion that excluded fossil fuel companies would have grown to $2.26 billion over the past 10 years, but an endowment that included investments in fossil fuel companies would have grown to $2.14 billion. That extra $119 million could pay for 850 four-year scholarships, assuming tuition of $35,000 per year.

So it’s possible exclusion of oil company investments could actually generate more money, if trends continue.

While it’s a sort of debatable whether or not Fossil Free would really have much impact on climate change—“Endowments don’t have enough financial clout to affect the flow or cost of capital for fossil fuel companies,” explained one analyst at Oppenheimer & Co.—it appears Fossil Free won’t really hurt colleges’ bottom lines. Their endowments will be just as strong.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer