American universities could lose up to $3.2 billion (£2.07bn) each year in funding if they cut ties with the fossil fuel industry.
New research commissioned by the Independent Petroleum Association of America (IPAA) said activists calling for schools to cut their ties with fossil fuel related stocks would result in them losing billions of dollars in returns and fees.
Many universities invest in fossil fuel funds as part of their portfolios. But campaigners say they should pull out of these deals, a process called divestment.
Leading researcher, Professor Daniel R. Fischel at the University of Chicago Law, said: “Every bit of economic evidence available to us today demonstrates that fossil-fuel divestment is a bad idea.”
His team tracked the performance of two investment portfolios over a 50-year period, one that included fossil fuel stocks and one that didn’t.
The ones with fossil fuels had returns 0.7% higher than those without.
Barry Russell, CEO of IPAA, said: “For those who argue that divestment is just a harmless, symbolic act, with no ability to impact either a company’s stock price or a school’s endowment performance, it turns out they were only half right.
“In fact, what this first-of-its-kind study confirms is that the costs associated with divestment are real and enormous, all while having no discernible effect on the companies actually being targeted by the policy.”