Fossil-fuel divestment has come under a microscope, with news reports touting the so-called "growth" of the movement and Mayor Bill de Blasio calling on more cities to give up their investments in the industry. Unsurprisingly, many facts have been left by the wayside.

Divestment has been front and center in New York's political debates over the past year. There's been disagreement on the state level, with Gov. Andrew Cuomo pushing divestment but Comptroller Thomas DiNapoli resisting, citing his fiduciary duty and the importance of the energy sector. "Fossil fuels continue to play an integral role in powering the world's electricity generators, industry, transportation and infrastructure," the comptroller said.

Meanwhile in New York City, the mayor's office has proclaimed that divestment is underway, when in reality the city has only commenced a request-for-information process to gather comments on how some of the city's pension funds might go about divesting. No actual divestments have occurred.

So what's all the hubbub about?

Last month divestment proponents claimed the movement is growing, an attempt to generate attention for a week of climate-change meetings in New York City and earlier in San Francisco. Yet instead of focusing on the environment—a topic we all agree is important—divestment has proven a distraction.

For starters, divestment is costly. In order to get past the purely political rhetoric that often consumes the debate, my organization, the Independent Petroleum Association of America, has commissioned research to look at what the actual financial impact of divestment would be for both the city's and state's pension funds. Findings from Prof. Daniel Fischel of the University of Chicago Law School and co-authors Christopher Fiore and Todd Kendall of economic consulting firm Compass Lexecon point to substantial shortfalls in investment performance, with no impact on the environment or targeted companies.

According to their research, divestment by New York City's five pension funds—which are valued at roughly $175 billion and serve the city's teachers, police, firefighters and civil servants—would cost a $98 million to 120 million annually and $1.2 billion to $1.5 trillion over 50 years. For the New York State Common Retirement Fund, a $192.4 billion fund that serves over a million retirees and beneficiaries, full fossil fuel divestment would cost up to $198 million in foregone returns every year and $1.5 trillion over 50 years.

These real dollars supporting real people would be given up for symbolism. With the average annual New York City pension being about $40,000, a $120 million loss due to divestment is the equivalent of 3,000 yearly pension payments for 3,000 city retirees. And because the state constitution requires that pensioners be paid, the city must make up shortfalls by taking more from taxpayers.

These costs emerge for many reasons. First, energy companies provide a great diversification benefit for a portfolio. In other words, divesting energy stocks from a given portfolio means taking on higher amounts of risk, sacrificing returns, or both. Divestment also imposes fees related to selling fossil-fuel holdings and replacing them, as well as immense, ongoing compliance costs to remain "fossil free" by whatever definition is set forth. These costs were not incorporated into the report's estimates, meaning the billions in losses laid out above are just the tip of the iceberg.

What's more, even if you are willing to put the city's pension funds at risk, divestment has no impact on the environment. William Coaker, chief investment officer of the San Francisco Employees Retirements System, recently stated, "Divestment alone does not harm or punish companies that produce fossil fuels, and the only parties that could be negatively impacted by divestment are those that are not invested in them." Energy companies are also investing billions in energy-efficiency and emissions-reduction technologies, efforts that should be supported by environmental proponents, not divested from.

Divestment proponents want state and city leaders to put their money where their mouth is and give up fossil-fuel investments, but to do so ignores reality. Divestment is a high-cost, ineffective means of supporting the environment. It's time divestment activists and government leaders focus on solutions and not another empty promise with a hefty price tag. After all, it's you who will foot the bill.

Jeff Eshelman is the senior vice president of operations and public affairs at the Independent Petroleum Association of America.

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