“The fear is that politics does get in the way of investment management where these folks are trying to help retirement savers,” said Hershman, who cited inquiries from members of his U.N.-backed investor coalition about how new laws might affect them. “Politics just getting in the way of that seems unfair to folks who don’t necessarily want their money involved in political fights.”

Companies and asset managers have increasingly called the risks from climate change a threat to business. The physical risks from higher sea levels, deeper droughts and more frequent flooding have hit commodity prices and real estate. Policies designed to help curb greenhouse gas emissions have locked energy firms out of nearly $40 trillion in assets, according to the Global Fossil Fuel Divestment Commitments Database.

Conservative opponents deride the emphasis on climate risk factors as social engineering designed to score points with coastal liberals and Democrats. They have called the concern overblown and immaterial to investment performance, arguing that devoting attention to climate risk violates investment managers’ duty to seek the best returns for clients.

“It’s for the pop culture,” said Sen. Kevin Cramer (R-N.D.), who has warned of federal regulators and financial institutions discriminating against fossil fuel companies. “From a fiduciary standpoint, it has nothing to do with markets or market viability.”

Texas Gov. Greg Abbott kicked off the state-level pushback last year when he signed a law requiring pension funds and other entities to divest from companies that pull away from the fossil fuel industry. The state’s lieutenant governor, Dan Patrick, upped the ante last month when he asked that BlackRock Inc. be added to the list of companies to be shunned after the Wall Street giant pledged to eliminate net greenhouse gases from its portfolio by 2050.

Meanwhile, a bill moving through West Virginia’s legislature would let the state treasurer stop doing business with financial firms that boycott petroleum, and Oklahoma lawmakers last week took up a measure to have agencies dump investments in companies that eschew fossil fuels.

“The point is to chill this stuff,” said Ivan Frishberg, chief sustainability officer with Amalgamated Bank, an employee-owned lender that doesn’t do business with fossil fuel companies.

Anti-climate bills in Louisiana, West Virginia and Oklahoma include similar language to a draft model policy filed last year at ALEC, a Republican-aligned group that’s funded in part by fossil fuel member organizations. Discussions on the draft are “likely to continue this year,” said Joe Trotter, ALEC’s task force director for energy, environment and agriculture.

The Heartland Institute, which rejects climate science and has received funding from the fossil fuel industry and GOP mega-donors Robert and Rebekah Mercer, is also behind bills that would bar states from considering environmental, social and governance factors when making decisions about public pensions and other investment accounts.

Bette Grande, state government relations manager at Heartland, recently testified before a panel of New Hampshire lawmakers on a bill that would bar banks from using social credit scores. Grande has also testified on legislation addressing ESG factors in Kansas, Wyoming and West Virginia, and is tracking bills in several other states, according to David Hoyt, Heartland’s executive director of development.

“The often-cited negative impacts from CO2 are not supported by facts,” Grande told POLITICO in an email that provided several links to Heartland misinformation about mainstream climate science.

States that have threatened to flout funds over net-zero commitments — West Virginia last month pulled a fund out of BlackRock Inc. for that reason — represent a relative drop in the bucket for big investment firms. In fact, areas that voted for President Joe Biden account for 63 percent of the $7.6 trillion of cash and securities held by state and local governments, according to an analysis by consulting firm ClearView Energy Partners. The 15 state treasurers that wrote a November 2021 letter opposing restrictions on fossil fuel financing represent 19 percent of that total.

But the pushback could leave financial firms facing a complicated patchwork of requirements, experts said. At the federal level, the Securities and Exchange Commission is devising guidance for firms to disclose climate risks for investors. The Federal Reserve is developing a framework for financial institutions to assess how portfolios perform under certain climate scenarios. Those efforts have helped spur the state-level bills, and there is little indication that the antagonism will abate.

West Virginia Treasurer Riley Moore, a Republican, has communicated with other lawmakers and officials in other states about legislation to bar companies that boycott energy firms from receiving state contracts, his spokesperson Jared Hunt said. But he said the state’s bill was crafted without any outside guidance. West Virginia’s version of that bill passed 31-2 in the Senate and now awaits House action.

Groups favoring divestment are getting involved on the state level as well. Maine, for example, is being required to get its state pension fund out of all fossil fuels investments by 2026. Lawmakers in New York, Virginia and Vermont also have weighed divestment legislation, ClearView said. There’s movement toward divestment in Oregon as well.

A clutch of Democratic state treasurers and auditors are working on a letter showing how climate risk affects returns for retirees and other investments, said Dave Wallack, executive director with nonprofit group For The Long Term, which works with treasurers, comptrollers and auditors. He said many of those treasurers see protecting pensioners’ investments from climate-related risks as core to their jobs.

“We’re not seeing this as ‘we’re going to put out a letter and virtue signal’ and that’s the end of it,” Wallack said. “My folks really see this as not an issue of do-gooderism but as fiduciaries with a 100-year view.”

Such responses reflect the “tribal nature” of positions on investing and climate change, said Isaac Boltansky, director of policy research and managing director at brokerage BTIG.

“It’s not going to be red states and blue states — it’s going to be red banks and blue banks, or red asset managers and blue asset managers,” he said.