The SEC proposed a landmark climate disclosure rule. Here’s what to know.

The proposed regulation would force hundreds of companies to disclose emissions for the first time, but critics may challenge the SEC’s authority to address climate risk in court

Tesla vehicles are assembled by robots at a factory in Fremont, Calif. Tesla and other publicly held companies would have to disclose their greenhouse gas emissions and financial risks due to climate change under a rule proposed by the SEC on Monday. (Jim Tanner/Reuters)

The Securities and Exchange Commission on Monday approved a landmark proposal to require all publicly traded companies to disclose their greenhouse gas emissions and the risks they face from climate change.

The proposed rule from the Wall Street regulator mandates that hundreds of businesses report their planet-warming emissions in a standardized way for the first time. It reflects the Biden administration’s broader push to confront the dangers that climate change poses to the financial system and the nation’s economic stability.

At an open meeting, the SEC’s three Democratic commissioners voted to approve the proposal, while the sole Republican commissioner voted against it. SEC Chair Gary Gensler, who was nominated by President Biden, said the rule would provide “consistent, comparable information” to investors.

Environmentalists hailed the rule as a crucial first step in forcing the private sector to confront the economic risks of a warming world, even as some said the SEC should have gone further in requiring all businesses to disclose the emissions generated by their supply chain and customers.

Some conservatives and business groups have opposed the federal government mandating any climate disclosures, and observers expect them to challenge the SEC proposal in court.

Here are answers to some common questions about the proposal:

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