New York CNN Business  — 

The Securities and Exchange Commission proposed a climate disclosure rule Monday, a move that would boost the Biden administration’s goal to combat climate change.

The rule would force companies to disclose their greenhouse emissions and other climate-related information to aid investment decisions — a first for the US and the SEC. The markets regulator would be taking a decisive initial step toward forcing private sector businesses to reckon with their carbon footprints.

Current disclosure methods are “fragmented” and “inconsistent,” the SEC said in a fact sheet Monday. The agency said around one third of companies already disclose some sort of climate information in their annual reports.

Notably, the rule will also require companies to report “Scope 3” emissions, which are indirect emissions created up and down a company’s supply chain, such as greenhouse gases from cars burning gasoline.

Climate-related risks that have both a “material impact” on financial statements and an effect on the company’s outlook will have to be disclosed. Companies will have to provide these disclosures in statements such as annual reports and other regulatory filings visible to investors.

Impact from climate-related events like severe weather would also have to be disclosed. Additionally, companies that have made their climate goals public will be required to share details and relevant data.

Investors are pushing for companies to disclose information and acknowledge the risks of climate change, and advocacy groups have long called for Scope 3 emissions to be tracked. But many industries have pushed back against reporting, and legal challenges are expected.

Business and conservative groups have raised concerns about the financial regulator passing such sweeping rules to combat climate change.

“The proposal … tells corporate managers how regulators doing the bidding of an array of non investor stakeholders expect them to run their companies,” Hester Peirce, a Republican SEC commissioner, said in a meeting Monday.

But Todd Phillips, director of financial regulation and corporate governance at the Center for American Progress, said the rule is “far from” a government mandate for reducing greenhouse emissions.

“Investors are going to have to make their own individual determinations about how to use the information and where to put their money,” Phillips said. “Some investors may make investing decisions based on this information, some may not.”

The US Chamber of Commerce expressed concern about the rule’s “prescriptive approach” in a statement Monday.

Kathleen Sgamma, president of the Western Energy Alliance, a natural gas and oil trade association, called the step to include Scope 3 disclosures “extreme” in a statement to CNN Business.

“By elevating climate change above basic market factors, SEC is on a path to starve oil and natural gas of capital and deliver lower returns to investors,” Sgamma said.

The US is lagging other countries in requiring this type of reporting. The United Kingdom, European Union and Japan are all set to begin enforcing some sort of climate disclosure rules on businesses.

The public has 60 days to comment on the proposal on the SEC website.