SEC proposes far-reaching climate disclosure rules for companies – here’s where the rules may be vulnerable to legal challenges

The SEC's proposed rules include some reporting of so-called Scope 3 emissions, in companies' supply chains and use of their products. AP Photo/Noah Berger

The U.S. Securities and Exchange Commission released its long-awaited proposal to require companies to disclose their climate risks to investors, and it’s arguably the most significant action on climate change yet under the Biden administration.

SEC Commissioner Allison Herren Lee called it a “watershed moment for investors and financial markets.” It is also a win for President Joe Biden, whose other climate efforts have struggled. A year ago, Biden appointed an SEC chairman, Gary Gensler, who supports climate disclosures in principle.