The Securities and Exchange Commission approved a long-anticipated rule to mandate that companies issue reports to investors on the effects of their operations on climate change.

The commission voted 3-2 to adopt the rule, part of President Joe Biden’s broader climate agenda, which envisions cutting greenhouse gas emissions by more than half, when compared to 2005 levels, by the end of the decade.

“These final rules build on past requirements by mandating material climate risk disclosures by public companies and in public offerings,” SEC Chairman Gary Gensler said in a press release. “The rules will provide investors with consistent, comparable, and decision-useful information, and issuers with clear reporting requirements.”

The controversial rule was first proposed last March and creates guidelines for how and what companies must report to investors about how their operations affect the climate. It requires large and mid-sized companies to report greenhouse gas emissions — reports that would be audited by an outside party.

The rule is significantly pared back from a proposed version by omitting a requirement that corporations disclose emissions generated by suppliers and customers. Still, it is expected to face legal challenges from the industry.

Self-reporting of climate information has already become commonplace in business as investors increasingly embrace environmental, social, and governance standards, known as ESG, but the rule would take the trend a step further by imposing reporting requirements.

ESG proponents argue that is a way finance and business can help reform society, such as by mitigating the negative effects of climate change. Those who oppose ESG say it distorts the economy and even America’s culture.

The Wednesday vote is scaled back from the proposed rule by dropping a requirement that corporations report “Scope 3” emissions, a provision hotly contested by industry. The SEC organizes corporate emissions into three categories, known as scopes. Scope 1 includes direct emissions, Scope 2 refers to indirect emissions, such as those involved in the use of electricity, and Scope 3 measures the emissions of other entities, such as suppliers or customers, in a company’s value chain.

Still, even without the Scope 3 requirement, there are some very vocal critics of the rule.

The American Securities Association issued a statement Wednesday condemning the move. President and CEO Chris Iacovella said the move showed the SEC “is anti-investor and pro-Wall Street.”

“This scheme does achieve one objective; it forces an enormous transfer of wealth from working families and savers to the ESG professional class whose elites will reap windfall profits from the rule,” he said.

Will Hild, the executive director of Consumers’ Research, said Wednesday should be “considered the darkest day in the history of the SEC.”

“With this decision, the commission has mocked its statutory authority, extended the reach of its regulations beyond public markets where it belongs, and applied countless new costs onto the American public,” he said. “It’s also an egregious example of swamp politics.”

The new rule inevitably will face challenges in the courts, with opponents arguing that the SEC has gone beyond its mandate.

Senate Banking Committee Chairman Sherrod Brown (D-OH) praised the vote and said that it was clear that the SEC responded to feedback from stakeholders in issuing the rule. Brown characterized the now-approved rule as a “thoughtful approach to climate risk disclosure.”

“Climate risk, like any other financial risk, is a threat to Americans’ jobs and savings, and to our markets and economy,” he said. “It’s commonsense to add material climate risks to the list of what we already require companies to disclose and establish a consistent framework for reporting greenhouse gas emissions.”

Meanwhile, Brown’s counterpart and ranking member of the committee, Sen. Tim Scott (R-SC), trashed the rule, saying it exceeds the SEC’s scope of authority and would hurt consumers.

“Ignoring the concerns of Americans, small business owners, and stakeholders from across the country, Chair Gensler pressed forward with a final rule that falls outside his agency’s authority and does far more to advance the Biden administration’s far-Left climate agenda than uphold the SEC’s mandate to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation,” Scott said.

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Derek Kriefels, CEO of the State Financial Officers Foundation — a group which frequently targets ESG, accused the SEC of “backdooring extremist climate polices.” He said that such changes would never end up becoming law if they went through the democratic process.

“The SEC made itself an enemy of the free market today,” Kriefels said. “Its onerous climate disclosure rule places an enormous burden on American businesses, large and small. They will be forced to take resources that could have gone to keeping prices low or reinvesting in the American economy, and instead waste them on staying in compliance with a rule that has no business existing in the first place.”