This study aims to analyze the effect of the agreement on the introduction of a carbon border adjustment mechanism on firms’environmental management performance despite a Korean climate change policy. This paper organizes data from 2019 to 2022 for non-financial corporations’ December settlement among listed export corporations excluding firms with negative shareholders' equity and makes estimates using the difference-in-differences method after propensity score matching. It further analyzes domestic firmsby dividing them into firms subject to allocation and those subject to non-allocations during the third planning period of the emission trading scheme, finding that the legislative announcement of the carbon border adjustment mechanism improves the environmental management performance of firms and that the environmental performance of firms subject to allocation is further improved compared to those non-ETS firms. This implies that firms regulated by the emission trading scheme must take more action to
mitigate environmental issues after the announcement of EU climate policy legislation.

[Key Words] Emission Trading Scheme, Carbon Border Adjustment Mechanism, Environmental Management, Difference-in-difference