This study investigates the effects of greenhouse gas (GHG) emissions on firm value in Korea and proposes explanations of these effects. To address selection issues regarding voluntary disclosure, we use the Korean government's adoption of the Target Management System in 2011, which requires only heavy GHG emitters to disclose their GHG emissions. Using difference-in-differences (DID) methodology, we find a significant decline in value among treated firms after the enactment of mandatory disclosure for heavy GHG emitters. This decline can be attributed, at least in part, to an increase in risk as perceived by investors. Furthermore, foreign ownership fell among treated firms following the mandate for heavy GHG emitters to disclose emissions, suggesting that reduced demand for stocks from foreign investors also contributes to the observed lower firm value. In summary, our study shows that investors actively use GHG emissions and penalize heavy GHG emitters for future liabilities associated with carbon emissions. Our findings offer valuable insights into the role of GHG emissions in shaping firm value, perceived risk, and investor behavior within the Korean context.