This paper investigates the role of investment funds in financing green companies in emerging markets (EMs) and the factors influencing these allocations. Despite a global surge in “sustainable” investing, companies involved in carbon solutions, particularly in EMs, make up a small portion of reported sustainable investments. Using fund- and asset-level analyses on a detailed portfolio-level dataset of the 37 000 largest investment funds globally, this paper identifies key characteristics driving green investments, such as younger funds, retail investor funds, funds with domestic mandates and sustainable funds which are more inclined to invest in green companies and less in fossil fuels. Inclusion of EM green companies in benchmarks and diversified ownership in listed firms enhance green investments. Greater green allocation in EMs is linked to higher portfolio flow openness and economic freedom and are also influenced by climate-related factors such as exports in renewable manufacturing.