Sustainable Attributes of China’s Open-End Funds: Navigating to a Green Economy

China is in the midst of a critical transition to a carbon-neutral economy, with various policies and regulations being introduced to facilitate this shift. This study focuses on the open-end funds market in China, a significant component of the country's capital market, to explore how it is adapting during this period of economic transformation. Specifically, we investigate the influence of carbon and Environmental, Social, and Governance (ESG) risks on the flow of open-end funds. Our findings indicate that sustainability factors are considered in the investment decision-making process by investors. Notably, there exists a negative relationship between sustainable risk factors and fund flows. This observation is particularly pronounced for funds that are designated as low carbon, have a high sustainability rating, or are primarily held by retail investors, underscoring the growing importance of sustainability considerations in the investment landscape of China's capital market.