Do climate policies deter global capital, or can they attract it? We address this important economic question by examining the change in foreign institutional ownership ensuing the implementation of carbon pricing policies around the world. Exploiting the staggered adoption of emissions trading systems (ETS) and carbon taxes across countries, we implement a difference-in-differences framework to identify the impact of carbon pricing on foreign institutional ownership. We find that the introduction of carbon pricing leads to a statistically and economically significant increase in foreign institutional holdings. Investors with explicit environmental mandates respond more strongly, as do investors headquartered in countries with prior carbon pricing experience, highlighting the roles of policy alignment and regulatory familiarity in shaping international portfolio choices. At the portfolio firm level, regulated firms experience improvements in accounting profitability following policy adoption, suggesting adaptive efficiency gains rather than competitiveness losses. Carbon pricing also attracts more foreign investment to firms with higher ESG transparency and in countries with weaker pre-existing climate policies, consistent with a signalling channel. Overall, our findings show that climate policy can reallocate global capital and that environmental ambition and foreign investment need not be in conflict.