Corporate social innovation and corporate social responsibility can both be categorized as forms of corporate social action, but the former emphasizes proactive and innovative solutions to social problems, whereas the latter is largely a routine and passive response. Existing research suggests that ESG funds are beneficial for corporate social responsibility, but their effects on corporate social innovation and the underlying mechanisms remain unclear. Drawing on an agentic perspective of institutional logics, this paper employs data from China’s A-share listed companies from 2008 to 2022 to investigate the impact of ESG fund ownership on corporate social innovation. The findings reveal that: (1) ESG fund ownership significantly suppresses corporate social innovation, as firms under the dominance of market logic tend to adopt routine social actions to address the social welfare logic pressures from ESG funds, thereby crowding out innovative actions. (2) Financial logic within organizational fields plays differentiated moderating roles—executives with financial backgrounds are generally unfavorable to social innovation, yet they mitigate the negative effect of ESG funds, whereas investor sentiment from retail shareholders has no direct impact but amplifies the suppressive effect of ESG funds. (3) The suppressive effect of ESG funds is weaker in regions dominated by market logic but stronger in regions dominated by government logic. This paper contributes to the literature on corporate social innovation, hybrid financial practices, and institutional complexity, while offering practical implications for enhancing the effectiveness of ESG funds, advancing “business for good”, and promoting the achievement of the Sustainable Development Goals (SDGs).