Converting CO2 into useful chemicals using metal catalysts is a significant challenge in chemistry. Among the various catalysts reported, transition metal lanthanide hybrid {3d‐4f} complexes stand out for their superior efficiency and site selectivity. However, unlike transition metal catalysts, understanding the origin of this efficiency in lanthanides poses a challenge due to their orbital degeneracy, rendering the application of DFT methods ineffective. In this study, we employed a combination of density functional theory (DFT) and ab initio CASSCF/RASSI‐SO calculations to explore the mechanism of CO2 conversion to cyclic carbonate using a 3d‐4f heterometallic catalyst for the first time. This work unveils the importance of 3d and 4f metal cooperativity and the role of individual spin‐orbit states in dictating the overall efficiency of the catalyst.