The development of information technology such as block chain, big data, cloud computing, and other such technologies provide an imperative future for enterprises to realize innovation and sustainable growth in digital transformation. This book chapter seeks to fill this gap by examining the effects of digitalization on the creation of environmentally sustainable innovations in enterprises. The discussions derived from the research show that digital transformation has greatly facilitated enterprises to advance green innovation. This relationship has been boosted by contributions like, an increased spending on R & D, government grants, and low-income tax burdens among others. Based on the discussions, government initiatives might be increased in increasing the enterprises' engagement in green innovation, such as increasing subsidies, increase the amount of tax credits. Further, this chapter encompasses the digital transformation of enterprises to learn the ways to enhance green innovation through higher R&D investment, government subsidy, and favorable taxation policies.