Digital transformation has become a top priority for organizations. As more and more organizations undergo digital transformation, sustainability alignment is gaining attention as it is considered the next big challenge. However, little is currently known about the nexus between digital transformation and environmental sustain-ability. This study is designed to fill this gap by employing mixed methods to develop a framework for envi-ronmentally sustainable digital transformation and explore dynamic capabilities for organizations. To begin with, we review extant literature and adopt the grounded theory approach to define and develop a framework for environmentally sustainable digital transformation (SDT). The framework identifies sustainable digital trans-formation as a reconfiguration process of an organization's core strategy to align novel digital technologies with sustainability goals. Using a qualitative meta-synthesis procedure (195 full-length articles screened) and a survey questionnaire (n = 63), we identify dynamic capabilities for SDT. Finally, we employ the modified Delphi method to build a consensus of experts (n = 52) on the identified capabilities. This study initially identified 28 capabilities based on the mixed method. However, consensus (>70% agreement) was achieved for 19 capabil-ities, classified into sustainable seizing, sensing, and transforming capabilities for organizations. The dynamic capabilities outlined in this paper provide insights for organizations seeking sustainable digital transformation. This study contributes to the literature by defining the novel concept of SDT through a conceptual framework and has many practical and theoretical implications.