In recent years, advancing industrialization and rapid climate change have considerably influenced the global consumption pattern of natural assets. Undoubtedly, this massive utilization of natural resources and hazardous environmental emissions have profoundly curbed the worldwide socio-economic context, substantially causing this ecological burden to amplify the harmful effects on countries’ prosperity. This study aims to improve the sustainable performance of manufacturing firms in Pakistan through innovation capabilities and green process innovation. The study has adopted a quantitative approach, and data has been accumulated through a structured questionnaire distributed among 299 employees working in manufacturing firms. A structural equation model using Smart PLS software was used to analyze the collected data from the respondents. The results have identified a significant correlation between innovation capabilities, green process innovation, and sustainable performance. The buffering role of digital leadership enhances the employees’ creative skills and sustainable performance. Additionally, the extent that green product innovation plays a mediating role between innovation capabilities, green process innovation, and sustainable performance has been contemplated. Henceforth, the current study also analyzes the moderating role of digital leadership in sustainable performance.