AI‐Driven Sustainability in Smart Manufacturing: Environmental Intelligence as a Capability for the Industry 6.0 Transition

ABSTRACT Manufacturing firms face growing pressure to decarbonize under the European Green Deal and the Corporate Sustainability Reporting Directive. This study examines how AI‐enabled capabilities support that transition and introduces environmental intelligence as an operational meta‐capability through which firms sense, interpret, optimize, and learn from environmental and process data. Using survey data from 240 European manufacturing firms, including companies in hard‐to‐abate sectors, we examine how cognitive capabilities and digital maturity are associated with the development of environmental intelligence and how this capability relates to sustainable performance. The results show that digital maturity strengthens the link between cognitive capabilities and environmental intelligence. Environmental intelligence is also associated with better environmental outcomes. These findings clarify the role of data‐driven environmental learning in smart manufacturing and offer practical guidance for aligning digital transformation with sustainability objectives.