Abstract Enterprises need to innovate business strategies to deal with the negative effects of low‐carbon development, among which digital transformation is an important breakthrough technology. This paper discusses the impact of low‐carbon development on enterprises' digital transformation. Theoretical analysis shows that environmental regulations driven by low‐carbon development have the compensatory effect of stimulating enterprise digital transformation to mitigate misallocation of capital and labor, especially for enterprises with higher productivity. In addition, both the construction of network infrastructure and the development of digital finance can strengthen the incentives for enterprises' digital transformation. The empirical tests based on Chinese A‐share listed enterprises show that the degree of enterprises' digital transformation increases by 0.0122 standard deviation for every one standard deviation reduction in regional carbon emission intensity. These results deepen the understanding of the relationship between green development and microenterprise digitalization.
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