ABSTRACT Experimental catalyst design to promote the hydrogenation of CO 2 has led to the synthesis of an efficient tripodal palladium pincer complex. This work presents a computational reading key of the ligand design for efficient transition metal catalysts using palladium pincer complexes as precise representatives. By investigating the electronic structure/reactivity relationship, we demonstrate that all the progressive adjustments of the pincer architecture do not significantly affect the Pd‐L (L = PCy 3 , PPh 3 ) bond and the electron density rearrangement in the first coordination sphere of the complex. We find a strong Pd‐L bond, where the dispersion energy contribution is substantial, that rules out the previously proposed mechanism involving Pd‐L bond breaking. Mechanisms of H 2 activation and CO 2 reduction are revisited, which showcase how the secondary coordination sphere plays a critical role in reactivity, strongly affecting the Pd‐O (carboxylic arm) bond polarization due to hydrogen bond formation with the O atom. The catalytically active complex is demonstrated to perform through a stepwise mechanism involving polar addition of H 2 across the Pd δ+ ‐O δ− bond and subsequent OH deprotonation by an external base (DBU), forming a Pd‐H hydride complex, which easily reacts with CO 2 through an outer‐sphere hydride transfer path.