The transformative journey toward Industry 4.0 (I4.0) has revolutionized business operations, requiring firms to adapt to digitalization and environmentally-conscious practices (often termed “green digital,” “sustainable digital,” “smart green,” or “responsible digital”). This adaptation may be challenging, especially for small and medium-sized enterprises (SMEs) that typically lack larger firms’ adaptive resources and capacities. This chapter delves into the dynamic intersection of sustainability and digital transformation by focusing on the specific case of SMEs to propose a preliminary framework for evaluating SMEs’ Industry 5.0 (I5.0) maturity levels (digital), which has a broader scope by including green and social practices (sustainable) with digitalization. The chapter first provides some background by highlighting the push for organizations to integrate sustainable practices into their digital transformation endeavors seamlessly. In a world grappling with environmental and social challenges, aligning technological advancements with responsibility is increasingly relevant for SMEs. The schwerpunkt of the chapter is an extensive (but non-systematic) literature review of the digital maturity level assessment domain, coupled with insights from extant research in the sustainable digital (5.0) assessment area. The objective of the review is to construct a preliminary framework for evaluating SMEs’ digital preparedness while concurrently measuring their commitment to sustainable practices. This framework incorporates critical parameters such as resource efficiency, circular economy principles, and the incorporation of renewable energy sources in digital control operations. The chapter further sheds light on SMEs’ challenges in achieving a coherent balance between digitalization and sustainability. These challenges span technological, organizational, and regulatory dimensions, emphasizing the multifaceted nature of the transition. Notably, the chapter identifies these challenges and proposes practical strategies and best practices to overcome them.