While industrial digitalization presents great opportunities to enhance the efficiency, flexibility, and reliability of production systems, the environmental implications of these improvements are not systematically considered. As digitalization is a relatively new field of research, there are no unified framework to guide its development towards achieving sustainability goals. To support researchers and practitioners towards such a framework, this study aims to formalize the relationship between industrial digitalization and environmental sustainability by reviewing published literature intersection of these two topics. The work was carried out in four steps: (1) Define and scope the problem around environmental considerations when adopting and exploiting digital technologies in manufacturing; (2) Design the literature analysis process to identify publications at the intersection of environmental sustainability and digitalization; (3) Categorise the literature based on established eco-efficiency principles; (4) Visualise and discuss the results about which principles are covered by current research and to what extent. The global trends in the literature collected and analysed are presented along with a more detailed content analysis for Swedish research. While the results confirm that digitalization has the potential to address eco-efficiency principles, relatively few studies explicitly mention the sustainability implications of the research and proposed technological solutions. The paper proposes an eco-efficient smart production model using eco-efficiency as guiding principles. The main argument put forward in this paper is that digital technologies should more systematically contribute to greener industrial systems through energy and material efficiency, pollution prevention, sustainable use of renewable sources, product quality and durability, value retention through remanufacturing, recycling and servitization.