DFT and microkinetic modelling studies have been carried out to explore the reaction mechanism of newly reported CO₂ hydrogenation reaction to methanol. The catalytic activity of PNP-based Mn(I), Fe(II) and Ru(II) homogeneous complexes for CO₂ hydrogenation to methanol has been explored. The hydrogenation occurs in the presence of a morpholine co-catalyst via a formamide intermediate. DFT calculations performed on the demonstrative reaction pathway allow us to suggest a complete reaction mechanism. The present study reports the multistep transformation of CO₂ to methanol. We propose that following initial CO₂ hydrogenation to HCOOH by metal catalysts, amidation of HCOOH to N-formylmorpholine occurs in the presence of morpholine, which further undergoes hydrogenation reaction for the formation of methanol by metal catalysts. The highly exergonic nature of the amidation step increases the overall rate of the reaction. Remarkably, the N-formylmorpholine hydrogenation step may follow two different pathways (CO vs. C–N bond hydrogenation) and both the pathways involve comparable reaction free energy barriers for hydrogenation, i.e., both the considered reaction mechanisms are competitive in nature. Furthermore, our microkinetic modelling results agree well with previous experimental studies, which confirm that the proposed reaction mechanism is the most plausible reaction mechanism for CO₂ hydrogenation to methanol.