A new series of water soluble Ir(III) catalysts has been designed and synthesized to determine the catalyst ligand's role in activating CO2 through electronic and second-coordination-sphere effects for the homogeneous catalytic hydrogenation of CO2. We report high catalytic hydrogenation activity of [Cp*Ir(6,6′-R2-bpy)(OH2)]SO4 (bpy = 2,2′-bipyridine, R = OH) at ambient temperatures and pressures. Good correlation between the ligand substituents' Hammett parameters, which we varied by synthesizing ligands and catalysts substituted with R = H, Me, OMe and OH, and catalytic hydrogenation rates clearly illustrates the importance of electronic effects. Remarkably, additional rate enhancements are consistently observed when substituents are moved from 4,4′ positions to 6,6′ positions on 2,2′-bipyridine. Combined DFT calculations and NMR experiments suggest that the origin of these effects lies in the pendent base-aided heterolysis of H2, which significantly lowers the transition state energy. These studies are significant in elucidating new design principles for CO2 hydrogenation that lead to superior catalytic activity.