Eco-innovation is the development of products and processes that contribute to sustainable development, applying the commercial application of knowledge to elicit direct or indirect ecological improvements. It is a new business approach which promotes sustainability throughout the entire life cycle of a product, while also boosting a company’s performance and competitiveness. This includes a range of related ideas, from environmentally friendly technological advances to socially acceptable innovative paths towards sustainability. Eco-innovation includes new production processes, new products or services, and new management and business methods, the use or implementation of which is likely to prevent or substantially reduce the risks to the environment, pollution, and any other negative impact of the use of resources throughout the lifecycle of related activities.
“The success of eco-innovation depends on the awareness that will be created among businesses through the dissemination of strong business cases, the adjustment of the policy framework that should stimulate and reward the market for eco-innovative solutions.”
It can help small- and medium-sized enterprises (SMEs) access new and expanding markets, increase productivity, attract new investment into the business, increase profitability across the value chain, and help SMEs stay ahead of regulations and standards – notably those related to the environment. It means all forms of innovation activities resulting in or aimed at significantly improving environmental protection.
The field of research that seeks to explain how, why, and at what rate new “ecological” ideas and technology spread is called eco-innovation diffusion. Implementing eco-innovation is a challenging process and will not be suitable for all organizations. Therefore understating barriers and drivers at the national and business level, as well as the main gaps in policy and education.
The idea of eco-innovation is fairly recent. Most commonly it refers to new technologies that improve economic and environmental performance but also some definitions include organizational and social changes for improving competitiveness and sustainability and its social, economic, and environmental pillars.
One of the first appearances of the concept of eco-innovation in the literature is in the book by Claude Fussler and Peter James. In a subsequent article, Peter James defines eco-innovation as “new products and processes which provide customer and business value but significantly decrease environmental impacts”. Despite the promise of eco-innovations, the term is also used in diverse contexts with different underlying connotations that may eventually diminish its practical value. The success of eco-innovation depends on the awareness that will be created among businesses through the dissemination of strong business cases, the adjustment of the policy framework that should stimulate and reward the market for eco-innovative solutions.
Klaus Rennings introduces the term eco-innovation addressing explicitly three kinds of changes towards sustainable development: technological, social, and institutional innovation. Furthermore, the urgency for change has led to the increasing application of the term ‘innovation’ in environmental management and policy.