In this paper, technological and managerial innovation are seen as the dual keys to achieving environmental sustainability. Much research on environmental sustainability has focused upon the role of large organisations. Traditionally, they have been perceived as major contributors to environmental degradation and their task is to find innovative solutions to minimise pollution. However, small and medium sized enterprises (SMEs) represent more than 80% of enterprises operating throughout Europe and this identifies them as significant contributors to environmental problems. This paper, based upon the findings of two research projects funded by the European Commission, focuses on SMEs' potential to innovate environmentally and the role they can play in minimising industry's environmental impact. It identifies the barriers, motivating factors and benefits experienced by SMEs and places emphasis on effective networking as a support for environmental innovation.
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