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. This includes a range of related ideas, from environmentally friendly technological advances to socially acceptable innovative paths towards sustainability. 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.
The idea of eco-innovation is fairly recent. 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". Klaus Rennings introduces the term eco-innovation addressing explicitly three kinds of changes towards sustainable development: technological, social and institutional innovation.
Eco-innovation is closely linked to a variety of related concepts. It is often used interchangeably with "environmental innovation", and is also often linked with environmental technology, eco-efficiency, eco-design, environmental design, sustainable design, or sustainable innovation. While the term "environmental innovation" is used in similar contexts to "eco-innovation", the other terms are mostly used when referring to product or process design, and therefore focus more on the technological aspects of eco-innovation rather than the societal or political aspects. Ecovation is the process by which responsible capitalism aligns with ecological innovation to construct products which have a generative nature and are recyclable back into the environment for usage in other industries.
The most common usage of the term "eco-innovation" is to refer to innovative products and processes that reduce environmental impacts. This is often used in conjunction with eco-efficiency and eco-design. Leaders in many industries have been developing innovative technologies in order to work towards sustainability. However, these are not always practical, or enforced by policy and legislation.
Another position held (for example, by the organisation Eco Innovation) is that this definition should be complemented: eco-innovations should also bring greater social and cultural acceptance. In this view, this "social pillar" added to James's definition is necessary because it determines learning and the effectiveness of eco-innovations. This approach gives eco-innovations a social component, a status that is more than a new type of commodity, or a new sector, even though environmental technology and eco-innovation are associated with the emergence of new economic activities or even branches (e.g., waste treatment, recycling, etc.). This approach considers eco-innovation in terms of usage rather than merely in terms of product. The social pillar associated with eco-innovation introduces a governance component that makes eco-innovation a more integrated tool for sustainable development.
Literature in the field of eco-innovations often focuses on policy, regulations, technology, market and firm specific factors rather than diffusion. However, understanding of diffusion of eco-innovations recently has gained more importance given the fact that some eco-innovations are already at a mature stage. Survey research shows that most customers hold positive attitudes towards various types of eco-innovations. At the same time, adoption rates of solutions such as dynamic electricity tariffs remain unsatisfactorily low. The "Not In My Back Yard" (NIMBY) concept is often used to describe what at first seems to be a confusing intention-behavior gap between high levels of public support for eco-innovations and frequent non-engagement or even local hostility towards specific project proposals. Social psychology and economic behavior models could and should be used to overcome these challenges.