Eco-innovation offers a huge market for enterprises and has become one of the cornerstones of the European Union strategy in response to the global environmental and economic challenges being faced.

It is recognised in many studies and policy documents that developing eco-innovation capabilities and practices has significant commercial potential across all economic sectors. At the same time, reducing uncertainly about future market developments will help boost investment and accelerate innovation in environmental technologies, products and services.

To facilitate this market development, the Eco-Innovation Observatory (EIO) aims to provide a much-needed integrated information source on eco-innovation for companies and innovation service providers, as well as providing a solid decision-making basis for policy development.

The Eco-Innovation Observatory is a 3-year initiative financed by the European Commission's Directorate-General for the Environment from the Competitiveness and Innovation framework Programme (CIP). The Observatory is developing an integrated information source and a series of analyses on eco-innovation trends and markets, targeting business, innovation service providers, policy makers as well as researchers and analysts. The EIO directly informs two major EU initiatives: the Environmental Technologies Action Plan (ETAP) and Europe INNOVA.

The Observatory approaches eco-innovation as a pervasive phenomenon present in all economic sectors and therefore relevant for all types of innovation, defining eco-innovation thus:

"Eco-innovation is the introduction of any new or significantly improved product (good or service), process, organisational change or marketing solution that reduces the use of natural resources (including materials, energy, water and land) and decreases the release of harmful substances across the whole life-cycle."