Eco-innovation is any innovation that reduces the use of natural resources and decreases the release of harmful substances across the whole lifecycle. As all innovations, eco-innovation means bringing a new product (good or service) to the market or implementing a new solution in the production or organisational processes of a company. What distinguishes it from other innovations, however, is that eco-innovation results in both economic and environmental benefits. Environmental benefits include reducing the use of natural resources and decreasing the release of harmful substances per unit output across the whole life cycle.

Water is a critical resource for all societies and a combination of climate change, population growth, increased urbanization and dietary shift poses a challenge for countries around the world to manage precious and limited fresh water resources. This challenge calls for eco-innovative solutions including development of technology and new organisational and management solutions in addition to legislative responses.

Finland and Denmark, followed by Germany, Austria and Sweden are the top EU Member States in terms of eco-innovation performance according to the Eco-Innovation Scoreboard 2010 (Eco-IS). The first results distinguish three groups of eco-innovation performers in the EU: eco-innovation leaders (green), eco-innovation followers (yellow) and catching up countries (blue).

Can resource-efficiency provide the framework needed for developing a sustainable construction sector, now and over the long term? What is the role of eco-innovation in resource-efficient construction?

What are the trends of eco-innovation in European countries and sectors? What are the benefits from eco-innovations and who benefits from the newly implemented solutions? The Community Innovation Survey (CIS 2008) asked European companies about environmental benefits from innovation.

How do European companies respond to rising material prices? The latest Eurobarometer survey asked European companies about their eco-innovation performance.

Phosphorus is an essential nutrient for all living matters. Nevertheless, current use patterns put a long-term supply at risk. Moreover, European phosphorus supply is highly import dependent, contributing to the vulnerability of food security. Innovation along the life cycle can help to reduce phosphor losses. Monitoring tools empower policies to act target-oriented.

Can eco-innovation trigger the transformation towards resource efficiency in a way that is good for business and good for the environment?

The 2011 update of the Eco-Innovation Scoreboard (Eco-IS) shows that Finland, Sweden and Denmark are the European leaders in eco-innovation performance. Those 3 countries have the highest performance of all EU-27 Member States as measured with a total of 16 eco-innovation-related indicators, which are combined in the overall scoreboard index. Apart from this group of eco-innovation leaders, the scoreboard reveals three other groups of countries. Good eco-innovation achievers, comprising other Western European countries, which build the bridge between the top-performers and the average eco-innovation performers. The latter group of countries has an eco-innovation index close to the EU average value. The final group are countries catching up in eco-innovation, with 12 mainly New Member States the largest group of countries in the Eco-Innovation Scoreboard 2011.

What is the scope of savings companies can achieve from implementing material efficiency measures? An empirical analysis of roughly 100 case studies with data stemming from the German Material Efficiency Agency (demea) gives an overview.

International collaboration and engaging in international markets are business opportunities for European eco-innovative SMEs. They also offer chances to contribute in economic and technological leapfrogging for developing countries and give an environmental value to the development process. What has been the role of European SMEs in promoting a green economy not just "in house" but also on a global scale? What are the challenges and opportunities for European eco-innovators on emerging markets in Asia, Africa and Latin America?

Why should business eco-innovate? This brief presents two of the opportunities associated with eco-innovation. It is based on the EIO 2011 Annual Report and focuses on the economic perspective. Overall, eco-innovation can provide the framework for a future-orientated, sustainable and competitive business strategy.

The Eco-Innovation Scoreboard (Eco-IS) is the first tool to assess and illustrate eco-innovation performance across the 27 EU Member States. It aims at capturing the different aspects of eco-innovation by applying indicators grouped into five thematic areas. The Eco-IS thereby shows how well individual Member States perform in different dimensions of eco-innovation compared to the EU average and points to strengths and weaknesses. The Eco-IS complements other measurement approaches of innovativeness of the EU and EU countries and aims to promote a holistic view on economic, environmental and social performance.

Eco-innovation has become one of the most expanding sectors in the last years, as well as a policy priority for the EU. This brief makes use of Social Network Analysis (SNA) techniques to understand the formation of social networks that the EU Framework Programmes for RTD (FP6 and FP7) have contributed to form between the different EU and extra-European institutions involved in eco-innovation projects.

This year the Eco-Innovation Observatory has looked at how eco-innovation can lead to and create pervasive change. It argues that if eco-innovation is based on partnerships of different stakeholders working together, it can play a crucial role in the transition to a green and competitive economy. This brief asks the following questions:

• Vision: What kind of future do we want?
• Status quo: What is the state of resource use and eco-innovation in the EU?
• The transition: What is the role of eco-innovation?
• Recommendations: What can policy makers and businesses change?

Given that current trends of development in Europe, but also in other world regions, are increasingly unsustainable, there is an urgent need for action. What is required is a systemic change, a shift of paradigm, away from a society based on ever increasing consumption of nature and strive for infinite growth in quantitative terms towards a development path, which is oriented towards the overarching goal of high quality of life for all people and which needs to be realised within the environmental carrying capacity of the planet. Eco-innovation is one important way to achieve the required systemic change. The thematic report "A systemic perspective on eco-innovation" illustrates that a number of eco-innovation examples do already exist in various thematic fields. The report also lists key elements, which decision makers in the policy arena as well as in companies need to take into account, if they want to actively contribute to a systemic change.

The work on setting up of the Eco-Innovation Observatory (EIO) started in 2009. After three years, the EIO has delivered numerous reports, data analyses and a website with interactive database and good practice examples from across European Union.