The transition to a low carbon economy demands new business strategies for maintaining competitiveness, benefiting from and contributing towards the ‘clean’ growth. An ongoing study of the regional SMEs operating in the East Midlands reveals the patterns in which SMEs approach capability building towards sustainability. This developmental paper presents a conceptual view of how these patterns can be theorised and empirically tested further. The paper outlines a theoretical avenue aiming to further our understanding about environmental capabilities. The paper concludes with a number of practical recommendations towards developing environmental capabilities of SMEs in the context of a transition towards sustainability.N/
