The article aims to analyze the concept of eco-innovations emphasizing the motivations for implementing them, and effects of the eco-innovation process. The author presents the principal definitions of eco-innovations. Various motivations triggering eco-innovations are presented with a focus on regulatory and market factors. Entrepreneurs should be encouraged to adopt eco-innovations because they contribute to sustainable development which is the only way for a world that is challenged by global population growth, climate change, declining non-renewable resource stock, water shortages, and environmental degradation. The effects of eco-innovations can be both positive and negative. The main aim of eco-innovations is to decrease the environmental burdens of entrepreneurial activity. However, a new attitude towards eco-innovations emphasizes the role of economic returns and supplies security. The types of effects of environmentally friendly innovations discussed in the paper include environmental, technological, economic, social, cultural and managerial.