This chapter explores climate neutrality in small and medium enterprises (SMEs), which is imperative for sustainable development and requires the active participation of all economic sectors. SMEs play a critical role in global emissions reduction due to their collective economic influence but face significant challenges in adopting climate-neutral practices. These challenges include limited financial resources, insufficient environmental expertise, and regulatory complexities. Smart eco-innovation emerges as a promising solution, offering cost-effective and scalable technologies that align with SMEs’ resource constraints. Leveraging advancements in artificial intelligence, the Internet of Things (IoT), and data analytics, eco-innovation enhances resource efficiency and reduces emissions through strategies such as energy optimization and waste minimization. Beyond environmental benefits, eco-innovative practices can provide SMEs with competitive advantages, including cost savings, improved brand reputation, and access to sustainability-focused markets. However, barriers such as high upfront costs, technical knowledge gaps, and the perception of limited short-term benefits hinder widespread adoption. Policy interventions, including targeted financial incentives, streamlined regulatory frameworks, and capacity-building initiatives, are critical to facilitating the transition of SMEs to climate-neutral operations. The findings underscore the need for tailored solutions that enable SMEs to contribute effectively to global climate goals, highlighting the interconnected benefits of sustainability, resilience, and economic competitiveness within the SME sector.