Environmental collaboration between civil society organisations (CSO) and large business companies have been increasing in Japan since the 1990s. This increase implies a significant social change, which is worth examining for various reasons: Business companies and CSOs are environmentally important actors but follow different rationalities (profit-seeking respectively environmentalism). However, cross-sector collaboration between such different actors may result in synergies and innovation as well (e.g. institutional change or new interaction patterns). Therefore, this leads to the question what kind of innovation arises from environmental collaboration in Japan. Moreover, it investigates how these innovation effects contribute to environmental governance. Precisely, this paper elaborates possible innovation effects by taking advantage of the concept of social innovation and by discussing a typical case study of cross-sector collaboration in Japan. Overall, this study underlines that civil society organisations serve as important drivers for social innovation. By this means, I argue that they are vital for effective governance, because their competences go (partially) beyond political capacities, although state interventions remain crucial for implementing binding environmental standards in society as a whole.