The issue of sustainability has attracted considerable attention over the last decade and has been accompanied by the development of stringent packaging material legislation for firms. Drawing on a single case approach, this paper examines the operational challenges faced by manufacturing SMEs as they strive to meet the expectations and requirements of increasingly demanding sustainable packaging regulations. The findings highlight the internal costs and complexities that are faced by manufacturing firms when complying with the regulations. It suggests that some firms may face financial and technical constraints that prevent them from reporting the significant efforts that they are making to improving packaging materials. More significantly it identifies the seemingly insurmountable problems that are faced by SMEs when confronted with powerful upstream or downstream supply chain partners that are resistant to improvement initiatives. This can result in organisations acting in a self-interested manner and consequently, the cumulative environmental impact of the supply chain is greater than it may be if organisations were more environmentally cooperative.