Collective contribution of Small and Medium Enterprises (SMEs) to economic growth is evident in many countries worldwide. On the other hand, however, it contributes also to environmental burdens the world already suffered today. This paper suggests that sustainable SMEs growth is attainable through Open Innovation (OI) concept. A model is developed with the aim to evaluate the role of OI in reducing SMEs environmental impact. The model development is conducted in two stages; first is identification of relevant variables. This is done by reviewing relevant OI models and select variables based on statistical characteristics; second is building logical relationships between the variables based on interviews and literature reviews. The development is iterative so each iteration can bring new information and update the model. Final model is presented in a causal loop diagram (CLD) and discussed.