This paper examines the factors that affect firms' decisions in investing into Eco-Innovations in the UK manufacturing sector based on a novel dataset from DEFRA Government Survey of Environmental Expenditure (2006). Most of the research on environmental economics emphasise the key role that environmental regulations play in stimulating Eco-Innovations. Insights from the innovation literature underline the role of supply-side factors such as firms' capabilities and demand-side mechanisms, namely societal requirements of Corporate Social Responsibility, for the generation of Eco-Innovations. The paper provides empirical insights on these issues by applying a Heckman selection model to identify which factors are important in (1) the decision to undertake Environmental R&D and (2) the level of Environmental R&D investments. Our findings indicate that demand factors affect the decision of the firms to undertake Environmental R&D while they do not exhibit any impact u pon the level of investments on Environmental R&D. Our results confirm previous finding on the importance of the supply factors and of the stringency of environmental regulations for Eco-Innovations, but they contest the role played by the demand factors. Firms invest on Eco-Innovations in order to satisfy the minimum customer and societal requirements, while increasing investments on Eco-Innovations are stimulated by cost savings, firms' capabilities, and stricter regulations.