In this paper we investigate key causal linkages in proactive environmental practices based on an empirical study of 232 Malaysian Small and Medium Enterprises (SMEs). We propose a conceptual framework and test this framework using Structural Equation Modelling (SEM). The key focus of this study is to explore SMEs’ environmental initiatives and the impact of stakeholders’ involvement in determining SMEs’ environmental strategies. The study examines the relationship between stakeholders’ involvement (customers, suppliers, government, top managers and employees) and proactive environmental practices (internal management systems, process-based changes, product-based changes). The results support the notion that SMEs have moved to develop an increasingly proactive environmental orientation. Although our survey strongly suggests that each stakeholder has a different role and impacts differently on SMEs’ sustainability practices, vertical partners play the most critical roles in supporting environmental practices based on product and process-based changes.