In Malaysia, batik industry especially in Kelantan and Terengganu is one of the handicraft products that contributed significantly to the country’s economy even the industry has poor environmental record and has attracted attention from stakeholders. Until recently, not many researchers in Malaysia have dwelt in-depth investigation into environmental practices in SMEs. This research used mixed methods-s quantitative and qualitative research approaches. The sampling frame of this study was based on the number of registered Batik Entrepreneurs Association in Kelantan state. The selection of respondents was based on convenient sampling. The first objective of this study is to measure entrepreneurs’ awareness of environmental issues, environmental perceptions, environmental practices, environmental performances, as well as pressure from stakeholders against the industry and challenges. The second objective measures relationship amongst all the variables. The result of the study shows low level of environmental awareness among batik entrepreneurs. However, they had positive attitude on greening batik industry. They perceived green management and batik industry can go hand in hand. In terms of environmental practices, batik industry in Kelantan did not widely embrace them. They were rather reactive and the environmental management was merely on housekeeping. Recycling, usage of natural dyes and proper installation of waste treatment were not widely practiced. The main challenges for them to be environmentally proactive were time, knowledge and lack of experts in this area. So, it does not come as a surprise to see most of them did not perform when it came to environmental management. Failure of stakeholders, including the Department of Environment (DOE) to exert pressure on them to be environmentally responsible was also responsible for the current situation. If environmental management need to be strengthen, all parties responsible should play their own roles. Batik industry cannot be environmentally responsible on their own. Carrot and stick approach can go hand in hand.