This paper is among the first to explore the ways in which sustainable entrepreneurship may play a role in neutralizing the adverse of effects of cooptation strategies undertaken by large-scale incumbents. My central interest is in asking: When and how can entrepreneurs identify and exploit opportunities that positively change the calculus of a complex policy landscape dominated by non-sustainable firms, practices and attitudes? The context for this inquiry is the household material recycling industry. I first examine how large-scale packaging manufacturers have used cooptation strategies to embrace the recycling movement in order to shift the costs of recycling subsidies from private manufacturing firms to society. In the second stage of the study, I examine how sustainability-minded entrepreneurs have launched new start-ups that develop and exploit attractive niches for Cleantech–based packaging alternatives that focus on upfront packaging innovations rather than back-end recycling aims.