In this paper, we explore the crucial role of technological innovation in achieving sustainable development. Technology has the potential to promote sustainability by incorporating green practices into production methods. However, it's important to design technology that balances economic, environmental, and social considerations, benefiting all stakeholders while minimizing negative impacts on the planet and society. We provide a systematic overview of the challenges of development over time and according to the scope of societal interest. We identify the direction of progress towards a more holistic and sustainable approach to innovation, aligned with the requirements of Smart Industry 4.0 and 5.0. The paper also delves into the significance of advanced tools like Cleaner Production (CP), Environmental Accounting (EA), Pollution Prevention (PP), Recycling (R), Life Cycle Analysis (LCA), Eco-labelling (EL), and the Environmental Technologies Action Plan (ETAP) in promoting sustainable development in the transition towards Smart Industry. Moreover, we address the timing of innovation strategies through a backward decision-making system and the selection of innovation tools to meet the goals of Industry 4.0 and the Smart and Sustainable Industry Generation 5. We recognize that the economic viability of each technology is essential for sustainability and must be considered over a period of 20+ years.