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This thesis aims at investigating the effect of knowledge management (KM) capabilities on the relationship between environmental practices and the firm performance in the hospitality industry. The objective is to provide evidence whether firms which possess superior knowledge management capabilities have the ability to better manage their environmental practices (EP) and to create superior firm performance (FP). Design/methodology/approach In order to have a thorough and concrete insight within the organisation, the environmental management practices have been divided into the three-organisation hierarchical level which are strategic, tactical and operational. KM capabilities are divided into seven sub-dimensions, grouped into 2 categories which are infrastructure and processes. A sample of 201 companies was used from the Mauritius tourism sector and data was collected using the Likert survey questionnaire. Quantitative analysis was conducted with SPSS and regressions were carried out to evaluate the moderating effect of knowledge management on environmental practices and firm performance. Findings The study establishes that there is quite strong evidences to support the moderating effect of some KM capabilities, nevertheless these effects are different for each of the 3 hierarchical level of the firm. It confirms that firms with greater KM capabilities are able to demonstrate better effectiveness on their environmental practices which in turn creates a more positive impact on the firm performance at operation level. Practical implications There are 3 folds of implications. On one side, it can be confirmed that the hospitality and tourism sectors will benefit by implementing KM processes at operation level to improve their performance. On the other side, this study highlights that the increasing too much KM acquisition process would have a negative effect at strategic level of the organisation. Finally, this research has not found any evidence of KM interaction with EP at tactical level. This can be explained by the fact that most organisations in this sector are more active at operational level being in the hospitality sector, where they must be closer to the customer expectations, but further research at tactical level in other service industry might reveal more intelligence. Originality and value This study contributes to the sustainability of environmental and the overall firm performance operating in the tertiary sector of the economy with the tourism industry as an example and in extension to the future of the quaternary sector, where greening of the economies is becoming a major challenge. It highlights the role for each KM capability on the EP-FP links at operation, tactical and strategic level whereas previous environmental studies have focused mainly on the primary and secondary sectors of the economy but not in-depth at each level of the organisation. The final chapter highlights the contribution to both the academia and the industry.