State of the Environment (SOE) reporting is an emerging municipal management tool designed to monitor and increase awareness of the current status, changes and trends in the condition of the local environment. A multifaceted investigation was undertaken to examine municipal SOE reporting in Canada and to identify barriers to its widespread implementation. Highlights of the case study and survey components are summarized and a conceptual model for municipal SOE reporting is proposed. Overall, the study revealed considerable interest in environmental reporting, however, the lack of common municipal indicators, organizing frameworks and environmental data accessible at the local level impedes its widespread implementation. Future needs to enhance SOE reporting include: development of common municipal indicators, including environmental sustainability indicators; enhancement of the compatibility of SOE reporting frameworks across municipal, provincial and national levels; and re-examination of the data collected by diverse levels of government to optimize their utilization at the local level.