The intricate relationship between physical and social environments within organizations plays a pivotal role in shaping sustainable innovation endeavors. This paper presents a comprehensive analysis of two key dynamics that have garnered substantial scholarly attention for promoting sustainable innovation: the physical environment and the organizational climate. To elucidate the intricate interplay between these dynamics, we propose a novel three-dimensional framework that guides the modeling of the intricate processes through which the physical environment and innovation climate synergistically influence innovation outcomes. Building on this framework, we delve into an in-depth literature review concerning physical environments that exert a significant impact on innovation. Through this review, we identify and elaborate on four pivotal elements of the physical environment: communality, personalization, comfort, and healthiness. Leveraging insights gleaned from this review, we outline two promising avenues for future research in the realm of the physical environment's interaction with the innovation climate. Furthermore, we underscore the critical importance of adopting an interdisciplinary approach that seamlessly integrates insights from both the physical and social domains to comprehensively understand the sustainable innovation landscape.