Small islands worldwide are increasingly turning to conspicuous sustainability as a development strategy. Island spatiality encourages renewable energy and sustainability initiatives that emphasise iconicity and are undertaken in order to gain competitive advantage, strengthen sustainable tourism or ecotourism, claim undue credit, distract from failures of governance or obviate the need for more comprehensive policy action. Without necessarily contributing significantly to climate change mitigation, the pursuit of eco‐island status can raise costs without raising income, distract from more pressing social and environmental problems, lead to competitive sustainability and provide green cover behind which communities can maintain unsustainable practices. We argue that eco‐islands do not successfully encourage wider sustainable development and climate change mitigation. Instead, island communities may place themselves in eco‐island traps. Islands may invest in inefficient or ineffective renewable energy and sustainability initiatives in order to maintain illusory eco‐island status for the benefit of ecotourism, thereby becoming trapped by the eco‐label. Islands may also chase the diminishing returns of ever‐more comprehensive and difficult to achieve sustainability, becoming trapped into serving as eco‐island exemplars. We conclude by arguing that island communities should pursue locally contextualised development, potentially focused on climate change adaptation, rather than focus on an eco‐island status that is oriented toward place branding and ecotourism.