Microencapsulation is an advanced methodology for the protection, preservation, and/or delivery of active materials in a wide range of industrial sectors, such as pharmaceuticals, cosmetics, fragrances, paints, coatings, detergents, food products, and agrochemicals. Polymeric materials have been extensively used as microcapsule shells to provide appropriate barrier properties to achieve controlled release of the encapsulated active ingredient. However, significant limitations are associated with such capsules, including undesired leaching and the nonbiodegradable nature of the typically used polymers. In addition, the energy cost of manufacturing microcapsules is an important factor to be considered when designing microcapsule systems and the corresponding production processes. Recent factors linked to UN sustainability goals are modifying how such microencapsulation systems should be designed in pursuit of “ideal” microcapsules that are efficient, safe, cost-effective and environmentally friendly. This review provides an overview of advances in microencapsulation, with emphasis on sustainable microcapsule designs. The key evaluation techniques to assess the biodegradability of microcapsules, in compliance with recently evolving European Union requirements, are also described. Moreover, the most common methodologies for the fabrication of microcapsules are presented within the framework of their energy demand. Recent promising microcapsule designs are also highlighted for their suitability toward meeting current design requirements and stringent regulations, tackling the ongoing challenges, limitations, and opportunities.