Simple decorations can be festive.

Here are my suggestions for eco-friendly entertaining. You can adapt many of these ideas to any party, not just Christmas or “holiday,” as they call it. But since a lot of people have Christmas on the brain at this season, I’ll start with that holiday.
For Christmas-type decor that is environmentally friendly, I suggest lots of live plants. There are several traditional holiday plants (miniature live pine trees, ivy, poinsettias, Christmas cactus, etc.), and others that could be part of a holiday mix. Try juxtaposing a miniature red rose bush with English ivy for a festive centerpiece. For extra credit on the environmental side, look for live plants that have been grown locally and organically. Local greenhouses are a great place to find them.
Or, if you have plants in your yard that would work for holiday decorating, cut a few branches of fir or some holly branches for a mantlepiece decoration. And then compost or chip them after the party and use the result on your garden next year.
Locally grown, organic flowers are always a sustainable choice. In the winter, that means greenhouse flowers, too.
Of course, you will need some accents on all that greenery, and my favorite accent in the winter is light. In Chicago, there are several organizations that keep bees and sell their products, including beeswax candles. For starters, try the Chicago Honey Co-op. Beeswax is less polluting than petroleum-based wax candles, and coming from a local source makes it doubly eco-friendly. It also smells nice!
If you are celebrating Chanuka, beeswax Chanuka candles are available in specialty shops, although I have yet to find any made locally. (If you know of a local source, please let me know.)
Another idea is LED holiday lights. In my opinion, most of the white lights look too bluish to be very attractive, but the red, green, and blue ones I have seen are quite nice, and the pale yellow ones are a fine substitute for white. LEDs use a tiny fraction of the energy of traditional incandescent lights, and they ought to last a very long time. Both those qualities make them environmentally friendly.
For any kind of party, you can make your food part of your decorations. Edible centerpieces look nice and taste great. You can buy “flower” arrangements made of fruit, or create something yourself. Even something as simple as a basket of unshelled nuts or fresh fruit with a colorful napkin can provide both snacks and visual interest. If you’re playing dreidel, the unshelled nuts of your centerpiece can also be the “chips” in the game.
A completely different approach to decorating is the second-hand idea. It is often possible to find very nice decor items in second-hand shops, especially in shops in expensive neighborhoods or towns. Of course, if this requires many long car trips, that would offset the benefits of not buying new, so plan your shopping trips carefully. If you are lucky or live near a lot of resale or vintage shops, though, you might find vases, last year’s novelty items, theme knick-knacks, and other useful decorating items. This approach may require advance planning and some creative thinking.
Any decor you can make yourself from materials at hand is an eco-friendly option. If you are good with your hands, you might make an interesting decoration for your coffee table out of a second-hand vase, some branches from the back yard, a little Enlish ivy (also from the yard), and LED lights.
Also, for eco-friendly food service, nothing beats real china, linen, silver, and glassware. Yes, it uses a lot of water to clean up after the party, but it is still a better eco choice than disposables. It also looks very festive. There is such a thing as compostable disposable dishes, but I have been told that you have to have a very hot compost pile in order to actually compost these items.
But the most environmentally conscious thing you can do when decorating is remembering that less is more. The more new stuff you acquire just for decorating, the less eco-friendly your decorations will be. So, consider renting large items, instead of buying them, if you are doing elaborate decorations. But if you do find yourself with decorations you don’t plan to use again, minimize their impact by either donating them to a second-hand shop or giving them away on your local Freecycle group.
Have happy and green celebrations!