For corporations, compliance feels a bit like Dad busting up the keg party just when things are getting good.

At best, it amounts to someone (usually government) telling you what to do and leaving you holding the bill. At worst, it can blindside you, and leave you limping in your race against foreign competitors.

Or is it all that bad?

There's a curious phenomenon emerging in the world of green business. Government mandates often trigger business innovation, leading to even greater prosperity.

Lisa Jackson at the EPA provides some great examples from her experience with the Clean Air Act:

• In the 1970s lobbyists predicted "entire industries might collapse" if the act was used to phase in catalytic converters. Instead, the mandate gave birth to a global market for catalytic converters, with American manufacturers at the pinnacle of that market.
• In the 1980s opponents of an amended Clean Air Act claimed the amendments would cause "a quiet death for businesses across the country." Instead, the economy grew by 64 percent and acid rain declined by 50 percent.
• In the 1990s, many claimed that using the act to phase out CFCs would cause "severe economic and social disruption." In reality, the phase-out happened smoothly, five years ahead of schedule, and cost 30 percent less than predicted.

Today, government isn't the only regulator pushing green compliance. Businesses on the journey to sustainability are now regularly requesting their entire supply chain join them on the trip.

They're doing it to accelerate their own positive impact. But it also lessens the possibility of being tarred with the environmental indiscretions of an errant supplier. Case in point: Nestle learned the hard way that the sins of their palm oil suppliers could come back to haunt them.

Compliance: Another Word for 'Unmet Need'

If you're facing impending environmental compliance regulation, try looking at it as an unmet need. After all, there are generally dissatisfied consumers somewhere in the equation. In the case of the Clean Air Act, they were the folks getting sick from pollution. And corporations regulating their supply chain are driven by consumers demanding a product that's better for themselves, and for their planet.

If you successfully isolate this unmet need, you'll understand your target better. Which is the first step to successful innovation.

Next Page: Companies that have gotten it right.