Business ethics can be defined in a myriad of ways, but its generally accepted meaning falls somewhere between two poles: being equally responsible to each of a company’s stakeholders and simply following the letter of the law. While few people would currently advocate for the latter definition, at least publicly, quite a few advocate the former without defining precisely what it means. It is impossible to address each stakeholder equally, so where do the trade-offs occur?

For example, consider coal mining in West Virginia. In the Appalachian Mountains, coal companies employ techniques called mountaintop removal and valley fill. After clear-cutting the peak or ridge of a mountain, the company uses huge amounts of explosives to remove tons of topsoil and rock and access the seams of coal within the mountain. The topsoil and rock is scraped into the adjoining valley by enormous dragline cranes. The coal is extracted, cleaned and shipped to power plants across the country. The resulting waste, called slurry, is stored on-site in retention ponds.

Photographs of this process are quite striking—the environment around these mines is devastated. The clear-cutting and topsoil removal destroys whatever native forest existed on the site. The valley fill and slurry both create havoc in the local watershed, and thus the surrounding water table is often unsuitable for anything, much less human consumption. Ask an environmentalist or a union worker about this process and watch out. And yet, what is the alternative? Underground coal mining is extremely labor-intensive and dangerous, and thus, as mine collapse stories have made tragically clear, costly. Who will pay those costs? This is likely to be the end consumer, raising a number of issues as to how low and middle income families will afford higher energy prices. According to the Energy Information Administration, a government agency, coal generates 48.6 percent of our country’s electricity. What else could provide this amount of electricity? Natural gas is subject to severe price fluctuations and requires importation terminals near which no one wants to live. Not to mention that most of the world’s proven natural gas reserves are located in Russia, Iran, and the Middle East­—not exactly what one would categorize as ideal regions for a reliable energy source. Oil carries the same risks. Solar, hydro, wind, and nuclear power are in no position to provide this much electricity. Based on their current level, it will take decades until they are as efficient as coal.

This example presents a number of ethical dilemmas. Burning coal produces a great deal of harmful emissions, including carbon, the main culprit in global warming. Mountaintop removal has caused the coal industry to shed thousands of mining jobs over the past few decades, effectively breaking the power of the mining unions and the protection they engendered. The destruction of pristine mountain wilderness eliminates the possibility of sustainable tourism revenue for the local inhabitants, in addition to destroying the intrinsic value found in the natural world (although some would argue against this point). And yet, what other sources can the nation turn to for its electricity supply?

This problem that appears clear-cut at the beginning thereby evolves into a very difficult ethical dilemma. Coal companies are providing an affordable and necessary service to the electricity consumer and are providing high returns to their investors, and yet industry practices are ruinous to the natural environment and the human communities around the mines. Here lies the new frontier of business ethics. In an ideal world, all stakeholders can win, but until we reach this world, someone (or the natural environment) must lose. The idea that an ethical business must simply follow the law and provide the highest returns to their shareholders while doing so is dying a long-overdue death. There are far too many examples of laws being designed and interpreted to suit powerful industries for this myopic belief in the rightness of the letter of the law to be anything but wishful thinking. The new definition of business ethics is written in gray. Right and wrong in the business world must be constantly examined by all participants in the decision-making process. Trade-offs must be weighed, sacrifices must occur and eventually, a decision must be made in which there are winners and losers. As a society, and especially as a business community, it is our responsibility to determine the balance between these winners and losers in a manner that reflects the ideals we wish to pass on to future generations.

The author is a member of the Columbia Business School class of 2009.