Recent business ethics scandals have created a moral minefield of shifting expectations and growing uncertainty about the responsibilities of business. These scandals have triggered a backlash of stringent laws and standards, most notably the Sarbanes Oxley Act. While we should not minimize the importance of a fair and consistent regulatory framework, the solution to our most important, emerging ethics issues in 2008 will not come from laws alone. What we need from business is a renewed moral imagination that helps us frame the issues in innovative, more helpful ways.

What critical issues lie ahead? In 2008 we will continue to see the unfolding of major concerns such as the subprime mortgage financial crisis. Business will step up its response to global warming. Issues of globalization will become even more pressing than before. These issues are as obvious as they are important. And yet, it could well be that the most important issue facing us in 2008 has not yet been anticipated by even the most thoughtful forecasters. When the rate of change is accelerating, it is not surprising that some of the most serious challenges to business ethics seem to come from nowhere.

To deal effectively and responsibly with both ongoing and emerging ethics issues, business needs to shift its perspective from reactive compliance to proactive moral imagination. Moral imagination is the capacity to discern the bigger picture. It is the kind of imagination that reveals how the web of financial and managerial connections of business are simultaneously a web of ethical interdependencies. The moral imagination lifts our sights from the short-term horizon of our immediate actions to include a wider appreciation of the impact we have over time on diverse constituencies. Most significant, the moral imagination compels us to question the adequacy of conventional wisdom in favor of pioneering new solutions to ethical quandaries.

We're seeing something of a renaissance of moral imagination in how business responds to environmental issues. For a long time, business was simply blind to the negative impacts of commercial activity on nature. Starting in the 1970s there evolved a regulatory approach to curbing business pollution: It seemed to many that the best way to fix environmental problems was through governmental regulation. Today, however, there is a growing awareness that regulations alone are not sufficient and we are witnessing a growing interest in a sustainability approach that seeks to integrate financial and environmental goals. This approach takes a broader perspective to the problem by balancing three goals, economic, environmental and ethical sustainability. In this approach, business plays a constructive, proactive role in devising development strategies that meets the needs of the present without compromising future generations. The pattern here is clear: Regulations are important but not sufficient alone. Also needed is a new way of envisioning the problem. In this example, we are learning to imagine the economy as a subset of the biosphere, a radically new perspective that opens doors to new possibilities.

Previously, the most established and robust examples of programs in corporate ethics and social responsibility were developed by leading Fortune 100 corporations. These companies possessed the resources necessary to develop such programs and they were very much in the public eye. These corporations will continue to play an important role in ethics by enhancing their training, communications and community involvement programs. At the same time, I predict that cutting-edge work in business ethics will increasingly come from the more entrepreneurial segments of the economy, because there is an integral connection between moral imagination and the qualities of effective entrepreneurs.

The spirit of entrepreneurship includes imagination, inventiveness and openness to the new. This spirit of creative response aligns with the capacity to exercise moral imagination and to see ethical problems in a new light. To be sure, our most fundamental ethical values -- values such as honesty, avoiding doing harm, keeping commitments -- are grounded in timeless traditions and are not likely to be soon abandoned. But it is in the application of these ethical values to emerging, unique situations, where moral imagination and the entrepreneurial spirit can make a decisive difference.