In 2015, the United Nations Member States adopted The 2030 Agenda for Sustainable Development: a shared blueprint towards peace and prosperity for people and the planet. End poverty, improve human lives, and protect the environment: thatâs largely what the 17 Sustainable Development Goals (SDGs) strive to achieve by 2030.
But itâs 2023 and weâre far from eradicating poverty. Current projections place the global poverty rate at 7 per cent (around 600 million people) in 2030. Meanwhile, on the environmental front, researchers are forecasting a 66% chance that weâll exceed the 1.5C global warming threshold between now and 2027.
We need to do better.
A Different Mindset for the 21st Century
What we sorely need is a different mindset thatâs more suited to our 21st-century problems.
An alternative economic system for a future that meets every personâs basic needs while safeguarding the living world on which we all depend. A system that makes us thrive, whether or not thereâs economic growth.
Thatâs the vision underpinning Doughnut Economics, conceived by Kate Raworth. Some say itâs nothing more than an idealistic notion. But many others have started implementing the Doughnutâs principles to transform their businesses and communities.
It might seem like pie in the sky, but the same could be said for airplanes, self-driving cars, and female Prime Ministers. As the great Nelson Mandela said, âIt always seems impossible until it’s done.â
Circular business models are a fundamental step forward in sustainability efforts. But if unlimited growth remains the primary business goal, we will still be contributing to over-consumption, which is a root cause of our climate crisis.
Doughnut Economics offers an inclusive, balanced approach to creating a regenerative and distributive economy for all of usâpeople, businesses, countries, planetâto prosper, rather than just grow.
Itâs about the circle of life. If local communities prosper and the ecosystem is healthy, businesses will naturally do well, and the economy will likewise growâin the long run. This is the theory anyway. And if nature is anything to go by, the Doughnut could be the ideal guide to achieving equitable and equal success, provided we all work together.
Pushing Beyond Circular Limits
Circularity shares a number of common principles with the Doughnut, mainly in its focus on transforming our throwaway economy into one that eliminates waste and pollution, circulates resources, and regenerates nature.
However, The Ellen MacArthur Foundation cautions that discussions about the circular economy can often be rather narrow, when focusing solely on practical elements such as closed loops, product service systems, business models, etc. A more holistic view is needed. One that includes âthe science and philosophy that shapes how we think and act, as well as legislation and infrastructural elementsâ, without which we run a real risk of âbusiness as usualâ with a few green tweaks.
This is where Doughnut Economicsâ inclusive approach takes circularity further. It advocates for an economy that ensures social justice and ecological safety, regardless of whether GDP is going up, down, or holding steady.
In Chapter 1 of her book, Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist, Kate Raworth argues:
âFor over 60 years, economic thinking told us that GDP growth was a good enough proxy for progress, and that it looked like an ever-rising line. But this century calls for quite a different shape and direction of progress.â
Perhaps itâs time for us to raise the bar and push beyond the limits of growth-driven economies and pure circularity, to create a future where humanity and nature are in harmony with one another.
The Sweet Spot: What is Regenerative Prosperity?
Letâs go back to the Doughnut to take a closer look at the sweet spot.
Described as a 21st-century compass for human prosperity, the Doughnut consists of two concentric rings:
- An inner ring symbolising the minimum social foundation necessary to ensure that no one is deprived of lifeâs essentials, and
- An outer ring that represents an ecological ceiling preventing us from collectively overshooting the planetary boundaries, protecting Earthâs life-supporting systems.
In the middle lies a doughnut – the sweet spot where humanity can live in an ecologically safe and socially just space.
In her book, Kate Raworth shares seven ways to think like a 21st-century economist. Itâs a framework inspired by diverse schools of economic thought including ecological, feminist, institutional, behavioural and complexity economics.
Idealistic or Insightful?
Critics of Doughnut Economics have found fault with its utopian claims and failure to provide a clear actionable solution. To be sceptical of its feasibility is an understandable response. It does sound a little starry-eyed, even in these times where everybody wants to save the world.
But itâs important to stress that Raworth isnât against growth. She acknowledges in her book that significant GDP growth is very much needed for low- and middle-income countries to get above the doughnutâs social foundation. The point is to use economic growth as a means to work towards social goals within the earthâs boundaries, rather than making it an indicator of success in itself, which is an oversight with our current system.
Raworth isnât the first to sound the alarm on our obsession with growth.
Visionary systems thinker Donella Meadowsâone of the lead authors of the 1972 book, Limits to Growthâboldly declared that âGrowth is one of the stupidest purposes ever invented by any culture, weâve got to have an enough.â The book was widely criticised as doomsday fantasy due to its premise that given earthâs finite resources, the quest for unlimited growth in population, material goods, etc., would eventually cause civilisationâs collapse.
40 years later, truth isnât so far from fiction. New research by the University of Melbourne finds some of the bookâs forecasts to be eerily accurate. The findings indicate that if we stay on the bookâs âbusiness-as-usualâ trajectory (which weâve been doing so far), we can expect to start seeing the early stages of global collapse soon.
As melodramatic as that seems, the logic is sound. If we continue to overburden our ecosystem, thereâs only one possible outcome. Knowing this, Doughnut Economics could be interpreted as an insightful approach to a looming problem. It doesnât offer a clear set of policies or solutions to our social and ecological problems, but it proposes an alternative mindset befitting our times. Raworthâs opinion is that the solutions lie not in a fixed formula, given the complexity of our world, but in a dynamic balance of priorities.
How Your Sustainable Business Can Hit the Sweet Spot & Thrive, Not Just Grow
Now that you understand the theory behind Doughnut Economics, how can your sustainable business can get in on the Doughnut action?
The key to creating a regenerative and distributive enterprise lies in its âdeep designâ, defined as:
- The purpose of the business
- How it operates in networks
- How it is governed
- How it is owned, and
- The nature of its relationship with finance
The Doughnut changes the organisationâs focus from value extraction to benefit generation. These five layers of deep design, inspired by Marjorie Kellyâa leading theorist in next-generation enterprise designâcan powerfully shape an organisationâs capabilities and contributions to the world.
Patagonia Makes Earth Their Only Shareholder
Take for example Patagoniaâs recent business redesign, which was announced last September 2022.
In a radical move, the companyâs owners transferred all controlling shares to the Patagonia Purpose Trust, which exists to protect the companyâs values. These shares hold all voting rights without any dividend rights. Patagoniaâs profits will be channelled to the Holdfast Collective âto protect nature and biodiversity, support thriving communities and fight the environmental crisisâ.
This fundamentally transforms Patagoniaâs governance, ownership, and financial parameters, bringing them in line with its stated purpose to âsave our home planetâ. Under this new direction, we can expect to see even more transformative ideas in their product design, supply chain management, production, and marketing.
Yvon Chouinard, Patagonia founder, former owner, and current board member proclaims:
âInstead of extracting value from nature and transforming it into wealth, we are using the wealth Patagonia creates to protect the source. Weâre making Earth our only shareholder. I am dead serious about saving this planet.â
Breedweer: An Impact-First Provider of Facility Cleaning Services
Another prime example of a regenerative and distributive enterprise, cited in the Doughnut & Enterprise Design paper, is Breedweer: a Dutch facility service provider with social impact as its core purpose and goal.
Driven to achieve the UN SDGs, Breedweer is one of the 10% most social companies in the Netherlands. Associating sustainability with creating social returns, the company shows that the proof is indeed in the doughnut pudding!
Besides proactively employing people from vulnerable target groups, they follow through with training and development at the Breedweer Academy. The companyâs dividend cap and reinvestment policy guarantees that 50% of profits finance activities supporting their social mission, allowing the business to create continuous and lasting impact.
The Emergence of Doughnut Economic Cities
Criticisms aside, Doughnut Economics is being adopted in major cities including Amsterdam, Copenhagen, Brussels, Dunedin, and more.
In Amsterdam, the goal is to bring their 872,000 residents inside the Doughnut to ensure a good quality of life for all, within acceptable ecological boundaries. In collaboration with Raworthâs Doughnut Economics Action Lab (DEAL), the city is introducing massive infrastructure projects, employment schemes, and new policies for government contracts to realise that vision.
Being a new and experimental concept, itâs hard to tell how effective Doughnut Economics will be in addressing our social and ecological problems. On its own, probably not much. But combined with other tools, it could prove a useful compass for a world of individual nations.
All the same, itâs encouraging to see that businesses and cities all over are stepping up to the challenge. At the end of the day, we need to start somewhere.
What say you?
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