Credit: Joshua Rawson / Unsplash
In a world where social and ecological challenges compound daily, is it time to trade GDP growth for an economic mindset better suited to 21st-century realities?
Kate Raworth believes so. A senior associate at Oxford University’s Environmental Change Institute, Raworth developed the idea of “doughnut economics,” a framework to guide global development, government policy, and corporate strategy in this era of climate change and social inequality.
Raworth, co-founder of the Doughnut Economics Action Lab, first developed her framework in a 2012 Oxfam report and later in a bestselling book, “Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist.”
In a keynote at the MIT 2024 Sustainability Summit this spring, Raworth explained her model, which consists of two concentric rings that form what looks like a doughnut. The inner ring represents a social foundation, which ensures that no one lacks life’s essentials; the outer ring represents an ecological ceiling to ensure that humanity doesn’t collectively overshoot planetary boundaries protecting Earth’s life-supporting systems.
The space between those rings is the sweet spot: an ecologically safe and socially just society, led by a regenerative and distributive economy, which forward-thinking companies can help create.
The current picture
Many emerging countries, such as Malawi and Senegal, fall short in foundational social areas such as food, water, health, education, housing, and more. Other countries, such as the United States, exist outside the ecological ceiling, exploiting Earth’s resources with grave environmental consequences, such as climate change, ocean and air pollution, ozone layer depletion, and more.
“No nation is living in the doughnut,” Raworth said — meaning that no nation is meeting the needs of all its people while living within the means of the planet. Currently, Costa Rica comes closest.
“Last-century economic theories, last-century government policies and business models … none of them were designed to turn this story around. None of them solve this picture,” Raworth said. “We need new theories, new policies, and business innovation.”
On a global scale, high-income nations need to transform from solely pursuing GDP growth toward a more balanced system that reduces energy use; low-income nations need to grow their economies to meet their people’s needs without exceeding planetary boundaries.
A role for business in reaching the sweet spot
Raworth suggested four questions that corporate leaders should ask about how their industry fits between the social foundation and ecological ceiling, both locally and globally.
Credit: Kate Raworth, Doughnut Economics Action Lab
How can everyone connected to my industry thrive? Think about how your industry touches and shapes the lives of its employees, consumers, customers, suppliers, and the local community. Does it support labor rights, protect a space of local community, and foster collaboration? Who has a voice at the table?
How can my industry be as generous as the wildlands next door? What does ecological generosity look like in the immediate environment of your industry’s operations? Can you cycle water instead of wasting it, harvest energy instead of losing it, or build and protect soil instead of degrading it? How can you store more carbon and harvest solar energy? What does ecological generosity look like in the immediate environment of your industry’s operations?
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How can my industry respect the health of the whole planet? Organizations should consider the impact of their energy use, the products they import, and the stream of waste they export on the key ecological ceiling areas shown in the doughnut.
How can my industry respect the well-being of all people? Leaders can ask: Are people being paid a living wage? What is the industry strategy around intellectual property? Are essential ideas being hoarded and protected by a single company, or are they being allowed to spread and scale as times demand?
Ultimately, Raworth said, companies should be able to answer the question “Why do we exist?”
“What do we do in service of in the world? What are our networks of relationships with employees, customers, suppliers, industry allies, and government? Are we using those relationships and reinforcing our values and purpose through them — or undermining them?” Raworth asked.
By confronting these questions, she said, organizations can do their part to support regenerative and distributive economies.
Read next: 5 ‘extraordinary turnarounds’ for global well-being
