The Doughnut: A framework for the entrepreneurs taking on 21st century challenges
How can we provide social foundations for all, within our ecological limits? What kind of economic mind-set would get us there? How should entrepreneurs think about their business, and its role to resources and the natural world?
Our current model – pursuit of growth at any cost – is clearly not taking these kinds of questions into consideration. Economies grow, but people do not feel they have better lives. In the UK, the percentage of people reporting themselves ‘very happy’ declined from 52% in 1957 to 36% in 2005, despite real income doubling in that period.
Our current way of quantifying success in society - GDP growth - does not actually correlate with increases in happiness, wellbeing, life expectancy, or the Social Progress Index once people have the basic material necessities of life. In fact, once a country hits about $20,000 per person – less than half that of the UK – there isn’t a strong correlation between further growth and Social Progress.
Endless growth in consumption is not a formula for the kind of economy that delivers prosperous lives, or one that reflects planetary limits.What makes matters worse, is these growth-based models are directly in contention with our long-term ability to thrive on this planet.
So how do we re-orientate business and economics to make it deliver prosperous lives more effectively, and without jeopardising humanity’s long-term odds to survive? If entrepreneurs see their role as building a better world, as opposed to simply accumulating wealth, these questions need to be answered.
Oxford Economist Kate Raworth has set out a new framework for tackling these issues called The Doughnut.
The Doughnut uses important planetary boundaries research to set out earth’s life supporting systems, which we depend on. Once this is recognised, the challenge is providing an expanding population with enough of a social foundation so that all their human rights are met.
Essentially, this recognises that humans thrive thanks to the balance of earths eco-systems. How can we create businesses, and economic practices more broadly that recognise this, and become part of that fine balance, instead of exploiting it?
From linear and degenerative to sustainable and regenerative
The main way the Doughnut encourages us to think about our economic practises is to move from the ‘degenerative’ models of the industrial revolution, to the ‘regenerative’ models of the 21st century.
Degenerative (also referred to as linear, or extractive) is the type of economic practise that takes a natural resource, commodifies it, turns it into a product, then waste. It looks something like this:
Regenerative models aim not only to be sustainable, but to be generous. To build long-term models for prosperity, our economies need to shift from degenerative and extractive not only to sustainable, but to regenerative.
We need businesses that help transform our economic practices from a linear one to a sustainable, or even a regenerative one. This could be by examining their own models, or by taking the resources from a broader resource patterns. Take coffee beans as an example – less than 1% of each bean is used for the actual coffee. That leaves lots of precious organic matter that can be used for growing other things. Or, as bio-bean demonstrate, can be turned into clean energy.
Below are two diagrams which illustrate the degenerative model which exploits resources for gain, and regenerative, which accepts that we are reliant on vibrant ecosystems.
From Kate Raworth’s Doughnut Economics: 7 ways to think like a 21st century economist, here is the spread of business attitudes
- Do Nothing: Businesses see environmental factors as irrelevant, and are happy to exploit and profit, creating short term value at the long-term expense of human’s flourishing
- Do what pays: Greening some products, or taking “eco-efficient measures that cut costs, or boost the brand”
- Do our fair share: Taking on some responsibility, but ultimately still seeing it as a burden. Also, considering how much ecological goodness can we consume rather than how much they can contribute. In other words, “Still trapped in the degenerative mindset”
- Do no Harm: Complete sustainability
- Be Generous: “Give back to the living systems of which we are a part” - whether that's by producing energy, clean air, or water, some businesses are being generous to their environments
Which businesses do you know that exemplify step four? How about step five? These are the kinds of businesses that will help move us into the Doughnut's safe space for humanity. This is the kind of practice that must urgently be aimed for.