What is doughnut economics?
Doughnut economics is a framework developed by economist Kate Raworth that depicts a safe and just operating space for humanity. The doughnut is formed by two concentric rings: the inner ring is the social foundation (food, health, education, work, gender equality and others) and the outer ring is the ecological ceiling defined by planetary boundaries.
The desired "doughnut zone" is the state in which no one's basic needs go unmet, while planetary boundaries are not crossed. In Finland, the application of doughnut economics has been built in the Doughnut Economics for Finland project led by the University of Jyväskylä's Wisdom community and funded by Sitra.
Why is doughnut economics relevant to companies?
Doughnut economics offers a systemic framework for a company to look at its impacts on two levels: the social foundation (employment, wages, health, equality, local communities) and the ecological ceiling (climate, nature, water, land use). It complements ESG thinking by adding a systemic linkage.
Several cities (Amsterdam, Brussels, Copenhagen) have adopted doughnut economics as a basis for their strategies. The Pirkanmaa regional council and the City of Jyväskylä have piloted it in Finland.
Doughnut economics vs. growth-led economics
Traditional economic thinking starts from maximising GDP growth. Doughnut economics flips the question: instead of growth, the goal is to thrive within the doughnut. This approach is close to the regenerative economy and regenerative growth, which build business in service of life.
Practical applications for a company
A company can use the doughnut economics framework in strategy work through four questions: 1) Is the purpose of our business already defined as a positive impact? 2) Do we strengthen the social foundation? 3) Do we stay within the ecological ceiling? 4) Do we distribute value across stakeholders, or concentrate it? The answers shape business model renewal.
Related concepts
- Planetary boundaries, the ecological ceiling of the doughnut.
- Regenerative economy, a parallel approach.
- Regenerative growth, the form of growth that fits within the doughnut.
- Regenerative business, where doughnut thinking turns into a management model at company level.