Doughnut Economics for business: creating enterprises that are regenerative and distributive
From a toolkit by Doughnut Economics
There is growing recognition that the current global economic system is driving ecological crises and extremes of social deprivation and inequity.
Doughnut Economics provides one possible compass for turning this situation around, with the goal of meeting the needs of all people within the means of the living planet.
The Doughnut consists of two concentric rings: one representing a social foundation, to ensure that no one is left falling short on life’s essentials; and the other representing an ecological ceiling, to ensure that humanity does not collectively overshoot the planetary boundaries that protect Earth's life-supporting systems. Between these two sets of boundaries lies a doughnut-shaped space that is both ecologically safe and socially just: a space in which humanity can thrive.
Getting into the Doughnut calls for nothing less than a transformation in the dynamics of the global economy.
Today’s degenerative industrial systems – inherited from the last century – are still using up and running down the living world, and must rapidly be turned into regenerative industries that work with Earth’s cycles and within Earth’s means.
At the same time, today’s divisive context – thanks to the concentration of ownership and power in far too few hands – must be turned into distributive outcomes, through an economy that shares value and opportunity far more equitably with all who co-create it.
What, then, does Doughnut Economics mean for business?
It calls on businesses to demonstrate how they are going to transform so that they will belong in this future – aligned to, and in service of, a world where all people and the living planet thrive. For many companies, moving towards such a transformation typically begins with innovations in product design, eliminating single-use plastics and built-in obsolescence, while committing to paying living wages for the supply-chain workers making the products.
Such actions are an important start, but they are far from sufficient if business is to become not just ‘more sustainable’ but regenerative by design, and not just ‘more inclusive’ but distributive by design. Reaching this scale of ambition calls for transforming not only the design of products, but the deep design of business itself. Innovations in the five layers of business design – through Purpose, Networks, Governance, Ownership, and Finance – are essential if business is to become regenerative and distributive in its strategies, operations, and impacts, thereby helping to bring humanity into the Doughnut.
Doughnut Economics is, of course, far from the only initiative calling for business transformation. Many other initiatives and approaches are already underway, with many different points of focus: shifting the mindset of business leaders; promoting consumer and investor action; supporting collective action by workers, farmers, and communities; promoting democratisation of business; and developing impact measurement to set better targets for businesses.
Governments have likewise introduced rules and regulations, taxes, subsidies, new alliances, and innovation programmes intended to promote sustainable and social business practices, such as through ESG (environmental, social, and governance) reporting, carbon pricing, and extended producer responsibility. These are all important contributions to achieving the change needed in the business world but the transformative change required will only be achieved by also transforming the deep design of business itself.
Deep design focuses on the ownership and financial structure of an enterprise; how it manages relationships with suppliers, clients, and stakeholders; how it makes and monitors key decisions; and how it sets and protects its purpose. In this sense, enterprise (re)design is foundational for many other transformations, in both business and the wider economy, that can help to bring humanity within the safe and just space of the Doughnut.
Focusing on deep design is a fast-evolving approach to transforming business. New design innovations necessary for business to become regenerative and distributive are now being created and explored; already the scope of what may be possible is emerging. From a regenerative perspective, for example, consider business designs that make Earth the sole shareholder, a board director, or the chief executive of a company. Examples like this already exist: U.S. outdoor clothing company Patagonia has made Earth its ‘only shareholder’, U.K. based shampoo company Faith In Nature has ‘appointed Nature to its board’ and Willicroft, a Dutch plant-based cheese company, has shaped the chief executive role to ensure that Nature is the priority.
Design innovations like these can fundamentally affect the likelihood of a business taking transformative regenerative action, for instance by giving the green light to a regenerative agriculture proposal, making significant investments in carbon-positive construction, or achieving beyond a living wage for supply chain workers.
From a distributive perspective, consider the transformative actions that can be pursued when the interests of the people most connected to, or impacted by, a business are core to its deep design. Examples exist, such as wool and fashion producers Manos del Uruguay, whose profits are always used to generate benefits for its artisans across rural Uruguay. Consider Amul, a dairy company in India whose small-scale farmers own the business, thus benefitting both from its profits and from having purchasing practices designed to support their needs. Likewise consider the rise of affordable community-owned renewable energy suppliers, such as the 1,900 citizen-led energy cooperatives in the REScoop Federation, representing over 1.25 million people across Europe.
While none of these businesses would yet claim to be fully regenerative and distributive by design, they collectively demonstrate that innovations in the deep design of business – its Purpose, Networks, Governance, Ownership, and Finance – can unlock transformative action to open up far greater scope for business to become part of a regenerative and distributive future.
In order to introduce businesses to Doughnut Economics and facilitate such journeys of redesign for companies of many kinds, Doughnut Economics Action Lab (DEAL) has created the Doughnut Design for Business tool. This is a set of materials, activities, and guidance for individuals and organisations interested in supporting businesses to engage with Doughnut Economics through activity-based workshops. Central to the creation of this tool was a pilot workshop series with businesses from across Europe.
In essence, Doughnut Economics is about redesigning business – away from the outdated 20th century idea of existing to extract maximum value, to the 21st century idea of generating maximum benefits.
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From a toolkit by Doughnut Economics, 27/09/2023