As the world faces increasing environmental and social challenges, businesses are searching for frameworks that balance growth with sustainability. One gaining global attention is Doughnut Economics, coined by economist Kate Raworth in her 2012 book. It offers a model for meeting human needs while staying within the planet’s ecological limits, helping organisations operate responsibly and strategically.
What is Doughnut Economics theory?
Many existing economic and business models focus primarily on growth (of profits or of GDP), often prioritising short-term profits over social and environmental wellbeing.
Doughnut Economics offers a different approach. Developed by economist, Kate Raworth, the concept takes its name from its distinctive shape.
- The inner ring represents the social foundation, including essentials like healthcare, education, income, and equality. Falling below it means people’s basic needs are unmet.
- The outer ring represents the ecological ceiling, which includes planetary boundaries such as climate stability, biodiversity, and water use. Exceeding these limits causes ecological harm.
- The space between the two rings forms a “safe and just space” for humanity, where wellbeing and environmental sustainability coexist.
Success is measured not only by financial outcomes but by how well human needs are met and ecological boundaries are respected. It encourages organisations to track social, environmental, and financial indicators together. Growth is no longer the automatic goal; instead, the focus is on sustaining long-term wellbeing for people, communities, and the environment.
Are Doughnut Economics related to the Circular Economy?
Doughnut Economics and the circular economy share the goal of creating sustainable and resilient systems, but they focus on different aspects.
- The circular economy emphasises resource efficiency, waste reduction, and designing products and services that can be reused, repaired, or recycled. It addresses the material and environmental flows of production and consumption.
- Doughnut Economics, by contrast, provides a broader framework that balances social needs with ecological limits, encompassing health, equity, and wellbeing alongside environmental sustainability.
Together, these frameworks can reinforce one another. Circular economy practices help businesses stay within the ecological ceiling defined by Doughnut Economics by reducing resource use and environmental impact. At the same time, Doughnut Economics ensures that social foundations, such as fair labor practices and community wellbeing, are considered alongside environmental gains. By integrating both approaches, companies can pursue a holistic sustainability strategy that addresses people, planet, and profit simultaneously.
What are the principles of Doughnut Economics?
Raworth’s framework rests on several guiding principles that redefine economic priorities.
- Focus on Human and Ecological Wellbeing: Economic activities should aim to meet everyone’s basic needs while respecting planetary boundaries.
- Systems Thinking: Business and policy decisions must account for the interconnectedness of social and ecological systems.
- Regenerative and Distributive Design: Organisations should prioritise practices that restore natural systems and ensure equitable access to resources.
- Dynamic Adaptation: Rather than fixed growth targets, organisations should emphasise resilience, innovation, and adaptability.
What are the benefits and challenges of Doughnut Economics?
Adopting Doughnut Economics offers multiple advantages, which can be seen using the ‘Triple Bottom Line’ model:
- People: Prioritising social foundations ensures fair wages, improved working conditions, and accessible public services. This fosters a healthier, more engaged workforce.
- Planet: Staying within ecological boundaries mitigates climate risk, protects biodiversity, and ensures long-term resource availability.
- Profit: Businesses reduce operational risks, enhance brand reputation, and attract ethically minded investors and consumers. Operating within environmental limits builds resilience against supply chain disruptions and resource scarcity.
Currently, integrating Doughnut Economics into business strategy presents some challenges, including:
- Complex Measurement: Quantifying social and environmental impact alongside financial performance requires robust data systems and indicators.
- Regulatory Variability: Legal frameworks differ across jurisdictions, making global implementation complex. Compliance must balance local laws with sustainability goals.
- Cultural Shift: Companies must embed the value of holistic wellbeing into their culture. Leadership commitment and stakeholder engagement are essential.
- Short-Term Pressures: Organisations must manage immediate performance expectations while planning for long-term sustainability.
Despite the challenges, implementing Doughnut Economics is possible. Cities and companies are beginning to put Doughnut Economics principles into action. Amsterdam has integrated the model into urban planning. Policies are evaluated based on how they maintain ecological limits while promoting social welfare, including affordable housing and clean energy access. Corporations are adopting circular economy practices, renewable energy, and fair supply chains to align with Doughnut principles.
Legislation supports these efforts. Environmental laws like the EU Green Deal and the UK Environment Act encourage carbon neutrality, waste reduction, and sustainable resource use. By leveraging regulatory frameworks, businesses can innovate responsibly while remaining compliant.
How can iCOR support businesses in transitioning towards the Doughnut Economy?
By providing structured evidence collection, storage, and presentation through legal registers and sustainability dashboards, iCOR helps organisations track their social and environmental impact, ensuring alignment with both regulatory requirements and Doughnut principles.
Book a demo here to learn how iCOR can support your business.