Doughnut Economics as a model for a Regenerative Economy

We did not start the century off well. In 2008, we faced a financial meltdown. We saw floods and wildfires raging through various parts of the world. Moreover, just two years ago, we started fighting a worldwide pandemic.

Unfortunately, there is no easy way out: We cannot just tweak our economy to get things straight. We have to change it at the deepest level. To achieve this, DEAL proposes a doughnut economy.

The inner circle depicts the social foundations, the sustainable development goals as defined by the United Nations (the social UN SDGs) we need to meet in order to sustain a healthy society. The outer circle depicts our non-negotiable planetary boundaries. We have to respect them, or we destroy our planet. Our economy should never expand beyond our planetary boundaries and neither contract below the social foundations. But… We are living far out of balance.

Fig.1. The Doughnut of social and planetary boundaries.

We collectively overshoot the majority of our planetary boundaries and fall short of our social foundations for around a billion people on the planet. The economic model that got us to where we are today will not get us any further.

Fig.2. Humanity is living far out of balance – overshooting in most boundaries.

We follow a degenerative model of production and consumption. We take from the earth, make something, use it and lose it as waste.

There are better models. Models that minimize waste and loss of energy and reuse materials. Those regenerative practices create an economy that works with and within the cycles of the living world.

Fig.3. Regenerative practices: An economy that works with and within the cycles of the living world.

Notable companies that work with regenerative practices are:

• Fairphone with its open modular design. As a result Fair phones are repairable and upgradeable without replacing the whole hardware.
• Body Shop with its recycling scheme. Minimizing the use of single-use packaging on a global scale.
• Houdini with its 100% recyclable garments.

There is a social side to this.

In order to achieve circularity and other goals related to our planetary boundaries, we also have to focus on the social side of the doughnut. Instead of maximizing value for a few, we have to follow distributive practices. This means sharing opportunity and value with all who co-create it.

Some best practices of companies pioneering in this aspect are:

• Employee ownership demonstrated by Richer Sounds, allowing the whole staff to benefit from business success.
• Community-focused tourism by FairBnB, that prevents gentrification.
• Fair Tax Mark by LUSH, certifying that the company focuses on efficiently paying taxes, rather than hiring an army of lawyers to optimize taxes.

While some of those transformations are gradually introduced through regulation, businesses and entrepreneurs can most effectively accelerate change. Unfortunately, we currently limit ourselves to practices that maximize margins and profits in the short term, missing many opportunities to create benefits for many in the long term.

What if we changed that model? What if we looked for viable solutions that had high enough margins to keep the business prosperous but don’t necessarily maximize those returns? We would get real solutions.

We need to get from “how much financial value can I extract from this business” to the desperately needed “how many benefits can we generate?”.

Fig.4. From degenerative and divisive to regenerative and distributive business models.