Doughnut economics
Economics - sustainability - climate change - environmental concerns
Author: Charitarth Sindhu, Environmental Sustainability & ESG Consultant
Doughnut economics suggests a shift in traditional economic paradigms to tackle issues including climate change, global poverty and environmental decline.
Visualize a doughnut
The inner circle of the doughnut symbolizes the fundamental societal necessities identified in the United Nations Sustainable Development Goals (SDGs), including nourishment, clean water, healthcare, education, and other essentials.
The doughnut economics framework advocates for resource allocation in a manner that ensures everyone maintains a standard of living above this threshold, safeguarding against deprivation.
On the furthest outer rim of the doughnut lies an ecological boundary that humanity must respect to prevent further environmental deterioration.
Crossing this threshold through excessive resource exploitation leads to adverse effects including climate change, loss of biodiversity, ocean degradation, and pollution.
Maintaining a sustainable balance beneath this limit is crucial to safeguarding the Earth's ecosystems.
Between the two rings lies 'the safe and equitable zone for humanity,' where the economy can operate without compromising essential needs, nor exceeding ecological limits.
Principles guiding Doughnut Economics
- Beyond GDP: This model advocates for alternative measures to Gross Domestic Product (GDP), emphasizing indicators that offer a more comprehensive understanding of human and ecological well-being, such as the Genuine Progress Indicator (GPI) which measures the quantity and distribution of net benefits of the embedded economic system on the larger social and environmental systems.
- Regenerative and Distributive Design: promoting economic models that prioritize environmental restoration and equitable resource distribution over perpetual growth. This entails transitioning to circular economies that minimize waste, prioritize renewable resources, and ensure fair wealth and resource distribution.
- Systems Thinking: acknowledging the interconnectedness of social, economic, and environmental systems, doughnut economics urges policymakers to consider complex feedback loops and dynamics when designing interventions, targeting root causes rather than symptoms.
- Localism and Community Resilience: encouraging decentralized decision-making and local production and consumption to reduce reliance on global supply chains and facilitate their decarbonization.
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Coined by economist Kate Raworth of the Universities of Oxford, Cambridge and Amsterdam in 2012, the doughnut economics concept has gained significant attention from international bodies including the United Nations.
See also
- Business & Sustainable Development Commission
- Cambridge Institute for Sustainability Leadership (CISL)
- Climate benchmark
- Climate change
- Corporate social responsibility
- Corporate Sustainability Assessment
- Corporate Sustainability Reporting Directive (CSRD)
- Degradation
- Economics
- ESG investment
- EU Platform on Sustainable Finance
- Global Sustainability Standards Board
- Global Sustainable Finance Council
- Global Sustainable Investment Alliance
- Green finance
- International Platform on Sustainable Finance
- International Institute for Sustainable Development
- International Sustainability Standards Board
- Liquidity and Sustainability Facility (LSF)
- Natural capital
- Organic
- Principles for Sustainable Insurance
- Reputational risk
- Return on Sustainability Investment
- Risk management
- Stakeholder
- Stewardship
- Sustainability
- Sustainability Accounting Standards
- Sustainability Accounting Standards Board (SASB)
- Sustainability bond
- Sustainability bond framework
- Sustainability Bond Guidelines
- Sustainability breach
- Sustainability Disclosure Requirements (SDR)
- Sustainability-linked bond
- Sustainability linked bond framework
- Sustainability-Linked Bond Principles
- Sustainability linked financing
- Sustainability linked loan
- Sustainability-Linked Loan Principles
- Sustainability performance target
- Sustainability provision
- Sustainability reporting
- Sustainability themed investing
- Sustainable bond
- Sustainable Bond Market
- Sustainable debt
- Sustainable Development Goals (SDGs)
- Sustainable
- Sustainable finance
- Sustainable Finance Disclosure Regulation (SFDR)
- Sustainable Finance Working Group
- Sustainable infrastructure
- Sustainable Infrastructure Foundation
- Sustainable investment
- Sustainable loan
- Threshold
- Triple bottom line
- UK Sustainable Investment and Finance Association
- United Nations
- World Business Council for Sustainable Development
