The Doughnut economics & Social Economy: An economy that serves both people and the planet

Klara Drèze

Klara Drèze

Intern at SEE

Raffaele Scarpa

Raffaele Scarpa

Intern at SEE

Gayane Simonyan

Gayane Simonyan

Intern at SEE

Doughnut economics is an alternative business model,  focused on reaching a balance between the needs of people and the planet’s necessities, more than uniquely implementing the GDP. This concept was first introduced by Kate Raworth in 2012 inside the Oxfam report, obtaining quickly international adhesion, including at the UN level. 

The Doughnut is formed by two concentric rings representing:

  • – The Social foundation as basis of proper life conditions necessary to avoid the critical human deprivation below.
  • – The Ecological ceiling as boundary to limit human overstepping to the critical planetary degradation above.

The compass prioritizes the measures through which the desired goals can be reached. Below the boundary of Social foundation, there are 12 dimensions from the Sustainable Development Goals in which the access to should be improved represented by: water, food, health, education, income & work, peace & justice, political voice, social equity, gender equality, housing, networks, and energy.  In the meantime, above the limit of the ecological ceiling are shown the risks of human exploitation of the planet, individuated with 9 possible outcomes mentioned by Earth-system scientists: climate change, ocean acidification, chemical pollution, nitrogen & phosphorus loading, freshwater withdrawals, land conversion, biodiversity loss, air pollution, and ozone layer depletion.                     

The author Kate Raworth calls this image a humanity`s “selfie” in the early 21st century which clearly illustrates existed pattern of humankind and planetary home.  Regrettably, the large-scale red segments show the volume of shortfall and overshoot within boundaries, which means that in 12 social dimensions millions of people are still struggling to fulfill their basic needs, as well as four planetary boundaries, have been exceeded the allowable limits by the humans. Hence, desired win-win situation, likewise completing the needs of the population while valuing and protecting the norms of the living planet, can be achieved only by eradicating the red color of the Doughnut. Concisely, in order to achieve the 21st-century goal, and keep the balance between boundaries, humans need to build an economy that will serve the people and the planet: Doughnut Economics.

The goal of the doughnut economy is not the continuous growth of GDP, but the growth of thriving the donut. This economic mindset is not based on policies and regulations, but on a general way of thinking of the 21st century useful to bring humanity into a safe and ecological space. Doughnut economics is an inclusive approach that gives more visibility to the cooperative and caring side of human behavior, despite the individualistic and competitive one. The doughnut economy can invert the business trend by transforming degenerative economies into regenerative ones and divisive economies into distributive ones. The economy should invert its focus on gain, as it is stressed: “Growth is a healthy phase of life, but nothing grows forever things that succeed do so by growing until it is time to grow up and thrive instead.”

A public policy example: Brussels' Region Shifting Economy

The pandemic has highlighted a wide range of new challenges and in order to address them, the Brussels-Capital Region has decided to adapt and deepen its commitments to economic, social, and ecological transition. To achieve carbon neutrality of economic activities by 2050, the Go4Brussels 2030 strategy was therefore presented in February 2021 and implemented in Brussels according to the socio-economic model of the Doughnut, with the aim of meeting the needs of all its inhabitants while remaining within planetary boundaries.

The pandemic and successive crises (environmental crisis, war in Ukraine, etc.) have, for example, highlighted the limits and vulnerability of a globalised economy with little regard for the environment. External dependency has been harmful and shortening value chains as well as local production are the keys to a sustainable circular economic transition. There is a need to relocate production chains in Europe, to monitor energy and raw material prices and to address resource scarcity. Moving from an international and global level to a local level is therefore a step towards achieving Go4Brussels’ goals of a decarbonised, regenerative, circular, social, democratic, and digital economy by 2030.

In this context, the “Shifting Economy”, a regional strategy proposed by the Secretary of State for Economic Transition, Barbara Trachte, has been developed into a comprehensive action plan to align the Brussels government’s economic objectives with its climate objectives. The project converges with the SDGs of the UN and is a Brussels version of these objectives.

To implement the change, this gradual shift aims to provide economic support (financing, mentoring, public procurement, R&D, etc.) to economic activities that are territorially re-anchored and have a societal purpose. It also intends to develop quality jobs and increase the employment rate, reduce unemployment, and develop the skills of the people of Brussels. Indeed, the Brussels government has noted that already during the pandemic, the creativity, solidarity, and resilience of Brussels entrepreneurs directly contributed to mitigating its effects. Their actions should therefore be encouraged and supported.

All in all, in Brussels, the social economy is developing and doing well. The innovations emerging in Brussels could spread around the world and inspire other European and even international cities and regions. The financial, social, and environmental reports of enterprises are increasingly public and can be reused, and it is, therefore, time to scale up!  

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