Doughnut Economics to redesign business

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Erinch Sahan (b. Bursa, Turkey, 1981) is the Business and Enterprise lead at the Doughnut Economics Action Lab. Recently, he was the chief executive of the World Fair Trade Organization and previously he spent seven years at Oxfam leading campaign initiatives and founded Oxfam’s Future of Business Initiative. Sahan is a board member of the Social Enterprise World Forum and teaches Sustainable Value Chains at Cambridge Institute for Sustainability Leadership.

We are amidst some big crises. Climate and ecological breakdown is already causing extreme weather, hitting our food supply, disrupting supply chains and hurting people around the world. Meanwhile, economic inequality grows and millions are left falling short on food, livelihoods, energy, clean water and other life essentials. The economic, financial and business systems of the 20th century will need to adapt and transform fast, if we are to turn this around.

Something has been holding back the needed transformation across the business world. According to the 2024 Circularity Gap Report, «The total amount of materials consumed by the global economy continues to rise: in just the past six years alone we have consumed over half a trillion tonnes of materials – nearly as much as the entirety of the 20th century». While the business world seems more enthusiastic about concepts like sustainability, purpose and circular economy, it is by-and-large failing to transform its product designs, manufacturing processes or supply chain practices. It is refusing to phase out products or clients that will never become sufficiently sustainable or belong to the economy of the future. The business world is clinging on to outdated models of business. Something needs to change. Something can change.

Doughnut Economics as a compass for transformation

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.

Humanity is currently not in that safe and just space, which the Doughnut describes. The global economy is overshooting Earth’s capacity to support life, while billions of people are still falling short on life’s essentials.

Transforming business to unlock action

Getting into the Doughnut calls for nothing less than a transformation in the dynamics of the global economy. This need for transformation of our economies is now recognised by the business leaders too, with almost half of CEOs thinking that their business cannot continue to exist unless they reinvent their businesses (according to a survey dating back to January 2024 and conducted by PwC on over 4,700 CEOs). Climate change is a big driver of this, but not the only issue.

Using Doughnut Economics to drive this transformation means looking at the core of the design of business and finance. It means moving away from the current design of business around the question: How much value can we extract through this enterprise? Many of today’s sustainability initiatives, concepts and models try to remain aligned to this question, thereby driving actions that generate both high returns and high positive impacts. Some of the transitions and actions needed from the world of business do satisfy this pursuit of win-win solutions. But many don’t, and businesses are failing to unlock this broader set of actions. Many of the actions now needed could be commercially viable, delivering lower and slower returns, while achieving great benefits for society and the planet. And to unlock such ambitious action, and enable the transition that is needed, businesses and finance needs to be designed around the question: How many benefits can we generate through this enterprise?

[1] Consultabile online @ www.circularity-gap.world/2024