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Redesigning business – The Doughnut Economy

Doughnut economics is an alternative approach to conventional economic theory that aims to keep economic activity within the ecological limits of the planet while ensuring the well-being of all people. The concept was developed by British economist Kate Raworth and first presented in her book “Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist”, which was published in 2017.

The dilemma

Humanity’s collective understanding of progress is growth. And since the 20th century in particular, this view has manifested itself in an economic system that declares precisely this idea of progress and prosperity to be the leitmotif of its actions: an endlessly rising growth curve. Regardless of how prosperous a nation is, politicians and economists agree that the solution to almost all problems lies in economic growth.

But where has this maxim led us? We are facing a global crisis. We live on a finite planet that can only provide finite resources and yet we are striving for endless growth. We have already exceeded at least six of the nine planetary boundaries and the world’s population is increasing. And yet the dogma of the economy demands MORE. The math doesn’t add up.

The Doughnut

To counteract this dilemma, Kate Raworth has developed the concept of the “donut economy”. The term “doughnut” refers to the graphic representation of this concept, in which a doughnut-shaped figure is used to illustrate the two main goals of the idea: meeting the basic needs of all people and respecting planetary boundaries at the same time.

Illustration of the 'doughnut concept': The green area ("within the doughnut") symbolizes the ideal state

The inner area of the donut: This area represents the basic social needs of humanity, including food, water, education, health, energy, income and political freedom. The aim is to ensure that all people can live in this inner area without their basic needs being neglected.

The outer area of the donut: This area represents the planetary boundaries that should not be exceeded in order to maintain the stability of the global ecosystem. This includes ecological factors such as climate change, loss of biodiversity, ocean acidification, freshwater consumption and much more.

The aim of the donut economy is to create a “safe and just space for humanity” that lies between these two areas, i.e. IM Donut. This means that we must shape economic activities in such a way that they meet the needs of all people without exceeding the limits of the planet. Instead of endless growth, the economy must be in a state of prosperous equilibrium.

In short:
The ideal situation of this concept is to be IN the doughnut, which means that a nation can meet the needs of its population without exceeding the limits of the planet. Not a single nation in the world fulfills this status. The nation that comes closest to the desirable ” doughnut state” is Costa Rica. So-called “developed” nations may be able to meet the needs of their populations, but they overshoot planetary boundaries to such an extent that they endanger the livelihoods of all people.


A new perspective

The narrative of progress so far has been: a nation increases in wealth – this increase in income increases access to energy – this results in an enormous improvement in human well-being. And now, instead of fulfilling the second condition of the donut – staying within planetary boundaries – this “progress” results in consumption and overstepping the boundaries. The pattern is constantly repeating itself.

So how do you get into the doughnut?

In an age of globalization and deeply intertwined and networked economic systems, countries can no longer be viewed as individual, separate systems. You can only get into the donut through collaboration and a collective rethinking of all the prevailing dynamics.
Kate Raworth describes the current way of doing things as follows: “Take, Make, Use, Lose.” We take resources, produce products, sell and use them and ultimately throw them away. And therein lies the crux of the matter: these dynamics need to be rethought and redesigned. Instead of generating waste, these resources must be used again and again, recycled and returned to the cycle so that nature can recover and renew itself. Nature is our best role model here: just as it renews and regenerates itself, so must we do with the products we make. Kate Raworth claims that the guiding principle of “sustainable” is not enough. “Sustaining” is not enough, as we have reached a point where humankind has destroyed too much. “Regenerative” as a guiding principle must be at the forefront.

One hand holding a small globe

The right dircetion

Some companies are slowly beginning to move towards regenerative practices. One example of this is the Fairphone, whose modular design allows only those components that do not work to be replaced, thus counteracting the massive consumption of resources. Another example Raworth cites is the Swedish fashion label “Houdini”, which uses only organic fibers and recycled materials and shares its technology and knowledge to support other companies in their sustainable efforts and facilitate circular action. Because that’s what it’s all about: sharing knowledge, mutual support and collaboration. Working together instead of against each other.

Distributive economy

In doughnut economics, distributive systems are seen as an essential component of a sustainable and just economy. This includes mechanisms such as fair wages, social safety nets, educational opportunities, access to healthcare, fair taxation and other measures that help to reduce the gap between the affluent and the disadvantaged sections of society.

The promotion of distributive systems aims to strike a balance between economic growth and social justice by giving all people the opportunity to share in the fruits of prosperity and by reducing the inequalities that can lead to social tensions and injustices.

Companies such as “Creative Handicrafts” from Mumbai are examples of such distributive systems: the company’s workers are also the owners. Or “FairBnB”: The platform is based on fair remuneration for the hosts and at the same time income is invested in the strengthening of local communities.

But is this really feasible?

We live in a world with entrenched patterns and dynamics that pursue the following main objectives: Maximizing profits and increasing productivity. How can we redesign these structures and introduce sustainable new practices?

The key point is: it’s not about how sustainably a product is designed – it’s about how the company behind the product is designed. It’s about the inner workings of the corporate structure.
Companies need to question themselves: where is our deep design leading us at the moment and what needs to change if we want to continue to play an important economic role on this planet’s future?

The question of purpose: What is your Why?

Companies should scrutinize the following five attitudes:

  • Purpose: Companies should not only strive for profit, but also make a positive contribution to society and the environment.
  • Network: Collaboration and support between companies, communities and institutions are critical to achieving common goals.
  • Governance: Decision-making processes should be democratic, transparent and participatory in order to take into account the interests of all stakeholders.
  • Ownership: Ownership should be more equitably distributed to encourage participation and co-determination by workers, communities and the public.
  • Finance: Investments should flow into sustainable and equitable projects that support the environment, social justice and local economies.

It does not work alone

Businesses alone cannot achieve this transformation, and policy is critical to the implementation of the doughnut concept as it creates the legal framework, sets incentives and directs resources to promote the principles of sustainability, social justice and economic equality. Through the design of laws, regulations and incentive mechanisms, the principles of the doughnut concept can be put into practice by motivating businesses, communities and institutions to make sustainable and equitable choices. Policy also plays a key role in education and awareness-raising to promote the acceptance and implementation of the doughnut concept in society and support international cooperation to address global challenges.


Can countries, the economy and businesses redesign themselves? Can we create a new equilibrium, with all the complexity that our economic system entails, to get to a place of balance? Kate Raworth claims yes. Economics and business are a completely human construct: We invented them, so we can reinvent them.

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