Doughnut Economics: Rethinking the economic model

Kelly Clark By Kelly Clark

Relying on GDP growth as an indicator of success is flawed. It does not value what is important, and as a result, has exacerbated society’s increasing inequality and accelerated planetary peril.  But this does not have to be so. Laudes Foundation is exploring alternative ways of measuring economic progress, which both prioritises what is important in the economy and fundamentally determines how value is derived. To this end, we have launched the Laudes Finance Dialogue (LFD), inviting leading economic thinkers and visionaries to meet our governors and senior leadership team to discuss new economic ideas and debate how they can best be catalysed into action. 

Kate Raworth, author of the best seller, Doughnut Economics and co-founder of the Doughnut Economics Action Lab, recently joined the LFD to talk about how economics can be made fit for the needs of the 21st century.   

Doughnut Economics is a new vision for the economy. It draws its name from its shape: two concentric circles that integrate social and planetary boundaries, seeking to meet the needs of all people without overshooting earth’s life-giving systems. Instead of a single economic indicator, the Doughnut consists of a dashboard of indicators that define its boundaries. Its outer edge represents the ecological ceiling or planetary boundaries, while the inside edge reflects the social foundation or measures of human wellbeing. Effectively, it serves as a compass for human progress going forward and importantly, provides flexibility regarding how social, economic and environmental priorities can be met. The goal of this framework is to enable society to make positive choices; to live in balance so we are able to thrive - economically, socially and environmentally.  


Click here to see Kate talk about the Doughnut model.

A central tenet of the Doughnut is the belief that people are fundamentally social and reciprocal and economies can be redesigned to nurture and incentivise these human traits. This then becomes the starting point to align human endeavour with thriving enterprises, communities and cities; all of the critical elements of a climate-positive and inclusive economy to which we aspire at Laudes Foundation.  

At its core, Doughnut economics is based on an economy that is both distributive and regenerative by design. But to realise such a distributive and regenerative economic model, we need to change the rules of the system. Policy can therefore be a real enabler by:  

  • Adopting a zero-tolerance approach, with strong regulatory oversight that ultimately ends those activities which irreparably damage our planet and undermine the health of society; 

  • Embracing tax policy and public spending that incentivises shifts away from resource and wealth extraction and toward job creation and ‘pre-distribution’ of wealth to address inequality;  

  • Enabling more collaboration across public and private actors, especially in bringing about the industry-scale resource ecosystems required to make a circular and regenerative economy possible

The new economy to which we aspire cannot merely redistribute wealth but must be designed to ‘pre-distribute’ wealth in the form of meaningful access to public goods and services for all citizens. This requires increased public spending in areas such as health and education in order to invest in the potential of every human being.  


Click here to see Kate talk about the transition to a regenerative and distributive economy. 

In this paradigm, the economy is able to evolve away from the old, harmful and dirty industries of the past and enables people and communities to transition into an environmentally sustainable and just future, where they can retrain and reskill to contribute to the green economic recovery.   

This economic vision cannot be achieved by an individual or a single organisation. Rather, it requires intention, planning, collaboration and contributions from all stakeholders.  

And it is happening. At the city level (such as in Brussels, Amsterdam, Copenhagen, Cambridge and Nanaimo) as well as the country level (such as in Barbados, Curacao and Costa Rica), leaders across government, business and civil society are collaborating to bring the Doughnut model to life. . And awareness of the power of this model is growing, thanks to call-outs by Pope Francis and David Attenborough. There is real energy (and appetite) for this new economic model, and with the learning coming from those first movers who are putting it into practice, we expect to see the Doughnut continue to inspire and catalyse action. 


Click here to see Kate talk about the power of collaboration. 


At Laudes, we are honoured to support the pioneering work of Kate and the Doughnut Economics Action Lab (DEAL), bringing diverse stakeholders together for a common purpose. Thank you, Kate, for your inspiration

About the author

By Kelly Clark

Kelly is the Director of Finance Capital Market Transformation at Laudes Foundation. The love she holds for her twins and concern for future generations motivates her to strive for change in the global economy and the financial system that supports it. She brings a strategic, intersectional view to tackling inequality and the climate crisis, and a deep desire to build bridges and unify perspectives.

Finance and Capital Markets