Many people wonder about the focus on growth embedded in our economic thinking. Can a country’s economy grow forever? When does it stop? Can consumption expand infinitely? And, do consumption and growth lead to happiness? Is GDP a measure of well-being?
This week New Zealand launches its radical new “well-being” budget, prioritizing five areas: mental health, child poverty, indigenous people, thriving in a digital age, and transitioning to a low-emission, sustainable economy. Bhutan tracks “gross national happiness” with its GNH index, rather than GDP, and several other countries are looking at measures of well-being, and not just financial indicators.
Economist Kate Raworth has developed a new model that can help us get away from the old linear thinking where goods and services get sold ever more efficiently to wealthier and wealthier consumers, and GDP growth is somehow infinite. She points out that we need to bring millions of people into the economy who are currently left out - because of poverty, lack of education, poor health, gender inequity and so on. But at the same time, we need to stay within certain planetary boundaries, delineated by things like pollution, loss of biodiversity and thinning of the ozone layer, if we want to have a chance of survival through the next century and onward.
Raworth’s model doesn’t look like the usual line, heading endlessly up into the top right corner of an xy graph. Instead of being plotted on a graph, it simply looks like a donut, the area between two concentric circles. There’s an outer edge to it, because we have to live within limits, and an inner hole, because millions of people live below the poverty line and need to be lifted out of the hole and into the donut. So the inner boundary of the donut represents our social foundation, and the outer limit our ecological ceiling.
Raworth brings up the 17 UN Sustainable Development Goals, which include “No Poverty,” “Zero Hunger,” and “Peace, Justice and Strong Institutions” when she talks about how to eliminate the donut hole and leave no one behind. When she describes the outer limits, she applies a framework known as the Nine Planetary Boundaries developed by a group of scientists led by Johan Rockstrom and Will Steffen. These are: climate change, ocean acidification, chemical pollution, nitrogen and phosphorus loading, freshwater withdrawals, land conversion, biodiversity loss, air pollution, and ozone depletion.
Companies have an opportunity to use this kind of thinking when developing their sustainability strategies. Instead of asking how their businesses can do less environmental and social harm, they can look for their ideal place in the donut. That means balancing positive impacts (such as job creation, providing needed goods or services, wealth generation for new populations) with ecological and human limits.
One of the strong criticisms that Raworth and others have of mainstream economic thinking is that it ignores the environmental and social impacts of growth-at-all-costs. The most important things we have, such as the air we breathe, are dismissed as mere “externalities.” But protesters around the world, notably school children, won’t have it anymore. Greta Thunberg, the 16-year-old Swedish climate activist, recently told the British parliament, "This ongoing irresponsible behavior will no doubt be remembered in history as one of the greatest failures of humankind.”
The jury is out on whether humanity will be able to live, in the future, within the limits of planetary resources. “Answering this question is the 21st century journey,” says Raworth. She doesn’t have all the answers, but knows the first step is to change the lens we’ve been using.
A donut mindset can be applied to any ecosystem, local or global. For example, cities can approach their policy-making this way, looking at social foundations and ecological ceilings. As Raworth points out, many impacts need to be managed locally.
Some companies are stepping up their commitment to sustainability by starting with scientific limits (an outer edge) and working backwards to determine the outer edges their own impacts must stay within. So-called “science-based targets” are targets for reducing a company’s carbon emissions to levels that would equate to that company’s fair share of containing the earth’s temperature at below 2 degrees celsius over pre-industrial levels. This is no small feat for a company to accomplish, but many are stepping up to the challenge, aided by new tools based on scientifically-calculated emission scenarios and allocation methods.
This same logic could be applied to all nine of the planetary boundaries in the donut’s outer limit, and more. A sustainability strategy using this approach, and looking at the positive societal impacts a company can make strategically through the lens of the Sustainable Development Goals, can lead companies closer to becoming regenerative forces for good. There are lots of ways to map and measure and implement actions. “How we fill all this in is evolving,” says Raworth. “We’re going to get better and better at it.”
Still, it won’t be easy, and an enormous cultural shift will be required. Some people, cognizant of how much our industrial society has pushed the earth’s ecological limits, believe that population growth will simply be too much. How can a planet already overheating, losing so many species to extinction, seeing too many of its forests converted to farmland, and undergoing destruction by extreme weather events, support nine, ten or eleven billion people? Raworth notes that population growth doesn’t move in a straight line. As populations get wealthier, and specifically as girls and women become more educated, birth rates fall. This is why strengthening the inner edge of the donut, its social foundation, is imperative. The inequality we are so used to in our GDP growth system needs to give way to much more inclusive, equitable sharing of the earth’s resources.
Perhaps most people know this in their hearts. Perhaps this is why both the Paris Agreement - setting a strong outer donut limit of two degrees of global warming - and the Sustainable Development Goals - setting a strong framework for an inner donut foundation - were overwhelmingly voted in by countries everywhere. As Raworth says, “We don’t know if it will work, but let’s give ourselves the best chance we can.”