Friday 15 March 2019

Meeting the needs of all people while living within the means of our planet is the greatest challenge of the 21st century. Kate Raworth looks at the obstacles ahead.


Doughnut economics seeks to radically change how we measure economic performance. Coined by Kate Raworth, the noted author of "Doughnut Economics", it derives its name from a doughnut-shaped diagram. The hole in the middle represents people's basic needs (the "social foundation"), while the crust represents Earth's "ecological ceiling". The challenge is to satisfy the former without overshooting the latter.

"I see this as humanity's 21st century challenge; it is the direction of progress that we need to make this century"
Kate Raworth, author of Doughnut Economics
Raworth lists 12 social foundations, such as clean water, food and education, that are the foundation of people's needs. She also points to nine ecological ceilings, including pollution, climate change and loss of biodiversity. Any country that considers itself "developed" needs to meet the demands of both. Raworth was the keynote speaker at the BNP Paribas High Yield and Leveraged Finance Conference 2019.
According to Raworth, the world faces an unprecedented challenge to meet the needs of all people – while doing so within the means of the planet. For this to happen, industry, and the finance that invests in it, needs to transform. Her approach to understanding the world's economic problems represents a new way of looking at growth and development, highlighting high-income countries' frequent overshooting of carbon emissions, water and land use (and so on). No country that overshoots these ecological ceilings – what economists call negative externalities – can claim to be "developed", according to the doughnut model.


 
The Doughnut of social and planetary boundaries
The Doughnut of social and planetary boundaries
Source: Kate Raworth, Doughnut Economics


For Raworth, how we solve the world's problems in the coming decades is vital: "I see this as humanity's 21st century challenge; it is the direction of progress that we need to make this century."

The annual High Yield and Leveraged Finance Conference 2019 was hosted by UK country head Anne Marie Verstraeten, bringing together 700 guests, including prominent issuers and investors. It was the 15th event in the series, this year focusing on the future of Europe and key investment themes for 2019.


 
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