Lord Victor Adebowale introduced Kate Raworth the author of ‘Doughnut Economics” as “the future of economics, just like we’re the future of business” and she bought Social Enterprise Futures to a close with a soaring call for an urgent change to our economy, one which puts businesses like social enterprises at its centre.
She began with a critique of the systems we currently have in place – a model that has created inequalities of wealth, race, gender and power, explaining that crises emerge from within the systems we create, for example the climate emergency resulting as a direct consequence of over-reach by a shareholder value driven economy.
The goal is to shift from a system based on endless expansion to one based of thriving in balance.
To do this we need to get inside the “doughnut” a concept she explained using this picture:
No one should be left falling short on the essentials of life such as having access to food, water, shelter or a voice. However, we need to meet the needs of all people within the means of the living planet. So our goal is to create an economy which allows for both these needs that allows human flourishing within planetary boundaries – a “safe and just space for humanity.” This requires a move from a degenerative to regenerative economy, from divisive businesses motivated by shareholder value and profit to re-distributive ones.
Changing how businesses are designed
After setting up the goal of “doing the doughnut” Kate went into more depth on how we must change the way businesses are structured and the regulatory framework which surrounds them. This is essential to if business is to be part of the solution to the challenges of inequality and the climate emergency rather than a contributor to them. She touched on 5 aspects which affect how businesses are designed.
- Purpose – what is your business set up to do?
- Networks – who you partner with and work with as we need to exist and evolve together
- Governance – who has voice in decision making, who has a seat at the table. Major corporations may have great goals but is this translated through the company?
- Ownership – who owns the organisation – is it owned by employees, shareholders or venture capital
- Finance – what happens to your profits
All these five factors are interlinked and affect how a business operates.
But what role do social enterprises play in getting us into that doughnut?
Kate differentiated between “companies which need to transform to do the doughnut” and get us in that safe and just space and those which are “designed to do the doughnut” Most large companies need to change how they operate in order to work for people or planet and this can be difficult, citing how even if a CEO embeds social/environmental purpose it is much harder to change their networks, governance and ownership.
Social enterprises show what the future of business can look like but Kate made the argument that we need to have an “eco-system that makes businesses who are making this a reality a norm” linking to what Paul Polman said in our opening session about the need to change corporate governance.
We urgently need to shift away from shareholder primacy as it gives the wrong incentives creating structures which “allow people to leave their values at home.” Boards equally are not equipped to have the experiences or understanding of issues around sustainability.
Move social enterprise out of DCMS!
Kate, not coming from within the sector, couldn’t believe that government responsibility for social enterprise resides in DCMS stating that we should be in the department for business “This should be under BEIS it’s about innovating and being at the front end of business”
When posed what she would tell the Chancellor, Rishi Sunak, she replied with saying she’ll ask him what businesses stepped in and stepped up during COVID and who are the real innovators. We all know what the answer is to that…
Things have to change and they have to change fast, with urgent action needed to deal with rising inequalities, exacerbated by COVID, and the climate emergency. She ended by stating that “change happens at disruptive times” and that with regard to social enterprise “let’s enable them, empower them and help them to expand and spread.”