Clean Collateral: A New Term for a Sustainable Future
A new term for the ongoing transformation from a linear to circular economy.
"Clean collateral" refers to sustainable assets and a change in consumption patterns as retail consumers become as self-aware of their output as they are of their input. This term emphasizes the responsibility we have for not only what we consume but also what we discard. Growing up with economists, input-output analysis was frequently mentioned as a fundamental concept for me to learn and use in my own pattern behavior. With innovations like drop shipping, systems exist to make an almost limitless selection of products available to consumers. In contrast, the systems for output are less widely adopted and this reality reflects a crucial need to shift away from linear to circular economies. Infrastructure to support a circular economy includes clean energy production, waste management processes, and sustainable material consumption tools. The term is rooted in the need to be as self-aware of output as society is of input; in other words, an emphasis on building a more sustainable future that reduces waste and maximizes resource value.
Clean collateral can be thought of as an equation that takes into account the value of the resources we consume and the potential value of those resources when repurposed or recycled. Just as a home loan uses the equity or down payment as leverage for refinancing the loan, clean collateral uses the value of the resources we consume as leverage for creating a more sustainable future.
Prototype Equation
The first part of the equation takes into account the value of the resources we consume. The second part of the equation represents the cost of waste disposal. For instance, NYC uses tax revenue to pay for trash collection and that’s how residents pay for waste disposal in the metro area.
The final part of the equation represents the potential value of repurposed or recycled resources. This includes the value of materials that can be reused or repurposed, as well as the potential energy savings from using recycled materials rather than virgin materials.
Just like with a home loan, the more equity or down payment you have, the more leverage you have to refinance the loan. Similarly, the more value we can extract from the resources we consume through repurposing or recycling, the more clean collateral we have to create a more sustainable future.
By adopting circular practices that maximize the value of resources, we can increase our clean collateral and create a more sustainable future for ourselves and future generations.
In a traditional linear economy, resources are extracted from the earth, turned into products, used, and then discarded as waste. In contrast, a circular economy aims to keep resources in use for as long as possible by reducing waste and maximizing the value of resources. In this context, clean collateral refers to the potential value of materials that can be repurposed or recycled as part of a circular economy.
Clean collateral can take many forms. For example, a discarded piece of clothing can be repurposed as a cleaning cloth, or a broken electronic device can be refurbished for resale. These items may have previously been considered waste, but in a circular economy, they are seen as valuable resources that can be used again and again. Second hand clothing stores and marketplaces are increasingly growing in popularity as an example of this cycle.
The shift towards a circular economy is not just about reducing waste and extending the life of products, it is also about creating a more sustainable future. By reducing our reliance on finite resources and minimizing our impact on the environment, we can create a more resilient economy that benefits everyone.
Clean collateral is also linked to the concept of "conscious consumption," which is the idea that we should be more mindful of what we buy and how we use it. Rather than constantly buying new things, we should focus on buying items that we really need and that are made from sustainable materials. This approach not only reduces waste, but it also supports ethical production practices and reduces our impact on the planet.
In conclusion, the term "clean collateral" encapsulates the idea that everything we consume has value, even after it has served its original purpose. By embracing the circular economy and conscious consumption, we can create a more sustainable future for ourselves and for generations to come. Whether we are individuals, businesses, or policymakers, we all have a role to play in creating a world where clean collateral is the norm rather than the exception.